6 ms·

There’s two great reckonings coming to high tax States in the coming years. The first is when people realize that without tax offsets the appetite for their re

by koolba 8y ago

There’s two great reckonings coming to high tax States in the coming years. The first is when people realize that without tax offsets the appetite for their real estate plummets. It’s already started at the high end and is working it’s way down to the standard northeast 4/3/2.5 suburbs. The second reckoning will come after the tippping point of high income earners leave for low/no tax States like Florida and Nevada. What remains will be an eroded income tax base with decades of unfunded pension obligations. They’ll raise taxes further to compensate for the spread in a vicious cycle that will push out more of the tax base. Fun times ahead.

awinder 8y ago
No one in their right mind is moving from New York to Nevada. More likely, in fact much more likely, is that the double taxation policy that was carved out against high-tax-base states is corrected once Republican national losses continue to pile up. One can only hope that democrats remember how important it was to harm high-output states when they regain power and provide equivalent justice to the loaner states.
- rayiner 8y ago
  From 2010-2016, nearly a million people left the NYC metro area for other locations within the US: https://zicklin.baruch.cuny.edu/wp-content/uploads/sites/10/2018/02/Paper-Series-Feb.-2018-No.-15-New-Yorkers-on-the-Move.pdf https://zicklin.baruch.cuny.edu/wp-content/uploads/sites/10/...
  - ryanwaggoner 8y ago
    More context: The City of New York grew by over 362,000 residents between 2010 and 2016, a growth rate of 4.4% (Table 1). City officials consider this to be among the strongest periods of growth in the last half century (NYC Planning, 2017a). The population grew by 402,000 people through natural increase, and net foreign migration added an additional 500,000 residents. Net domestic migration was -524,000, as more people moved out of the city than moved in. If foreign and domestic migrants are consid- ered together, approximately one person moved out for every person that moved in. The greater NYMA has approximately 20.2 million people and grew by three percent during this period, adding over 586,000 residents. Approximately 672,000 people were added through natural increase while foreign migration added an additional 849,000. The metro lost 903,000 people from domestic out-migration. NYC is a major driver of the metro area’s population change; 62% of the metro’s net population growth occurred within the city. I don’t see the problem here.
    - ataturk 8y ago
      The problem is manifold--first off, the people leaving are the ones who had decent incomes and paid those high taxes. The influx is mostly all on the low end, meaning minimum wage or thereabouts. Do your own math--NYC wants to give everyone universal health insurance freebies. I don't see how that is even remotely sustainable with a huge population making median or lower than median income. It is already ridiculously expensive to live in NYC and most of the worker-bee underclass live on the margins, have hellish commutes, and basically exist like animals in substandard conditions that are just barely better than wherever it is they came from. It sucks being middle or lower middle class in NY, it is how I grew up and that was decades ago. With all the intervening inflation, it must really suck by now. In general, things aren't getting better for most inhabitants of the US, citizens and non-citizens alike. We are headed for 3rd World status where there is tiny, rich elite and everyone else is a low-wage debt slave running in place on a hamster wheel. We have to turn this around or it will be revolution for real--everyone is exhausted. Every stupid policy in the last 30 years has rewarded big business and done harm to middle class people.
- jdhn 8y ago
  >the double taxation policy that was carved out against high-tax-base states It's funny how the same liberals who call for higher taxes on the rich are so against capping a subsidy that primarily benefits rich people. If anything, the tax bill should've gone further and completely eliminated the mortgage and property tax deductions as these deductions primarily benefit the rich.
  - arebop 8y ago
    You're confused; the parent comment and the article are primarily about the SALT deduction, not the home mortgage interest deduction. The main reason to mention "homebuyers" is that these taxpayers want to change their state of residence to lower their state income tax. It's funny how the same "conservatives" that claim to love small and local government enacted tax policy that blocks states from effectively moving tax revenue from the federal government to the state government.
    - zaroth 8y ago
      Stepping back from labels and left vs right dynamics, there have been a lot of words written about the new tax code just benefits the rich. Whether you think states should be able to claim an uncapped amount of income out from under the Fed, whether you think that this tax policy is more or less likely to encourage smaller/bigger Federal government, it is definitely true that this is a substantial tax increase for anyone holding a large net value of personal property. Note that rental property does not have the same limits, as the deduction against rental income is not capped.
      - awinder 8y ago
        Crucially, it’s not just about a large net property holding. It’s about having a a large percentage of your personal worth in property. If you’re making a lot in salary, or you’re passing down millions in wealth, you’ve been offset on the personal property tax and other components of SALT. If you’re in the top 20% and you’re not getting offset on higher tax bands, you’re not offset.
helen___keller 8y ago
I'm not sure I see any evidence the latter one happens in the forseeable future. Many high tax states hold top-performing cities which are struggling to handle massive incoming migration that has been happening a good 20 years. The biggest gripe in my cost of living is by far housing. If I moved back to my home town in Florida, it would be so I can live near my parents and so I can afford a house . Not for taxes. I suppose states without top cities, like Vermont, might run into problems. But even that is speculation - how many people actually uproot their lives just to save on state income tax?
- rayiner 8y ago
  What do you mean “many?” Basically just SF and LA. There is huge net domestic outmigration from day NYC.
  - Retric 8y ago
    NYC’s population keeps growing. It had a peak in the 70’s, but it’s never been larger than right now. https://en.m.wikipedia.org/wiki/Demographics_of_New_York_(state) https://en.m.wikipedia.org/wiki/Demographics_of_New_York_(st...
    - lotsofpulp 8y ago
      NYC might be okay, it's one of a kind, but I think NJ/CT/IL are in for a slow long term decay. Their debt numbers are staggering, and they don't offer anything unique that other places don't. https://www.watchdog.org/illinois/by-the-numbers-illinois-receives-f-grade-on-national-ranking/article_b0448e98-0a30-11e9-90aa-fb0b253c28c7.html https://www.watchdog.org/illinois/by-the-numbers-illinois-re...
      - Retric 8y ago
        New Jersey has the second highest household income in the United States. That’s a significant draw. In terms of debt to GDP it’s South Carolina and New York that’s in real trouble. https://www.usgovernmentdebt.us/state_debt_rank https://www.usgovernmentdebt.us/state_debt_rank PS: All states combined is 14.79% and NJ stands at 15.69%. So it’s not great, but it’s not that far from average.
fiblye 8y ago
Demand for real estate plummets and prices drop. Sounds absolutely horrifying. The high income earners all fly off to states like Nevada, where the population is low and chances to earn a high income are even lower. That's definitely going to happen. Meanwhile, America's megarich continue to settle and grow their wealth in California, New York, and Washington and upcoming rich folk continue to pop up in those states while the best employment opportunities for other people also tend to be in regions where people are, not where tax benefits happen to be the best. Nevada's advantage is less the taxes and more the rapidly growing population and low rents due to a lack of high income earners driving rent prices up.
dsfyu404ed 8y ago
>There’s two great reckonings coming to high tax States in the coming years. Unfortunately all the people that pushed the policy that resulted in these states being high tax* will be able to move to gated communities, expensive suburbs and overpriced downtown apartments in other states. The people who will be left behind to be burnt will be all the poor people who can't escape the hell they didn't create. Things tend to bounce between extremes so I wouldn't be surprised if in the next 50yr a few currently high tax states go bankrupt then extremely low tax low service then back to some middle ground. *High tax isn't a problem by itself. The problem it that high tax states in the US don't turn around and deliver a proportionate amount of public good. A huge amount of the money disappears into an opaque, graft ridden black hole. If people actually got something proportionate in return (like they do in a few parts of Europe) taxes wouldn't be bad.
- del82 8y ago
  > *High tax isn't a problem by itself. The problem it that high tax states in the US don't turn around and deliver a proportionate amount of public good. I certainly agree that there's waste, and more taxes leads to more waste. To your point, though, about "proportional amount of public good", I think there's a case to be made that higher tax areas do generally enjoy better services. An example is in quality of public schools, which is very important to me and my spouse. NYC and its suburbs (including Westchester and Nassau Counties) are very high-tax areas. If you look at the US News ranking of public high school quality[0], you'll find that 42 of the top 50 public high schools in New York State are in NYC, Westchester, or Nassau; 3 more are in southern Putnam County (just north of Westchester) or western Suffolk County (just east of Nassau). There are legitimate questions to be asked about how much signal is in USNWR's rankings, but the quality of schools is one of the things that keeps my spouse and me in the NYC metro area. [0] https://www.usnews.com/education/best-high-schools/search?state-urlname=new-york https://www.usnews.com/education/best-high-schools/search?st...
  - zaroth 8y ago
    Is it the quality of the schools as a result of the high taxes, or is the high tax area drawing only high net worth individuals who have more time and money to invest in their children, leading to higher performing students in the same old schools?

by koolba 8y ago

awinder 8y ago

No one in their right mind is moving from New York to Nevada. More likely, in fact much more likely, is that the double taxation policy that was carved out against high-tax-base states is corrected once Republican national losses continue to pile up. One can only hope that democrats remember how important it was to harm high-output states when they regain power and provide equivalent justice to the loaner states.

rayiner 8y ago
From 2010-2016, nearly a million people left the NYC metro area for other locations within the US: https://zicklin.baruch.cuny.edu/wp-content/uploads/sites/10/2018/02/Paper-Series-Feb.-2018-No.-15-New-Yorkers-on-the-Move.pdf https://zicklin.baruch.cuny.edu/wp-content/uploads/sites/10/...
- ryanwaggoner 8y ago
  More context: The City of New York grew by over 362,000 residents between 2010 and 2016, a growth rate of 4.4% (Table 1). City officials consider this to be among the strongest periods of growth in the last half century (NYC Planning, 2017a). The population grew by 402,000 people through natural increase, and net foreign migration added an additional 500,000 residents. Net domestic migration was -524,000, as more people moved out of the city than moved in. If foreign and domestic migrants are consid- ered together, approximately one person moved out for every person that moved in. The greater NYMA has approximately 20.2 million people and grew by three percent during this period, adding over 586,000 residents. Approximately 672,000 people were added through natural increase while foreign migration added an additional 849,000. The metro lost 903,000 people from domestic out-migration. NYC is a major driver of the metro area’s population change; 62% of the metro’s net population growth occurred within the city. I don’t see the problem here.
  - ataturk 8y ago
    The problem is manifold--first off, the people leaving are the ones who had decent incomes and paid those high taxes. The influx is mostly all on the low end, meaning minimum wage or thereabouts. Do your own math--NYC wants to give everyone universal health insurance freebies. I don't see how that is even remotely sustainable with a huge population making median or lower than median income. It is already ridiculously expensive to live in NYC and most of the worker-bee underclass live on the margins, have hellish commutes, and basically exist like animals in substandard conditions that are just barely better than wherever it is they came from. It sucks being middle or lower middle class in NY, it is how I grew up and that was decades ago. With all the intervening inflation, it must really suck by now. In general, things aren't getting better for most inhabitants of the US, citizens and non-citizens alike. We are headed for 3rd World status where there is tiny, rich elite and everyone else is a low-wage debt slave running in place on a hamster wheel. We have to turn this around or it will be revolution for real--everyone is exhausted. Every stupid policy in the last 30 years has rewarded big business and done harm to middle class people.
jdhn 8y ago
>the double taxation policy that was carved out against high-tax-base states It's funny how the same liberals who call for higher taxes on the rich are so against capping a subsidy that primarily benefits rich people. If anything, the tax bill should've gone further and completely eliminated the mortgage and property tax deductions as these deductions primarily benefit the rich.
- arebop 8y ago
  You're confused; the parent comment and the article are primarily about the SALT deduction, not the home mortgage interest deduction. The main reason to mention "homebuyers" is that these taxpayers want to change their state of residence to lower their state income tax. It's funny how the same "conservatives" that claim to love small and local government enacted tax policy that blocks states from effectively moving tax revenue from the federal government to the state government.
  - zaroth 8y ago
    Stepping back from labels and left vs right dynamics, there have been a lot of words written about the new tax code just benefits the rich. Whether you think states should be able to claim an uncapped amount of income out from under the Fed, whether you think that this tax policy is more or less likely to encourage smaller/bigger Federal government, it is definitely true that this is a substantial tax increase for anyone holding a large net value of personal property. Note that rental property does not have the same limits, as the deduction against rental income is not capped.
    - awinder 8y ago
      Crucially, it’s not just about a large net property holding. It’s about having a a large percentage of your personal worth in property. If you’re making a lot in salary, or you’re passing down millions in wealth, you’ve been offset on the personal property tax and other components of SALT. If you’re in the top 20% and you’re not getting offset on higher tax bands, you’re not offset.

helen___keller 8y ago

I'm not sure I see any evidence the latter one happens in the forseeable future. Many high tax states hold top-performing cities which are struggling to handle massive incoming migration that has been happening a good 20 years. The biggest gripe in my cost of living is by far housing. If I moved back to my home town in Florida, it would be so I can live near my parents and so I can afford a house . Not for taxes. I suppose states without top cities, like Vermont, might run into problems. But even that is speculation - how many people actually uproot their lives just to save on state income tax?

rayiner 8y ago
What do you mean “many?” Basically just SF and LA. There is huge net domestic outmigration from day NYC.
- Retric 8y ago
  NYC’s population keeps growing. It had a peak in the 70’s, but it’s never been larger than right now. https://en.m.wikipedia.org/wiki/Demographics_of_New_York_(state) https://en.m.wikipedia.org/wiki/Demographics_of_New_York_(st...
  - lotsofpulp 8y ago
    NYC might be okay, it's one of a kind, but I think NJ/CT/IL are in for a slow long term decay. Their debt numbers are staggering, and they don't offer anything unique that other places don't. https://www.watchdog.org/illinois/by-the-numbers-illinois-receives-f-grade-on-national-ranking/article_b0448e98-0a30-11e9-90aa-fb0b253c28c7.html https://www.watchdog.org/illinois/by-the-numbers-illinois-re...
    - Retric 8y ago
      New Jersey has the second highest household income in the United States. That’s a significant draw. In terms of debt to GDP it’s South Carolina and New York that’s in real trouble. https://www.usgovernmentdebt.us/state_debt_rank https://www.usgovernmentdebt.us/state_debt_rank PS: All states combined is 14.79% and NJ stands at 15.69%. So it’s not great, but it’s not that far from average.

fiblye 8y ago

Demand for real estate plummets and prices drop. Sounds absolutely horrifying. The high income earners all fly off to states like Nevada, where the population is low and chances to earn a high income are even lower. That's definitely going to happen. Meanwhile, America's megarich continue to settle and grow their wealth in California, New York, and Washington and upcoming rich folk continue to pop up in those states while the best employment opportunities for other people also tend to be in regions where people are, not where tax benefits happen to be the best. Nevada's advantage is less the taxes and more the rapidly growing population and low rents due to a lack of high income earners driving rent prices up.

dsfyu404ed 8y ago

>There’s two great reckonings coming to high tax States in the coming years. Unfortunately all the people that pushed the policy that resulted in these states being high tax* will be able to move to gated communities, expensive suburbs and overpriced downtown apartments in other states. The people who will be left behind to be burnt will be all the poor people who can't escape the hell they didn't create. Things tend to bounce between extremes so I wouldn't be surprised if in the next 50yr a few currently high tax states go bankrupt then extremely low tax low service then back to some middle ground. *High tax isn't a problem by itself. The problem it that high tax states in the US don't turn around and deliver a proportionate amount of public good. A huge amount of the money disappears into an opaque, graft ridden black hole. If people actually got something proportionate in return (like they do in a few parts of Europe) taxes wouldn't be bad.

del82 8y ago
> *High tax isn't a problem by itself. The problem it that high tax states in the US don't turn around and deliver a proportionate amount of public good. I certainly agree that there's waste, and more taxes leads to more waste. To your point, though, about "proportional amount of public good", I think there's a case to be made that higher tax areas do generally enjoy better services. An example is in quality of public schools, which is very important to me and my spouse. NYC and its suburbs (including Westchester and Nassau Counties) are very high-tax areas. If you look at the US News ranking of public high school quality[0], you'll find that 42 of the top 50 public high schools in New York State are in NYC, Westchester, or Nassau; 3 more are in southern Putnam County (just north of Westchester) or western Suffolk County (just east of Nassau). There are legitimate questions to be asked about how much signal is in USNWR's rankings, but the quality of schools is one of the things that keeps my spouse and me in the NYC metro area. [0] https://www.usnews.com/education/best-high-schools/search?state-urlname=new-york https://www.usnews.com/education/best-high-schools/search?st...
- zaroth 8y ago
  Is it the quality of the schools as a result of the high taxes, or is the high tax area drawing only high net worth individuals who have more time and money to invest in their children, leading to higher performing students in the same old schools?