People are Fleeing High-Tax States for Florida and Bringing High Incomes with Them
Florida has a history of trying to woo people and businesses to move to the Sunshine State, and it appears to be working. In addition to its many other selling points, Florida has also had the reputation of being a low-tax state. Recent federal tax law changes have made our state even more attractive from a tax standpoint to many Americans.
The study released this month by Lending Tree states, “Florida tops the list for the most successful state at drawing in new residents and reaping the financial benefits — and it is not even close.” IRS data shows that 20 states enjoyed a net migration in adjusted gross income in 2016 and Florida led the way with a net gain of $17.7 billion. This is almost as much as the other 19 gainers combined--$19.4 million. The number two state—South Carolina—saw AGI grow by $2.3 billion. Texas, Washington and North Carolina round out the top five net gainers.
Florida is still #1 when its large economy is considered. Florida’s total AGI grew by 3 percent, the largest percentage growth in the nation. Which states are paying for Florida’s growth? The five states with the largest net decrease in AGI are New York, Illinois, New Jersey, Pennsylvania and Connecticut.
The people moving to Florida tend to be older and wealthier. People over 55 made up 72 percent of Florida’s growth and those making more than $100,000 make up 85 percent. Older folks are also fueling the growth in the other big-gainer southern states—the Carolinas. Conversely, most of the growth in Texas and Washington are from younger people (under 46).
And it is not just individuals that are fleeing high-tax states. Hedge funds, private equity firms and wealth management offices are re-locating to Florida. The head of Palm Beach County’s Business Development Board told FOX Business that more than 70 financial services companies have moved into Palm Beach County within the last three years and another 15 are considering such a move. Miami is also campaigning to convince businesses and individuals to move to South Florida.
The new $10,000 cap on the state and local taxes (SALT) deduction that was enacted as part of the federal Tax Cuts and Jobs Act of 2017 is only expected to heighten this migration. This hurts taxpayers in high state income and property tax states. Florida, of course, has no income tax and its property tax laws favor homeowners.
New York’s Gov. Cuomo partially blames the state’s $2.3 billion budget deficit on wealthier New Yorkers leaving the state in the wake in of the SALT deduction cap.
According to FOX Business, data provided by the Tax, Trusts & Estates Department of Cole Schotz, someone earning $650,000 in ordinary income could save $69,719 per year by moving from New York to Florida. Moving from New Jersey would save $58,300.