A couple of weeks ago Weekly Industry News looked at the movement of people from state-to-state from the perspective of United Van Lines who moves over 100,000 people a year.
The firm tracks who is moving and where they are going.
Four states in the West — the PIA Western Alliance states of Oregon (2), Idaho (3), Nevada (4) and Washington (6) — are in the top-10 places where people are going. The PIA Western Alliance state of California is one of the places people are leaving.
Christopher Thornberg of Beacon Economics says data from the U.S. Census Bureau's American Community Survey shows, “lower income Californians are the ones who are leaving, not higher income.”
Thornberg believes high housing costs is why.
The rental association Zumper agrees with Thornberg’s conclusion and says San Francisco is the most expensive rental market in the nation. New York is second but the rest of the top 10 is filled with California cities.
• San Jose is third
• Los Angeles is sixth
• Oakland and San Diego round out the list
The high cost of living cost California more than 138,000 people from July of 2016 to July of 2017. Most of low income individuals.
Thornberg and Zumper — it turns out — may be partially correct. A new reason to move has sprung to the forefront and it’s one that may cost the Golden State its treasured millionaires. It’s high taxes for the wealthy. Or so says conservative economists Arthur Laffer and Stephen Moore. Both are predicting wealth leaving California — and New York — because of the tax reforms passed by Congress last December.
The two men — and former advisors to President Donald Trump — wrote an op-ed piece in The Wall Street Journal titled So Long, California. Sayonara, New York. They predict a net number of 800,000 people will move out of the two states in the next three-years.
The issue is the new limit on the deduction of state and local taxes to $10,000. Laffer and Moore say many of the wealthiest in the two states will see a tax increase. In California, they believe that will be a rise from 8.5% to 13%. People making $10 million or more — they predict — will see a jump of 50%.
Or even more.
“In years to come, millions of people, thousands of businesses and tens of billions of dollars of net income will flee high-tax blue states for low-tax red states,” they wrote. Laffer and Moore think as many as 800,000 will take their residences and their wealth to lower or no-income tax states.
Connecticut, New Jersey and Minnesota could lose close to 500,000 people in that same time period.
Critics see things differently. The theory is pure fiction says Stanford economist Cristobal Young. He is the co-author of one of the nation’s most respected studies on taxing, wealth and migration. Calling Laffer and Moore’s theory nonsense, Young said California, New York and New Jersey have been high tax states for decades.
Yet, those states continue to be havens for the wealthy and have the highest concentration of wealthy people per capita in the nation.
“There is no correlation between the top tax state tax rate and the number (or rate) of millionaires in a state,” he said and went on to add that many affected by tax rates like those coming are late-career working rich or are the wealthy who are socially embedded in those states.
Source links: Forbes, MSN Money — link 1, link 2