February 13, 2006


Revolution on Wheels (KAREN HUBE, 2/13/06, Barron's)

THE REBEL COLONISTS WHO DUMPED 45 tons of tea into Boston Harbor showed the power of one kind of tax revolt -- the raucous kind. Now, 233 years later, large numbers of taxpayers across America are taking an entirely different approach. Quietly, without banners or raised fists, they are packing up their families and belongings and moving from high-tax states like California and New York to lower-tax locales like Florida, Nevada and Texas.

From 2000 through 2004, a net 1.3 million people moved out of states with taxes on ordinary income and into those without such taxes, says Richard Vedder, an economics professor at Ohio University. While climate clearly has played a role in the moves -- the destinations are often in the Sunbelt -- many of the low-tax states posting gains aren't generally considered dream spots: Nevada, New Hampshire, South Dakota, Tennessee and Wyoming.

"It's a stealth migration, and it's one of the biggest, most significant yet least recognized movements of the population in American history," says Vedder. "People are voting with their feet to say that taxes do matter." [...]

Wealthy Americans, in particular, seem fed up with giving an ever-growing share of their riches to the state tax man. Many are upset at moves by New York, New Jersey and a number of other states to squeeze ever larger revenues from estate taxes.

The basic math of moving to a low-tax state certainly can be compelling for the wealthy. "Their savings can be so large that it makes relocation all that much more worthwhile," says Len Adler, a wealth adviser for JP Morgan in Palm Beach, Fla. He and colleagues at Morgan have seen a noticeable increase in clients who are willing to pull up stakes to save taxes.

One of the most popular moves: leaving New York, New Jersey or Massachusetts (long known as Taxachusetts) and heading to Florida, thereby escaping steep state and local taxes. Florida not only has no income tax, it also has no estate tax and shields assets tied up in a residence from creditors.

Posted by Orrin Judd at February 13, 2006 8:37 PM

And yet there are some who would imprison them on trains. Let our people go...

Posted by: joe shropshire at February 13, 2006 10:32 PM

Amtrak to FL is a nice ride.

Posted by: oj at February 13, 2006 11:05 PM

Only if you have 24 hours to kill.

Posted by: AWW at February 13, 2006 11:16 PM

In Michigan, we've been losing businesses for several years because of our "punish the capitalist b*stards" taxation policies. The people have begun to follow those jobs.

I own a house in Detroit Metro. Houses in my neighborhood are taking a year to sell. Anyone want to buy a house in Livonia, Michigan???

Thank goodness we have a Canadian Democrat as governor so this decline can be blamed on Bush.

Posted by: Palmcroft at February 14, 2006 5:24 AM

That's why OJ lives in Florida now. ...uh Simpson, not Judd.

Posted by: RC at February 14, 2006 6:04 AM

Someone I know is moving to Georgia from Florida, stating the latter is too expensive for a family to live in.

That doesn't jibe with what I usually hear about FL.

Posted by: Ali Choudhury at February 14, 2006 8:04 AM

Ali -

As a Floridian living near the GA border, that doesn't jibe with anything I've seen or heard. We're still netting 1500 new residents each day, every day. The flow out is, alas, negligible.

Posted by: curt at February 14, 2006 9:57 AM

I hope these migrants have the sense not to vote for representatives that will put them in the same bind again.

Out west they call it "Californication".

Posted by: Twn at February 14, 2006 10:37 AM

states without income taxes invariably have very high property taxes. florida in particular has been killing people and businesses with explosive increases in property values.

Posted by: toe at February 17, 2006 4:34 PM