As an investor, understanding economic trends and shifts in the market is crucial to making informed decisions about where to allocate resources. One key trend that has emerged in recent years is the significant exodus of high-earning individuals from blue states like California and New York.
According to a recent poll by SmartAsset, Americans earning $200,000 or more have been the most eager to flee states like New York and California. These states have seen a substantial loss of high-income households, with California leading the way in outflows of high-earners.
California’s response to this mass exodus has been to implement legislation such as an exit tax, designed to penalize those who leave the state. This punitive tax applies to individuals and businesses seeking to relocate and can reach up to 0.4% of someone’s net worth. Additionally, California plans to tax anyone with an income over $30 million for up to a decade after they leave the state, further discouraging wealthy individuals from departing.
Other states are likely to follow suit in implementing similar exit taxes as they face budget shortfalls and seek to maintain revenue streams. New York, for example, has a high-income tax rate of 10.9%, which may also push high-earners to seek greener pastures in more tax-friendly states.
Where are these high-earning individuals moving to? States like Florida, Texas, North Carolina, South Carolina, and Arizona have seen a significant influx of high-income households. These red states offer lower taxes and a more business-friendly environment, making them attractive destinations for both businesses and individuals looking to escape the burdens of high-tax blue states.
In addition to tax incentives, these red states also offer lower property taxes and more affordable housing options in desirable neighborhoods. For example, the average AGI for those moving to Florida is $907,013, compared to $579,207 for new residents of California.
As inflation continues to rise and economic policies become more punitive towards high-income earners, the trend of migration from blue states to red states is likely to persist. Democrat-run states, in particular, may continue to adopt policies that penalize success and drive away wealth, further incentivizing high-earning individuals to seek refuge in more tax-friendly jurisdictions.
At Extreme Investor Network, we provide valuable insights and analysis on economic trends and market shifts that can help you make informed investment decisions. Stay tuned for more updates and information on how to navigate the ever-changing economic landscape.