Stephen Moore outlines “The Four States of the Apocalypse” — and of course, Illinois is one of the four:
“This is the flip side (of) tax the rich, tax the rich, tax the rich. The rich leave, and now what do you do?” said New York Governor Andrew M. Cuomo on Feb. 4.
After the Trump tax cut went into effect one year ago, we predicted that the Trump tax reform would supercharge the national economy but could cause big financial problems for the five highest-tax states: California, Connecticut, Illinois, New Jersey and New York.
The capping of the state and local tax deduction at $10,000 raised the highest effective state tax rates by about 66 percent (for example, in New York City and California, the rate on millionaires rose from about 8 percent to 13.3 percent). In New Jersey, the highest rate has risen from 7.5 percent to 12.75 percent.
Now, we have Andrew Cuomo conceding that the trend of rich people moving out of New York has caused the loss of $2.3 billion of tax revenue in Albany’s coffers. Cuomo called this tax change “diabolical.” We think it was a matter of tax fairness. No longer do residents of low-tax states have to pay higher federal taxes to support the blob of excessive state/local spending and pensions in the blue states.
As we predicted, the wealthy are fleeing these five states. The new United Van Lines data were just released that are a good proxy for where Americans are moving to and from. Guess what four states had the highest percentage of leavers in 2018: 1) New Jersey, 2) Illinois, 3) Connecticut and 4) New York. Even California had more Americans pack up and leave than enter.
Ironically, liberals like Cuomo who argued for years that businesses don’t make location decisions based on taxes in their states are now forced to admit that the cap on the state and local tax deduction (which primarily affects the richest 1 percent) is depleting their state coffers. The rich change their residence by moving for at least 183 days of the year to low taxers such as Arizona, Florida, Tennessee, Texas and Utah.
Read more about the “Four States of the Apocalypse”: Patriot Post
Image credit: reason.org.