Glenn Reynolds concludes a post on the migration of high income earners from high (and some medium) tax states, e.g. New York and Illinois, to states with lower taxes like Texas:
Instead of squandering hundreds of millions on political consultants, the GOP donor class would be better served setting up a “Welcome Wagon†that would target these movers (easy to do) and send them information on why the states they’re moving to are doing better.
Okay, I’ll bite. Why? Please quantify the results.
I think that the states with net domestic inmigration over the last five years nearly all produce oil. States with net domestic outmigration are all highly developed. The costs of buying homes has a lot more to do with it than taxes.
I can only speak for myself, and a large number of like minded and like wealth individuals.
The communities and range of home prices under consideration are actually similar – $900k to $2,000k. You can look it up yourself. Reynolds Plantation in GA, The Grove and Governors Club in TN, The Cliffs in NC, Sea Island, GA, Quail West in FL and on and on it goes in SCarolina and other FL and NC locations. That doesn’t even include Barton Creek in TX or all the AZ stuff. Now for sure these are well heeled people, but they also pay a lot in taxes.
The analysis has to include the big 3: state and local income taxes and fees, sales taxes and property taxes. And if you are looking at golf communities you include club initiation and dues. I’m here to tell you from first hand experience and spreadsheet making that the carrying costs are very different, and make IL and other northern states look just economically silly.
Unless the sales people are lying, providing falsified “where our residents come from,” and the people we have been introduced to are lying about their former locations this is real as can be. Including the deep Florida bounce back.
Some are coming for more temperate weather, although especially in Asheville and Nashville, the retained presence of four distinct seasons is cited as a draw. Some are coming for a more relaxed and retirement-like lifestyle. But pretty much all cite the triumvirate of tax burdens, and of course the obvious reality that there is much more to come. By the way, just do a little math. For those financing their residence, look at the mortgage equivalency of $1000/mo less in taxes. (Before tax deduction) it’s quite a sum. Something even the well heeled won’t sneeze at.
As a final note. In all the research and trips taken the most surprising venue has been Nashville. From cuisine to infrastructure to entertainment. Quite an eye opener. Downtown is what it is. Travel 20 minutes to Brentwood and you have basically Hinsdale if that’s your thing. 10 more minutes to Franklin or Cool Springs and you have for what all the world goes from Oak Brook or Naperville to an upscale Geneva, complete with a first rate school system. Another 5 minutes and you are in gorgeous rolling hills of national parks or horse country. And real live chefs tired of the hustle and bustle. As one person said, “we are business and people friendly, and we are stealing away the Chicagoans, Detroiters and Clevelanders.”
There are some interesting graphs in this link on the issue of urban exodus:
https://medium.com/migration-issues/is-there-an-urban-exodus-df9e7bebde12#.ld3ujqgq6
The New York City metro is losing a lot of people in domestic migration, while Chicago, Detroit, Boston, Philadelphia, and Los Angeles metros are losing people; Miami is poised to lose as well, while Houston, Phoenix, and Dallas are growing. There appears to be a distinct sun-belt trend here, as well as some smoothing. The medium-sized cities appear to be gaining at the expense of the largest cities. The author suggests some of this is due to late urbanization in the South.
Basically, another phrase to describe affordability of homes.
If there’s one thing you learn from watching “Fixer Upper” it’s that you get a lot more for your money in Waco than in Chicago.
Texas’s state per capita spending isn’t that different from Illinois’s. Here’s the summary of Texas taxes and the breakdown of revenues:
It’s not clear to me what Texas is doing to balance its budget. I can only speculate that oil fees play a role. I’m also curious about what that “Social Insurance Tax” slice is about.
This has been looked at many times. This is mostly retirees moving to warmer weather. Housing and taxes may be another reason why retirees decide to move, but we had retirees moving South even when taxes in the North weren’t so high. I used to make fun of them for doing that, but now I can appreciate it.
Steve
steve, my key point is that although the policies of the states with net inmigration is probably among the factors that lead people to move there I doubt that they’re dispositive and that’s true even for the highest income earners. You mention climate as a factor. I agree.
What explains Colorado?
http://www.denverpost.com/2016/04/14/colorado-has-more-people-on-the-move-than-any-other-state/
http://www.builtincolorado.com/2016/01/12/why-they-moved-colorado
I goto a conference in Denver almost every year. I think Colorado has become another destination site almost like California.
Steve