Except for eccentric billionaires, I haven’t heard about people renouncing their US citizenship and relocating to foreign tax havens.
But, in the past week, I’ve heard 4 stories of sober-minded friends starting to implement plans to move to states with no or low income taxes and no estate taxes.
That’s not a new thing, but the breadth of interest and urgency is something I haven’t seen before.
Some is induced by aging … 3 of the 4 are nearing retirement age.
The flashpoint, though, is ignited by Obama’s re-election and his rants and threats to jack up taxes.
Savvy folks understand that (a) more than folks making $250K will be impacted, and (b) many of the tax increases are already baked in courtesy of ObamaCare.
So, the thinking goes: “I can’t control the Fed taxes I pay but I can control the local taxes I pay … so, I’m moving to a low tax locale to offset the hit Obama’s putting on me.”
The interesting irony: the destination states are red ones … or purple ones (think Florida).
The bulk of the migration will be wealthier folks bolting from high tax & spend blue states (think CA, MD, NY, NJ) … giving the blue states a declining tax base and forcing them to jack up state taxes on everybody else to feed their tax and spend monsters.
An unintended consequence of the caviler Fed tax policy Obama is pushing … watch it develop.
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The Homa Files 
November 20, 2012 at 11:33 am |
Good riddance! We got their taxes during their productive years. Now that they are transitioning to “takers” rather than “makers” it will be interesting to see what the low tax states do with them. Especially if (when?) federal transfers are reduced.
Why wouldn’t the wealthy be better off by simply deducting their state taxes from the federal?
November 21, 2012 at 4:27 pm |
New Hampshire and Nevada stopped being fairly reliable red states due to this very migration. People fled high tax jurisdictions in California and Massachusetts/Vermont and brought their politics with them.
West Virginia is a good counter-example (Clinton won it by 20 points)… as jobs left mountain counties, non Scotch-Irish communities migrated to Baltimore in search of benefits… and left non-union working people behind (ie Republicans)
One of the few post-2000 victories for Republicans is that they’ve have become the party of working whites (all types too: blue, white and pink-collar); Democrats used to be the working people party in the country as recently as the 70s. Among employed white Americans, only rent-seekers (govt employees, etc.) and the remnants of private unions remain- and even the latter is more shaky than most people think.