JuliaGlazer

Despite clear evidence that high-tax states are now less competitive with low-tax states due to the 2017 U.S. Tax Cuts and Jobs Act, states are continuing to raise taxes. Taxpayers are beginning to move out of such states, according to The Frederick News Post.

In the past, individuals were able to deduct the money paid on state and local taxes from their federal return. The new tax laws have capped the deductible amount at $10,000, so now taxpayers are not protected from the consequences of the policies in high-tax states.

Connecticut, for example, lost equal to 1.6% of its annual adjusted gross income as taxpayers moved out of the high-tax state. Those moving out of Connecticut averaged $122,000 income, which was significantly higher than those who were moving into the state. New York lost a net $8.4 billion as taxpayers migrated out of the state. Illinois lost $4.8 billion and New Jersey lost $3.4 billion. In most blue states, governors will not admit that these migrations are happening.

Many state governments are responding to the backlash over higher taxes with even higher taxes. They continue to raise sales taxes and fees in order to make up for the money they lose from migrating taxpayers. In fact, the more effective method would be to drastically lower taxes to retain the state’s inhabitants.

Read the full story here.

Comments

Economics, Finance and Investing

FEATURED
COMMUNITY