Farewell, New York and California! Wealthy Americans are Moving to States with Lower Taxes
When the taxes get tough the rich get going — to states with more lenient tax policies. According to new research from SmartAsset, since the onset of the pandemic, Americans earning $200,000 or more a year are migrating from states with the highest tax burdens to states with lower taxes.
Below is a look at the states experiencing the greatest outflow of high-earning residents, listed from lowest to highest.
- Ohio: -889
- Minnesota: -952
- District of Columbia: -1,730
- Maryland: -1,828
- New Jersey: -2,833
- Virginia: -2,099
- Massachusetts: -2,116
- Illinois: -8,044
- New York: -19,912
California and New York are seeing the biggest exodus, which makes sense when you consider their formidable taxes. In California, the statewide tax rate is 7.25%, though, in most areas, additional local district taxes also apply. In New York, the average combined state and local sales tax rate amounts to 8.52%.
The cost of living is also formidable and on the rise in states seeing the highest outflow, particularly in major cities such as New York City and Los Angeles.
But can’t the rich afford the steep tax burden, just as they can manage the cost of living in popular metropolises? Ostensibly yes — but even big dollars go further in cheaper areas. For example, the average home in San Francisco goes for $1,576,808, according to Zillow; a home in Manhattan in New York City averages $776,946. And these are tightly packed cities so you’re surely not getting a very large place (likely an apartment or condo as opposed to a house).
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A home in Orlando, Florida — a state with no individual state tax rate — is $387,298. By moving to a state with no or low state taxes, the rich do what they do best: get richer. And it’s especially easy to do so now, when working from home has become more of the norm and many can do their white-collar jobs from wherever they like.
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