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I can't help but wonder if the recent tax changes will have any effect in consolidating East Coast tech jobs. Previously you could live in NJ and work in Manha

I can't help but wonder if the recent tax changes will have any effect in consolidating East Coast tech jobs. Previously you could live in NJ and work in Manhattan and write off the respective taxes of each. Now it's my understanding you'd be better served (for example) living and working solely in New Jersey. See [1] for an actual discussion on the tax law changes State and local taxes. Taxpayers can deduct a maximum of $10,000 from the total of their state and local income taxes or sales taxes, and their property taxes (added together), a measure that might hurt itemizers in high-tax states such as California, New York and New Jersey. The $10,000 cap applies whether you are single or married filing jointly; if you are married filing separately, it drops to $5,000. [1] https://www.investopedia.com/taxes/how-gop-tax-bill-affects-you/ https://www.investopedia.com/taxes/how-gop-tax-bill-affects-... Based on that maybe we'll see clustering on each side of the river? Entirely speculation on my part, of course.

lotsofpulp 9y ago
I don't see what the federal tax changes would have to do with commuting from NJ to NY? The change in federal law has to do with deducting the total amount of state and local taxes paid, which is, going forward, capped at $10k. New Jersey credits any tax paid to New York, which is staying the same.
- technofiend 9y ago
  > New Jersey credits any tax paid to New York, which is staying the same. 1) I was concerned that may no longer be the case, so thanks for that, but 2) if your net tax burden is > $10k because of double taxation then doesn't it make sense to exit one of the two places taxing you, thus lowering your overall burden? I.E. Even if NJ Tax is $6k and NYC is $5K that still means there's a $1k incentive to no longer work in one place and live in the other. That's my point.
  - lotsofpulp 9y ago
    "Double taxation" would be if you paid income tax in full to both NJ and NY, but that's not what happens since NJ provides a dollar for dollar credit for the income tax you pay to NY. Therefore, you only ever pay the maximum of either the income tax you owe NJ or the income tax you owe NY. You're right that the new federal tax law could incentivize people to move from places with higher state and local taxes to places with lower state and local taxes, but the differences between NJ/NY/CT are negligible. The only big difference would be moving out of New York City, as that would save you up to ~20% (federal tax rate) of 3.5% (NYC income tax rate) of your income, but I doubt many people are willing to trade in their quality of life in NYC just for that.

lotsofpulp 9y ago

I don't see what the federal tax changes would have to do with commuting from NJ to NY? The change in federal law has to do with deducting the total amount of state and local taxes paid, which is, going forward, capped at $10k. New Jersey credits any tax paid to New York, which is staying the same.

technofiend 9y ago
> New Jersey credits any tax paid to New York, which is staying the same. 1) I was concerned that may no longer be the case, so thanks for that, but 2) if your net tax burden is > $10k because of double taxation then doesn't it make sense to exit one of the two places taxing you, thus lowering your overall burden? I.E. Even if NJ Tax is $6k and NYC is $5K that still means there's a $1k incentive to no longer work in one place and live in the other. That's my point.
- lotsofpulp 9y ago
  "Double taxation" would be if you paid income tax in full to both NJ and NY, but that's not what happens since NJ provides a dollar for dollar credit for the income tax you pay to NY. Therefore, you only ever pay the maximum of either the income tax you owe NJ or the income tax you owe NY. You're right that the new federal tax law could incentivize people to move from places with higher state and local taxes to places with lower state and local taxes, but the differences between NJ/NY/CT are negligible. The only big difference would be moving out of New York City, as that would save you up to ~20% (federal tax rate) of 3.5% (NYC income tax rate) of your income, but I doubt many people are willing to trade in their quality of life in NYC just for that.