In Greenwich and Manhattan, Tax-Hike Fears Fuel Talk of Exodus

The poor, wealthy babies --- and all Democrats too. I feel terrible for them. (*Eye-roll*)

At Bloomberg, "Tax-Hike Fears Trigger Talk of Exodus From Manhattan and Greenwich":

Fears of a tax hike are fueling talk of an exodus in Greenwich and Manhattan https://t.co/EI8reC8OBj pic.twitter.com/IFp50a7VLB

— Bloomberg (@business) November 27, 2017

Even Bruce McGuire, founder of the Connecticut Hedge Fund Association, understands if wealthy Northeasterners flee the region due to changes in the tax code.

“It would almost be irresponsible if you weren’t thinking about moving,” he said.

The problem for the Connecticut hedge-fund set -- and, more broadly, for a lot of the Wall Street crowd -- is that Republican proposals in both the House and Senate would drive up taxes for many high-earners in the New York City area. By eliminating the deduction for most state and local taxes, an individual making a yearly salary of $1,000,000 -- a figure not uncommon in the financial industry -- would owe the Internal Revenue Service an additional $21,000, according to a preliminary analysis by accounting firm Marcum LLP.

Billionaire hedge fund managers have blazed the trail south in recent years. David Tepper, Paul Tudor Jones and Eddie Lampert are New York-area transplants to Florida, which has no personal income tax.

A final bill could still do away with the hike, but so far there are no signs coming out of Washington that will happen. Financially struggling New Jersey had the sixth-highest individual income rate this year, according to the Federation of Tax Administrators. New York ranked eighth and cash-strapped Connecticut 12th. Nine of the 10 states with the highest individual taxes, including Washington, D.C., voted Democratic in the 2016 presidential election.

Tax Refugees

No one interviewed for this story would talk openly about making plans to move, but Goldman Sachs Group Inc. is estimating that New York City alone could lose as much as 4 percent of its top earners if the bill becomes law. In Florida, where there’s no state income tax, there’s the sense that this is a great opportunity to lure disgruntled tax refugees.

The Miami Downtown Development Authority is throwing a party next month during the annual Art Basel show, and Nitin Motwani, a real estate developer, has invited wealthy Northeasterners who’ve expressed interest in moving to the area. Because the proposed tax changes are practically begging them to relocate, Motwani expects a crowd.

State and local taxes, also called SALT, “can and should be a major catalyst,” said Motwani, a development authority board member. Tax reform will “certainly be something we’re highlighting” at the party, in the Perez Art Museum. “Inertia is a tough thing, but you add on another tax bill and maybe that pushes you over the edge.”