The current United States
tax code allows some of the most profitable companies
in the world to not pay any federal corporate income
taxes. The present tax system ain't
fair. Actually, at least 55 of the
largest corporations in America paid no federal
corporate income taxes on their 2020 profits. And paid zero in federal
taxes. Some of these companies
include big names like FedEx, Nike, HP and
Salesforce. These companies are not
doing anything illegal, and these companies pay many
other forms of taxes. If a large, very profitable
company isn't paying the federal income tax, then we
have a real fairness problem on our. Hands and it's costing the
government billions. Can think about a bucket of
corporate tax breaks that are deliberately there in
the tax code. And overall, they cost the
federal government roughly $180 billion each year. And for comparison, the
corporate tax brings in about $370 billion of
revenue a year. Those 55 corporations would
have paid a collective total of $8.5 billion. Instead, they actually
received $3.5 billion in tax rebates. Corporations can receive
refunds just like individuals. Do, and that doesn't include
corporations that paid only some of these taxes. But not. All. The federal government
estimates that there's about 40 billion each year and
corporate taxes that are clearly owed. Here's how the most
profitable companies in the country avoid federal
corporate income taxes. It's important to note the
federal income tax is not the only tax corporations
pay. They're subject to state
and local taxes, too. Right now we're only
talking about the corporate federal income tax rate,
both domestic and international. Federal tax rate. At the
moment, it's 21% for domestic profits, but it's
as low as between zero and 10.5% of those profits are
profits of a US multinational that are
earned offshore. What do we do to make
America the most competitive place in the world? The 2017 Tax Cuts and Jobs
Act slash the 35% corporate tax rate to that 21%. The only levy at any level
that publicly traded businesses are supposed to
pay in proportion to how well they're doing. Where
the bigger you are, the more successful you are, the
more you ought to be paying. The corporate federal income
tax. It's about 7% of all
revenues that the federal government collects. Let's look at Amazon as an
example. Alexa, how much tax should
Amazon pay? Sorry, I don't know that
one. Amazon became famous in 2018
when the company reported about 11 billion in US
income and paid zero federal income tax. They actually
got a tax rebate of 129 million, according to their
financial reports. We now have four years of
data in those four years. Amazon has now reported $79
billion of US income and has paid a total of 4 billion
in federal income tax for a four year tax rate of 5.1%. So what that means is that
they're avoiding income tax at the federal level. Remember that the federal
rate is 21%. So in four years, Amazon's
effective tax rate was 5.1%. I'll emphasize that
everything I've just said about what Amazon is doing
appears to be completely legal. Amazon told CNBC that its US
taxes reflect its investments, employee
compensation and current tax laws. The company paid
federal income taxes. Other federal taxes and
state and local taxes. Publicly traded
corporations have two different ways of
accounting. So one form of accounting is for
shareholders. Let's call it book income. You have profits that are
reported to shareholders using general accepted
accounting principles under financial accounting. And
the purpose of that is really to determine, is
this corporation profitable? Is it worth investing from
a shareholder perspective, how is the firm doing from
a performance side of things? And the second form of
accounting is for taxes, let's call it taxable
income. Have a set of rules that are
different from and often diverge from that
accounting. Determine how much tax a
corporation is paying. And what that means is the
amount of profits that corporations may be
reporting for financial purposes may be very
different from the profits that they are reporting and
they're paying taxes on for tax purposes. This is how some companies
are able to tell investors, we made billions of
dollars, but turn around and tell the government we made
$0. We can call all of these
tools a form of tax expenditures. Tax
expenditures are any targeted tax break, think
tax credits or incentives. We want more oil. We want more solar energy. We want more manufacturing. We want higher paying jobs. We want more capital
investment. And for each of these things, Congress has
enacted a tax break that, at least on its face, is
designed to encourage these things. Take a tax credit for
research and development as an example. There's the R&D tax credit,
which allows companies to take deductions and credits
for their spending on research, the things they
spend money on to make better hamburgers. In the
case of McDonald's. Tool number two, accelerated
depreciation, another form of tax expenditure. We can also call these
write offs or expensing. This is a key example of
how those two different forms of accounting, book
and taxable incomes come into play. If you are a corporation
that's really in manufacturing, really
capital intensive, you may make a really large
investment in a given year under financial accounting
rules. Determine your profits. You're reporting to
shareholders. You may have to deduct that over, say,
ten years. For example, under the
general accepted accounting principles for tax purposes
especially, you may be able to accelerate those
deductions in the given year and in some cases even
taking a full and immediate deduction against your
taxable income for that investment. What that means
is you may be reporting a profit for a financial
accounting purposes, reporting no profit or even
a loss for tax purposes. And that creates a
difference between your financial income and your
tax income tool. Number three, stock options. There are tax breaks for
stock options which allow companies to write off the
cost with air quotes around the stock options they give
their executives and other senior employees. So that that just comes down
to the different rules between accounting and tax
accounting for when that compensation can be
deducted for for book accounting, it's deducted
immediately for tax purposes and maybe at a later date
when it's when it's ultimately vested to the
employee. And then that creates a
discrepancy in the total amount of taxable income
that these firms are reporting. They write them off as if
they were actual cash expense, when, of course,
giving stock options to your employees is absolutely not
the same. Sort of out of pocket
expense. Right. Signing a check every two
weeks. And finally, perhaps the
murkiest of all tools tool number for offshoring. There is a very deliberate
at the moment lower rate for foreign profits of US
multinationals and something between 0 to 10.5 on their
foreign profits. And that's an outright tax
benefit for them. That's worth roughly $60
billion a year, according to the Joint Committee on
Taxation. But it also creates this incentive to
shift their worldwide profits and to that sort of
foreign low tax bucket. Us based corporations are
finding ways to shift income into tax havens. You talk
about the Cayman Islands, Bermuda, the Bahamas,
Ireland and Luxembourg and the Netherlands. To some
extent. Their estimates that sort of
shifting is in the tens of billions of dollars a year,
up to $100 billion a year. Here's an example. Whirlpool, a US company
known for manufacturing home appliances both in the US
and Mexico. Whirlpool tried to avoid
both US and Mexican taxes on the profits from its
Mexican operations, and it did that by having the
Mexican operation owned by a mexican company with no
employees, and then having that Mexican company owned
by a Luxembourg holding company that had one
employee. And then it tried to claim that due to the
combination of the US, Mexico and Luxembourg, tax
rules for millions of dollars of its profits from
the Mexican operations wouldn't be subject to tax,
and Luxembourg wouldn't be subject to tax in Mexico
and wouldn't be subject to tax in the US. So it was trying to sort of
take advantage of the disconnect between all of
those tax systems to avoid tax and all of those
countries. And a court said, no, that goes too far. That's not what the law
actually allows. Whirlpool told CNBC that it
follows all tax laws in the jurisdictions in which it
operates and that whirlpool's use of the tax
code actually. Increase the amount of tax
that the US collected on its Mexican profits. The IRS thought Whirlpool
should have paid those US taxes earlier. It's still quite possible
for a US companies to shift their intangible assets out
of the US to avoid taxes. And it should be a top
priority of policymakers right now to prevent them
from doing so. Accounting and tax experts
say that probably the first best way to fix problem is
to go to the tax rules and look at each of the
different provisions. Decide whether or not you
want that on the tax code, repeal those inefficient
tax breaks or reduce them. Some say that is
unrealistic, otherwise it would have happened anyway,
and it's a hard thing to do. One solution could be to
beef up the IRS. There is nothing the IRS
does that is more cost intensive that requires
more resources than investigating the tax
avoidance behavior of large multinationals. Between 2011 and 2019, the
IRS budget for enforcement was cut by about a third. One policy solution would be
to implement minimum corporate taxes, both an
international minimum tax and a domestic minimum tax. A global minimum tax. Would end the race to the
bottom in corporate taxation. The legislation that's been
debated by Congress would raise the US minimum tax
rate on foreign profits from 10.5% to 15%. Implementing an
international minimum tax would help tamp down on
some of the offshoring of profits that companies can
maneuver about. Where that country doesn't
impose at least a 15% rate of tax, then the US will
impose an additional tax so that the corporation pays
at least 15% in each country, and that would
raise about $350 Billion over ten years. Then there's domestic
profits. One major proposal that's
come out over the last year or so and advocated by both
Biden administration and members of Congress has
been to levy a minimum tax on book income. Directly implementing a
domestic corporate minimum tax of 15% could reduce the
gap between the book income and taxable income,
basically cutting down the value of some tax
expenditures. The first priority with
corporate tax reform should be to get it to lift its
own way, to pay for companies, to pay by
whatever means something closer to the statutory
rate. And the book income tax
would certainly accomplish that. I think there are
better ways of doing it. I think there are more
inclusive ways of doing a minimum tax. But it's
certainly better than. The more money you make, the
more you have to pay in taxes, right? Well, not always. Here in the US, the more
you earn, the bigger a percentage cut the
government withholds from your pay. But here's the
thing. The ultra wealthy typically
take advantage of rules in the tax code, which enable
them to lower their effective tax rate. The rich are different from
you and me. As the old saying goes, in
large part because the sources of their income are
different. Just take the case of
billionaire Warren Buffett. He often points out that he
pays less taxes on a percentage basis than his
other employees, including his secretary. The reason, well, most of
his wealth comes from his stock holdings, not his
annual salary. The great thing about
stocks is that you aren't taxed until you sell them. And even then the taxes are
typically lower than the rates on wage income. So if you ask people what
bothers you most about the tax code, complexity is a
common answer, but also the feeling that the wealthy
don't pay their fair share. Or the feeling that
corporations don't pay their fair share. In 2018, Amazon famously
pulled in over $232 billion in global revenue, and yet
its federal tax bill was $0. And in fiscal year 2020, at
least 55 of the largest corporations in America,
including FedEx and Nike, also managed to pay no
federal corporate income taxes. There's a great Supreme
Court case with Judge Hand going many years ago that
it's not the taxpayers responsibility to pay the
most taxes that he can. It's the taxpayer's
responsibility to pay the least taxes that he can. There's even a rule within
the IRS code that if you want to pay more taxes, you
can write a check to the United States Treasury and
you can take a tax deduction for that. But some experts say tax
breaks are designed to reward the taxpayers who
are helping to pump up the economy and the bedrooms,
who are not getting contributors in terms of
real estate and businesses. They don't get tax
benefits, but it's because they are not contributing
to the economic growth at a larger scale. So how
exactly are the country's biggest earners using the
tax code to avoid paying taxes? To understand how
the wealthy take advantage of the tax
code, you first have to look at where all that wealth
comes from. The biggest loopholes arise
when you have assets. Most Americans don't have
assets. All they are depending upon
is their income from their salary from their employer. So if you have someone who
has assets such as business and real estate, again,
they are unlocking different areas of the tax code that
most individuals do not get to explore. You can think
of someone's wealth as being comprised of separate
assets which fit into one of three different tax
buckets. Taxable tax deferred and
tax free. If your only form of income
is your annual salary, then all of your wealth just
fits into the taxable bucket. But the rich also
tend to diversify into other types of assets and
investments that the tax code doesn't consider to be
taxable income. There are individual
retirement accounts, some of which are not subject to
federal taxes. And then you have
investments like stocks that fit into the tax deferred
bucket. If the value of your stock
portfolio goes up, you don't owe tax on those gains
until you realize that gain a.k.a.. Not until you sell
that stock. And even when you do sell,
the tax rate is typically lower than the rates on
wage income. Capital gains can be avoided
in life and also largely avoided in death. And so that's highly
advantageous to high income, high, high wealth people. Capital gains taxes also
apply to bonds plus tangible assets. So think things
like real estate or cars and boats. And with the right
tax planning, you can time it such that you only
realize those gains during a fiscal year when you have
big capital losses to offset that game. You can also
skip the tax entirely if you pass that appreciated
portfolio onto your heir when you die. Plus, owning
property opens up higher earners to even more ways
to chop down their tax bill. If you own real estate, you
can now deduct things as depreciation, real estate
taxes, property taxes. Even if you are not
investing in real estate to get rental income, even if
it's your primary residence. You can itemize your tax
deductions on a Schedule A, which can also locally
affect your tax liability. On the other hand, if you
do have rental properties, you can take advantage of
depreciation, your expenses related to your real estate
property and earn some extra income while paying minimal
tax on that additional income that you are
earning. And these strategies are just the tip
of the iceberg. There's a whole patchwork
of ways to drive down that annual tax bill. There's not some magic
deduction or magic credit that people overlook. And once I tell you, ooh,
you're going to get a $10,000 refund, what there
is, is a myriad of rules, opportunities and options
to lower your taxes. I'll give you a simple
example. There's almost 12 different tax breaks for
higher education, whether it be the tuition and fees,
deduction, 529 plans where you can put money in an
account and have it grow tax free. Borrowing against the value
of real estate or borrowing against the value of
insurance policies. For example, you can take
out a life insurance policy with a high cash dividend
and then borrow against that from a bank. The bank sees that as an
actual asset may loan up to 90% of the value of that
life insurance policy. That loan is effectively
income to you, but in the tax code, it's not
considered income or a capital gain. So it's it's
a tax it's tax free. So there's these kinds of
techniques that can be used if you have a lot of income
and a lot of assets that are just not available to
ordinary people that don't have that kind of
disposable income. In 2013, many time Grammy
winner Lauryn Hill was sentenced to three months
in prison, three months of home confinement, plus a
$60,000 fine for not reporting more than $2.3
million in income. She isn't alone. Some of the biggest names
in Hollywood have had serious run ins with the
IRS for failing to pay their fair share of taxes. To be clear, these are all
examples of tax evasion, which is illegal. Not to be confused with tax
avoidance, which is legal, even if it is deemed unfair
by large swaths of the population. Tax evasion is
illegal and is actually punishable for up to 5 to
20 years in prison. And the law is pretty black
and white. There may be some new
grayness on things like cryptocurrency and other
new innovations in the world, but most of the time
you know it when you owe it. And I can certainly tell
whether you owe taxes or not on a situation. But when
people come in with fabricated dependents, you
made up deductions, phantom partnership losses. That's when you get into
evasion. And evasion is the line
crosser. Those sophisticated tax
strategies that we just talked about. They are all
totally legal ways. To avoid paying more taxes
than you absolutely must. Tax avoidance, on the other
hand, is utilizing the tax code to benefit you in the
way that is legal. So if there is a deduction
for you having a dependent or you being able to
expense something through a business, as long as you're
following the tax code in the guidelines, you can
take these tax positions. Thanks to lax enforcement
by the IRS, tax avoidance by the top 1% of taxpayers
could exceed $5 trillion by 2029, according to former
Treasury Secretary Lawrence Summers. This same report
found that the top 1% account for about 70% of
underreporting. So why is it that the
country's top earners also tend to be pros in the
arena of tax avoidance? Experts tell us a lot of it
comes down to tax planning, wealthy individuals, tax
plan. Most Americans don't have a
tax plan. And a tax plan is going to
encompass the CPA or tax accountant to go into the
new stimulus package or a new tax reform and actually
look at how they can use the new changes in the code to
benefit their clients. These wealthy individuals
have that guidance throughout the year to get
them to a more reasonable position by year end. A tax loophole is a
provision in the tax code that allows people to
reduce their taxes to a point below that intended
by the lawmakers. In other words, it's a
technicality that lets the filer avoid a law without
directly violating it. Not everyone likes the
connotation. Loophole is kind of a bad
word, you know. I'm not even sure what
loophole means because it's either legal or it's not
legal. And if it's legal, then
it's not really a loophole I would put forth. It's a
best practice. And what I would tell you,
some of the best practice not of just high income
earners, but any smart, savvy taxpayer is to take
advantage of all the tax rules in the law. Once embedded in the tax
code, it's pretty difficult to get rid of a tax
loophole. Each one not only benefits somebody by saving
them money in their taxes, but it also typically has
an army of lobbyists backing it up. Sometimes they're not
partizan because they are more about protecting a
given, a given economic sector or even even
specific businesses. And that has to do more
with the locale. It might be more about what
parts of the country, what states, what congressional
districts have a certain economic sector. That's
very important. Essentially the US tax
system creates in the sense of buy system for those who
aspire to achieve wealth. And here's why you get tax
credits for having a business or having real
estate. In that act. You are creating
opportunities to employ people or creating
opportunities to house people. Unemployment and
homelessness are two of the major concerns for any
government. So why not give tax
incentives to those who are going to assist in creating
a way to aid these issues? So if you close out tax
loopholes and tax incentives, we don't know
what the outcome would be because this can
potentially discourage individuals who are
contributing to the vast growth of our economy to
not make those contributions at a more accelerated rate
despite the quagmire of opposition. The question as
to whether or not to close loopholes often pops up in
elections and with new administrations. Just take
the Biden White House. The president is taking aim
at some pretty popular loopholes in the tax code,
though it remains to be seen whether he'll succeed. Wealthy New Yorkers may soon
be getting the highest local tax rate in the nation. The combined city and state
taxes will be 14.8%. In early April. The New York
state legislature passed a $212 billion budget for
fiscal year 2022. Among spending cuts, it
includes tax increases on the wealthy. Others have
done the same. New Jersey raised that top
rate from 8.97% to 10.75% for those making $1,000,000
or more. Revenues are bleeding and
states have to do something. Honestly, if I had the
choice of taxing the wealthy more or preventing someone
from dying on the street, I would always choose the
other. Raising taxes on the wealthy
is contentious, while advocates say it's fair and
a way to decrease inequality. Others say it
will drive the wealthy out. After all, the 1% are
critical to state revenues, paying up to nearly 50% of
total state income taxes. There is a pack mentality
to, well, when all your friends are now in Florida
and you're the uncool guy or woman who is in New York. That is something that
could be a tipping point for why this becomes less of a
trickle, as we've seen over the past three or five
years and more of a flood if they leave. There's a huge
fiscal crisis. How do you pay for all of
these services? And that affects everyone. While tax flight is often
talked about, it's hard to prove empirically. Someone
may move for warmer weather or to get closer to family. And it just so happens that
taxes are lower where they're moving. What we do
know is that millionaires and billionaires are highly
tied to where they live and make money. Consider I can do what I do
from here in South Florida. Having no income taxes is a
great draw for sure. If taxes were your sole. Consideration where you were
doing business, you weren't in New York anyway. This again, is is really
different. At the early stages of the
pandemic, wealthy people left to seek safety, not to
save on taxes. And they have now spent
over a year in their second homes and are no longer
bound to their offices in New York City or San
Francisco or their children's schools. Raising
taxes at this fragile junction could make the
decision to officially relocate easier, and that
could have serious repercussions for state
revenues. Will the wealthy flee cities and states with
high taxes? The COVID 19 pandemic has
dealt a heavy blow to America's states. And the early months of the
pandemic. State lawmakers were warning of
unprecedented fiscal crisis in nearly every state. The Brookings Institution
estimated revenues falling by $155 billion in 2020 and
$167 billion in 2021. More complete data later
showed that states ended fiscal year 2020 in better
shape than initially expected, mainly thanks to
federal aid and the unusual nature of the recession
where wealthy and high wage earners economic situation
only got better. Even so, local government
officials have remained weary limitations on
borrowing to fund day to day operations left states with
two options cutting expenses or raising revenue. When we talk about economic
recovery, rich people don't need a recovery. They're
actually richer right now than they were before. Among spending cuts, a
number of states have either passed bills or are
considering tax hikes on the wealthy to balance their
budgets. I mean, I'm happy to pitch
in and pay the taxes for infrastructure, for
education, for technology advances. If it's not going
to some of those things, it does make it a little
harder to support. New York's tax increase may
be the most rigorous, involving several tiers,
starting for those earning 1 million to $25 million and
above, they expire in 2027. Now, I lived in New York,
worked in New York, and now I'm going to live and work
in Florida. And obviously, one of the
reasons I'm doing that is for the lower taxes. It is very easy for
financial firms to move to Florida because they don't
have a huge headcount. Those are the guys, the
hedge fund guys who make far and away more than the Wall
Street guys, the biggest salaries in New York City. And so it doesn't take a
lot to have a big impact on tax revenues, especially if
you've been away and you say, you know what, that's
what they're going to do. I'm just not going to go
back. You also can't ignore the
evidence of 15 to 20% commercial vacancy rates
and lower asking rates, and generally a picture that
suggests the city's property taxes are going to be
depressed for quite a while at the very best. Despite early reports that
California was going in the same direction in January
2021, Governor Newsom rejected the policy. The state had an
unprecedented year and ended with a budget surplus of
$15 billion. This wouldn't have been the
first time the Golden State would tax the wealthy in
the 1990s. The tax cut didn't do
anything to millionaire migration, neither in or
outmigration was affected. The millionaires tax in
2004 didn't do anything. The military tax in 2012,
which was larger, had small migration effects to the
extent that there is an effect, is mostly driven by
people sort of finding ways to essentially hide their
money or find ways to report less income on their tax
returns. In December 2015, the
wealthiest man in New Jersey, David Tepper, moved
to Florida. He pays so much in taxes
that it's going to screw up, possibly the entire state
budget. It was covered by most media
outlets, and although he never explicitly said why
he made the move, many assumed it was for tax
reasons. Frank Haynes He's a
legislative budget and finance officer to the
Senate Budget and Appropriations Committee of
New Jersey says, quote, We may be facing an unusual
degree of income tax forecast risk if news
reports are true that the person ranked by Forbes is
the wealthiest man in New Jersey has shifted personal
and business domicile to another state. Tepper moved back in
September 2020. There's just this sort of
one way interest and anecdotes and stories about
millionaire migration because it fits a story. But when you hear the
counterexample, people don't know what to make of it. Young has devoted much of
his career to studying the mobility of high income
earners based on taxes. But he's one of the few. The idea that tax policy
affects location decisions of wealthy individuals has
a long history, but the empirical evidence is
limited. Unless you interview people
as they're getting on their U-Haul or G 650 private jet
to go to Palm Beach for good. You don't know what
the reasons are and how those reasons stack up. It's always hard to say. People move for tax
reasons. What we can do and what we
are studying is the parallel causality or
coincidentally, of higher taxes and outmigration. According to Young, though,
it's simple millionaires and billionaires spend a lot on
trying to reduce their tax burden by hiring creative
accountants and lawyers. They travel a lot, but they
don't move a lot. In Texas are rarely their
main consideration. I always thought about it. Of course. Right? I mean,
taxes are important. That's Jon Kadin. He's a
member of Tiger 21, a peer membership network for high
net worth individuals. But really, I was I was
motivated to be in New York City and develop my career
there after my my marriage didn't work and I moved
from New Jersey into the city. I recognize there
would be additional taxes on New York and New Jersey are
around the same at the state level. But I had the
additional city taxes and it was worth it for me. You
know, New Jersey is my home. This is where I go to see
doctors. This is where I have all my
contacts. And I clearly taxes aren't
going to be the motivational factor that's going to get
me to move or re domicile. Those sentiments are true
for most Americans, rich or not, more than two thirds
live in the state in which they were born and the one
and a half to 2% that do move from one state to
another do it because of losing a job or a family. And it's nearly as likely
that those moves are from low tax states to high tax
states. Of the ones that do move to
a low tax state, it's primarily folks with low
incomes rather than high. The reason that people are
moving is largely housing prices. And then they, you
know, oftentimes they feel like there's a lack of
opportunity in that state. Anecdotal evidence tells a
different story. The Boyd Company is a site
selection consultancy. They help clients choose
the right location to operate their business over
the. Past decade or so. With respect to the exodus
of California. Markets like. Phenix and Las Vegas and
Reno and Salt Lake City have been big beneficiaries. These are states that hold
the line on taxes, that aren't in this never ending
game plan of borrowing, taxing and spending, and
the property and income tax savings. For a relocating worker from
San Francisco or Los Angeles. To a no income tax. Reno or Las Vegas, for
example, are just enormous. This is one of the greatest
moves to the suburbs from urban areas. We expect there will be
something close to an exodus from these really large
cities where housing is so expensive. For months, news reports,
preliminary data and anecdotes suggested that
the pandemic had ravaged state budgets. And because
of the mass urban exodus, states should be wary of
increasing taxes on the wealthy. States took to
austerity measures and spending dropped by 6% in
the second quarter. In reality, many states and
cities ended the year in decent shape, especially
with the arrival of President Biden's American
rescue plan. California had a record
year, and New York City's budget generated a surplus
of $3.4 billion instead of the initially projected
$4.2 billion deficit. The wealthy and companies in
New York are saying, wait a minute, we actually were on
board fixing that giant hole we had. But if we don't
have the hole anymore, that's a very small hole. And you're not cutting and
you're just going to tax us because there's a moral
argument. Well, then we don't want to
be here anymore. This, for a relatively
small revenue hole, has the potential to become a
self-fulfilling prophecy. If you're worried about the
revenue losses because people aren't coming back,
then probably the worst thing you can do is impose
very taxes that would make them. Not come back. As for that mass exodus, it
didn't happen except for March and April. Patterns
mimic 2019. Data collected by a number
of moving companies show that the biggest inbound
states were Idaho, North and South Carolina and Maine. And the biggest outbound
states were New York, Illinois, California and
New Jersey. Looking at regional data,
California didn't experience a pronounced exit either. Just fewer people moving in
moves in and out of those living in the wealthiest.
Zip codes were similar to other zip codes except for
in the Bay Area, their net domestic exits increased
178% for the entire area and 649% for San Francisco
alone compared to 2019. But it doesn't appear
people were escaping the high taxes. Nearly 80%
stayed in the state. That's why looking at
plummeting rent prices only tells part of the story. The reason why there are so
many anecdotes about rich Californians moving away is
because there's an enormous population of rich
Californians. If you want to pull out a
lot of examples of them doing anything, go to
California and you'll find just an enormous base
population to draw on. But who's leaving
California are lower income folks who can afford it. The data aside, there are
plenty of anecdotes of wealthy individuals leaving
urban areas. They've been gone for over
a year and making it permanent will likely be
easier than ever before. The question is, will it be
enough to make a serious dent in New York and other
states revenues? The pandemic just kind of
sparked me to really think outside the box and think I
can do this from anywhere even more. Since I've been
down here, I felt the swell of businesses moving down
here. For sure. There is now an emotional
component to what was an existing financial
component for why more want to leave. And again, we may
find out that it was all overblown and they didn't
leave the challenges. It will be too late.
