I pointed this out earlier this month at EPJ: Red States May Suffer Blowback From Elimination of Local and State Tax Deductibility Designed to Hurt Blue States.
Zero Hedge now notesthat Goldman Sach has just come out with a report that estimates that the changes currently contemplated on the Senate bill could ultimately result in 2-4% of Manhattan's top earners relocating to lower taxing jurisdictions.
Keep in mind, these will be mostly crazed lefties WHO WILL BE POLITICALLY ACTIVE.
But it will be more than the mid-level rich, as I pointed out in the above mentioned post:
I'm told, for example, that the greater Denver, Colorado region is getting more wacko every day as more and more California residents move to the area. And I am told that high taxes and the high minimum wages in Blue state territories are driving white trash into parts of Idaho.So Red Staters who hold the unusual view that state and local tax deductions on Federal tax forms are a "subsidy" to Blue Staters, may get their wish and see the SALT deductions eliminated---but it is only going to drive the Blue Staters into the Red states.
Nice job Red Staters, you have set the stage for the crazed social justice warriors to move to your own communities, and clamor for more government, but, hey, at least you won't be "subsiding" them from afar. They are going to be your new neighbors.
For an indication of what Red Staters will turn your state into in the long-term, read this.
-RW
This notion of an exodus of lefties from "blue" states to "red" as a protest against the elimination of the SALT deductions seems really far fetched to me. If the high state & local taxes themselves aren't enough in and of themselves to make folks uproot their lives and move to a different state, most likely far away distance wise and culturally (and also likely far away from the Fed spigots and their related high paying finance & ancillary service jobs), why would the additional pittance of adding back those amounts to their net income for fed tax purposes do so?
ReplyDeleteThe prospect of employment opportunities and other cultural issues will tend to restrict the movement of working age folks, especially those with families. Retirees, on the other hand, are a different matter altogether. With some sort of pension and/or old age bennies there is no need to find employment. They can move in like a pack of locusts.
I myself was a refugee from the high income, high tax, high cost of living Northeast 10 years ago. I now live in a lower income, lower tax, lower cost of living Southern red state coastal area with decent weather year round and medium to low SALT taxes. Their is no real Fed money spigot close by (Maybe some MIC money a couple of hundred miles or so) and if you are not self-employed (not being a retiree, I am), wages run around $10-12 an hour. What I see here is people moving from high tax blue states upon retirement and then bringing their blue state pensions and politics with them. This is happening irrespective of any change to SALT deductibility and will likely continue and increase over time due to current demographic trends.
As an aside, local politics is getting grabbier by the minute. This year the county hired a consultant who determined (surprise!) that all rank and file county employees were underpaid compared to their counterparts throughout the country. So they all got raises! Now the budget has grown quite a bit for 2018 and they need to cut or raise taxes. What did the county recommend to cut to balance the budget... wait for it... trash collection! So now that there has been push back to the proposed cut to an essential "service" the county can say they "tried to cut" but taxes may need to be raised. To me this is a straight Northeast-style local gov't gangster move. And they think no one notices...