The Top 5 States Residents Are Fleeing Due To Financial Repression i.e. Increased Taxes (+2K Views)

Lorimer Wilson November 30, 2012 Comments Off on The Top 5 States Residents Are Fleeing Due To Financial Repression i.e. Increased Taxes (+2K Views) 3,146 Views

The past few years have really put the squeeze on cash-strapped states to find new sources of revenue. This environment has generated a level of tax aggression from certain states, which in turn has resulted in a net loss of revenue instead of the intended gain. Residents have begun voting with their feet, deciding to move out of the state instead of thinning their pocket through unwanted taxation. So which states are chasing away their residents? How does it impact you if you live in one of them? We track migratory patterns through our residency product data, and while some of the states are no-brainers, others may surprise you. [Take a look.] Words: 691

So says ResidencyH at www.Minyanville.com in edited excerpts from the original article* entitled Voting With Our Feet: Top 5 States Losing Residents.

[Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), may have edited the article below to some degree for length and clarity – see Editor’s Note at the bottom of the page for details. This paragraph must be included in any article re-posting to avoid copyright infringement.]

The article goes on to say, in part:

Following are our top five ‘shrinking’ states in ascending order:

#5: Ohio:

The Buckeye State is one of the few around that actually has a balanced budget. One of the reasons is because they tax their residents so well. The interesting part about Ohio though, is that a constant stream has always existed out of the state. Some of the migration is probably due to weather, but they also have very strict well-defined rules surrounding residency. Ohio’s Bright-Line Test names the specific number of days over, under, and in between that dictate someone as resident, non-resident, or other (the burden of proof is on the resident in question for ‘other’). These rules make it simple for an Ohioan to decide whether to stay put or make a run for it.

#4. New Jersey:

Including local taxes, New Jersey has the highest tax rate in the country. Without going into painful detail, the cocktail of crowded, expensive, and verbal assault makes the Garden State an easy exit for most.

#3. California:

The Golden State is nearly in a tie for the number-two spot, and we are constantly surprised it isn’t at the top of the list given the fiscal issues present there. Municipality balance sheets are in shambles, the state already has high tax rates, and many residents are staying close but merely hopping the border into more tax advantageous states like Nevada. Yes, the weather can be great, the people creative, and they still have one of the most productive economies around, but we haven’t seen a decrease in the flow of residents out of the state which is always a cause for concern.

#2. New York:

One of the easy guesses for sure. New York has been bleeding residents for some time. Tom Golisano, the founder of Paychex, wrote a letter that was published in the New York Post about why he was leaving the state and he didn’t mince words, explaining he was taxed out of the state for greener pastures to no-income-tax Florida..

#1. Illinois:

This comes as a surprise to many, but Illinois has seen a huge exodus of residents in the past few years. The state recently increased their income tax by approximately 67%. That is an incredible jump, so it stands to reason residents are looking for a way out. Our residency lectures are consistently filled with more Illinois residents than any other state, hands down. Ironically, the Land of Lincoln could lose enough pennies through attrition that its financial problems only worsen.

Summary

Cities and states always have an ebb and flow in population, but if you are in a state with a decreasing population it could impact you in the way of higher taxes (to make up for lost revenues), a less healthy economy (less people to buy stuff), and possibly less pay in your pocket (as a result of shrinking business revenues). This ‘sucking effect’ of residents flowing out of the state can be a self-fulfilling feedback loop that decimates a region. The analogy of rats jumping off a sinking ship might come to mind.

Realistically we know that these states have natural resources and industry like coastlines, mining deposits, etc. that will always warrant some type of population, but it is worth considering where your state falls in the big economic picture because, well, it can have a direct effect on your own.

*http://www.minyanville.com/trading-and-investing/taxes/articles/Voting-With-Our-Feet253A-Top-5/11/28/2012/id/46168#ixzz2DcBwIsAO.

[Editor’s Note: The above post may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.]

Related Articles:

1. Forget About the Fiscal Cliff! Increased Taxes & Austerity Measures Are Coming to the U.S. Regardless! Here’s Why

It’s easy to find analysts and investors who are certain that a deal [to avoid the fiscal cliff] will be reached, or at least that the can will be kicked down the road to buy more time. It’s also easy to find more pessimistic views that are based on the lack of cooperation in the past, and a deeply polarized country and political system. However, I think many are missing the point, which is that austerity is coming to America – taxes are going up and government spending will be reduced – [and. as such,] the United States is likely to face a recession and market correction in 2013, regardless of whether or not a compromise is reached over the Fiscal Cliff. Words: 970

2. “This Time is Different: Eight Centuries of Financial Folly” – A Book by Reinhart and Rogoff

Highly leveraged economies, particularly those in which continual rollover of short-term debt is sustained only by confidence in relatively illiquid underlying assets, seldom survive forever, particularly if leverage continues to grow unchecked. Words: 1264

3. “Financial Repression” May Soon Become Our Worst Nightmare! Here’s Why

A new financial policy initiative known by the label “Financial Repression” may soon become our worst nightmare. ‘Repression’ rhymes with ‘depression’ which could be what we have to look forward to as rampant price inflation and permanently lower living standards take hold. Get ready to be conscripted into a citizen army assembled for the greater cause of saving the nation from being swamped by a tsunami of debt. Let me explain. Words: 1585

4. Taxmageddon: 2013 Will be a Disaster Regardless of Who Wins! Here’s Why

“Regardless of whether or not you feel taxes need to be raised, a big set of tax hikes is scheduled to happen. To be sure, some of those hikes will be undone in compromises, but many, if not most, will sneak through.” [Let me explain.]

5. Financial Repression: How Sneaky Governments Steal Your Money

One of the things that’s being lost in the welter of rhetoric around the debt crises of sovereign nations is that these are not normal debtors, and government debt is not the same as personal debt. If you or I are in debt we are obliged to fulfil the terms of our repayment obligations or to go bankrupt or to pretend to die and go off and live on the life insurance. A country in the same situation has a range of other measures available to it…[Let’s explore their options and what their implications would be for the country and its citizens.] Words: 1145

6. Stealth Taxation in the Form of Financial Repression is Coming! Here’s Why – and How

Financial Repression is a form of wealth confiscation and redistribution that is in some ways as effective as taxation – but the government never directly calls it that. It never appears in the budget (directly), and while it is dependent on a comprehensive network of laws and regulations – none of those go through the legislature with a stated intention of creating Financial Repression. So while the economic net effects are similar to a huge and comprehensive set of investor taxes being used to pay down the national debt, the “taxes” are never a campaign issue because voters and investors don’t understand what is happening – they only feel the results. [In this article I lay out for you what is slowly developing and expected to escalate dramatically in the next few years.] Words: 5800

7. John Hathaway: Financial Repression to Continue Even Under the Most Optimistic Scenarios

“In our view, monetary policy has been boxed in by previous actions, election year politics (and even more broadly by the dynamics of the contemporary state of democracy), and the slowdown in global forex accumulation. The result, we expect, will be a continuation of financial repression under the most optimistic of scenarios. At the very least, returns on liquid capital could remain negative for many years to come. Under such circumstances, demand for the protection offered by gold should remain strong. Should the presumed economic recovery falter, we anticipate that the calls for renewed QE will be deafening.”

8. The Fiscal Cliff: The Choice is Not “Recession or No Recession” but “Recession Now or Recession Later”! Here’s Why

The warnings that the fiscal cliff will cause a recession are delivered as if the government can decide whether or not we have a recession. In fact, the government does not have that power, or we would never have recessions. At the most, the government can influence when, not if, we have a recession. We will most likely undergo a recession when we wean ourselves off the unsustainable deficit spending of the last four years. The choice is not recession or no recession. The choice is recession now or recession later. [Let me explain.] Words: 542

9. Fiscal Tightening in 2013 and Its Economic Consequences

Under current law, a sharp reduction in the federal budget deficit between 2012 and 2013 will cause the economy to contract but, the Congressional Budget Office projects, will also put federal debt on a path more likely to be sustainable over time. To illustrate the effects of fiscal tightening, CBO compared its projections under current law (the “baseline” projections) with projections under an alternative set of policies — two scenarios in a broad spectrum of choices – in the infographic below.

10. The Fiscal Cliff: Everything You Need To Know About It & Its Implications

The U.S. federal government is scheduled to implement a fiscal tightening of unprecedented severity (approx. 5% of GDP) at the start of 2013. The last time a tightening of such proportions occurred (3% of GDP in 1969) it presaged a recession. Thus, unless mitigated by an act of Congress, we expect the fiscal cliff would lead the U.S. into a recession in 2013. Below, in 26 charts, we examine all aspects of the impending crisis to gauge its potential impact on the credit markets and, by extension, our strategic investment recommendations.

11. Fiscal Cliff Scenario Analysis of the 4 Possible Election Alternatives & Their Financial Implications

This post shows JPMorgan’s estimated probabilities on four different fiscal cliff outcomes, conditional on who wins the presidential election in November.

12. The Fiscal Cliff: What We Think Will Happen and What Investors Should Do

Unless the government acts quickly, it is probable that the term “fiscal cliff” will become a household phrase over the next few months. Unfortunately, this is reminiscent of the budget ceiling crisis about a year ago. In this report we will explain what the cliff is, discuss the worst case scenario, and determine what, if anything, you should do about it. Words: 1436

13. Grappling With the Possible Impact of the Fiscal Cliff

If Congress addresses the issue by maintaining the current tax and spending policies we will get more of the same economy we have experienced for the past three years (all else being equal). [That being said,] what if Congress goes over the fiscal cliff hit? This blog post is designed to asses the impact. Words: 1362

14. The Fiscal Cliff: What Is It? What Are Its Ramifications? What’s the Best Way to Invest for Such an Eventuality?

What is the “Fiscal Cliff”? What would its ramifications be? Will it tip the U.S. into a recession? What are the critical economic building blocks that would be adversely affected? How best should you position your portfolio for such an eventuality.

15. This Is What “Falling Off The Fiscal Cliff” Really Means – and It is DIRE!

We all know that high debt is a growth killer and, at the moment, the U.S. has a budget deficit of about $1 trillion. That’s a very big number…The question is, at what point do countries have to deal with high debt levels? How high do debt levels have to be before one has to deal with the problem by lowering budget deficits? Also, what are the consequences of such debt and budget reductions? Words: 500

16. Goldman Sachs: The Fiscal Cliff Is a Real & Present Danger to Future Level of S&P 500 – Here’s Why

“Portfolio managers have been swayed by hope over experience” when it comes to anticipating the effects the fiscal cliff will have on markets. Investors aren’t giving as much attention to the fiscal cliff as they should be, and that may be helping to set the markets up for a repeat of last year, when the debt ceiling negotiations sent stocks plummeting.

17. Regardless of Who Wins in November the U.S. Is Going Over the Financial Cliff! It’s Just a Matter of Time – Here’s Why

The outcome of the election of 2012 will [only] determine the rate of speed at which we approach the [financial] cliff [because] neither political alternative is willing to change course, to steer away from the cliff. The cliff is so high that whether we go over it at 200 mph (Obama) or whether we merely slip over the edge (Romney), the end result is the same — fatal for the economy and perhaps our entire political system. It is the fall that will kill us. [This article explains why that is going to be the case.] Words: 1135