by Martin Armstrong, Armstrong Economics:
The exodus from blue states has not waned since the pandemic. Americans are seeking lower taxes, crime, and tyranny as half of our nation descends into utter chaos. A recent poll by SmartAsset found that Americans earning $200,000 or more have been the most eager to flee states like New York and California.
California and New York have lost more high-earners, and therefore higher taxpayers, than any other states. California is the least desirable state with an average outflow of 24,670 high-income households with an adjusted gross income (AGI) of $1.3m. New York is not far behind, with a net outflow of 12,040 high-earning households worth an average AGI of $1.1m.
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California is rushing to implement legislation to punish those who dare to leave Newsom’s socialist utopia. I’ve discussed the exit tax on this blog in detail as businesses and individuals seeking to leave the Golden State must pay a fine. The government will look at all of your assets and investments to determine how much you will need to pay, which is usually 0.4% of someone’s net worth. Wealth historically flees when taxes rise, and to combat this issue, California plans to tax anyone with an income for $30 million for up to a full decade after they leave the state. Someone leaving the country entirely will still be forced to pay California for the privilege of leaving.
Other states will likely adopt an exit tax. New York’s state budget toppled, fueled by the migrant crisis, and they will begin to hunt their own citizens for funds because that is what governments have ALWAYS done when they find themselves insolvent.
California also has one of the highest tax brackets for income tax, often reaching 14.4%, while New York slaps a 10.9% tax on the highest earners.
Average home prices in California has reached $746,667 but it is difficult to compile an average price on such a large state and the average home in a DESIRABLE relatively safe neighborhood is much higher. The same could be said about New York as we have a vastly different landscape from the city to the north, and stating the average home price of $450,000 grossly understates what someone will pay if they live near the city or in a relatively safe desirable neighborhood.
Where is everyone moving?
- Florida: 29,771 net inflow of high-earning households
- Texas: 8,260 net inflow of high-earning households
- North Carolina: 5,792 net inflow of high-earning households
- South Carolina: 5,270 net inflow of high-earning households
- Arizona: 4,365 net inflow of high-earning households
Americans are fleeing to red states with lower taxes and crime. Property prices in desirable neighborhoods may be high, but you have a much lower property tax. Florida and Texas continue to be the safe havens within America for both businesses and individuals. The average AGI for those moving to Florida from the aforementioned states is $907,013 while California’s new residents have an average AGI of $579,207. Consequently, lower earners have been forced to leave these states.
Inflation has already caused every American to spend more while living on less. High-income households are being punished under these socialistic eat the rich policies that invalidly claim they are responsible for the financial hardships of others. This trend will continue as Democrat-run states continue to adopt hardline policies that penalize monetary success.
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