[RonaldusMagnus]

Originally Posted by Henry10

CT didn't need an income tax since it had two strong horses pulling the cart -- insurance and defense contracting. These two gave CT the stability Jay is talking about.

But these two collapsed in the last 1-2 decades, and now Wall Street / FFC is the lone cash-cow. Inherently, financial services are boom-and-bust, so CT economy will yo-yo accordingly.

Couple this with the fast-rising pension nightmare, triple-couple this with a political class that thinks that gravy train still has gravy left -- now you have a state with a clear writing on the wall -- things will get worse before they get better.

All that may be true and it is the symptom not the cause. The cause of net wealth outflow is best described as water finds its own level. All else being equal, w no income tax there was net inflow. With similar income tax to surrounding areas that competitive advantage to lure wealth decreases.

[kidyankee764]

Originally Posted by RonaldusMagnus

The two are not mutually exclusive. Yes, people in Westchester don't like the property taxes. The point is that decision was much more no brainer when CT also had no income tax causing many more high income families to flock. Again, the arbitrage is no longer no brainer. Does that mean no one settles in CT? No. And no one claimed that.

I can tell you my family is currently in the midst of this exact decision. Where to move to raise our young kids and enjoy the forever house. We are looking at Westchester, CT, and the comparable parts of Bergen County. We are leaning Bergen but I can tell you without hesitation that if CT was 0% income tax there would be NO other consideration. The economic benefit would be incredible. Look at these forums and you see a great % of folks looking for similar things. Upwardly mobile families trying to balance quality of life w stark economic reality.

I'm not doubting that. I merely made a statement that NYers continue to flock to CT due to the lower property tax rate.

It's clear Jay isn't the only one getting defensive, here.

[RonaldusMagnus]

Originally Posted by kidyankee764

I'm not doubting that. I merely made a statement that NYers continue to flock to CT due to the lower property tax rate.

It's clear Jay isn't the only one getting defensive, here.

I wouldn't say "flock" Bc u know a guy. I can tell you a town like Westport to my family is alluring Bc of the relatively lower property tax but still not as alluring if there was no income tax. But the larger data (not the anecdotes) point to the net outflow.

[atlaw]

"Couple this with the fast-rising pension nightmare, triple-couple this with a political class that thinks that gravy train still has gravy left -- now you have a state with a clear writing on the wall -- things will get worse before they get better."


This. The northeast will wither and the gravy is going away.

[Henry10]

Originally Posted by RonaldusMagnus

All that may be true and it is the symptom not the cause. The cause of net wealth outflow is best described as water finds its own level. All else being equal, w no income tax there was net inflow. With similar income tax to surrounding areas that competitive advantage to lure wealth decreases.

I think you have the notions of cause and effect mixed up. Secondly, not sure why you think there is an argument to debate if people move to lower cost areas, or if water flows uphill. Obviously, that's obvious.

Thirdly, do we really need to re-hash why wealth is flowing out of CT?

[JayCT]

Originally Posted by RonaldusMagnus

Jay, your awfully defensive. Did the article say there was no other wealth in the state? No. Only that most was concentrated in the southwest corner of Greenwich, Darien, New Canaan,etc. The facts are in the article if you would read the whole thing.

Historically less expensive than NY? Yes, And the key to that was no income tax. Many people on all of these state forums are all looking for similar things, good quality housing, schools, within earshot of their jobs. When CT was 0% income tax that was a gargantuan blinking "COME HERE" signal to those whom the state income tax of NY vs NONE in CT. Do you think the very people debating Westchester v Fairfield County weren't doing the trade-off of a few more minutes commute vs a big fat 0% income tax? It is logical. You had part of the tri-state area drawing people in. Now that arbitrage is finished and the result is over time that money leaves the state. It is hard to understand why this is so difficult to comprehend.

I am not being defensive. I want people that come to this forum to know the facts. It has been more than 20 years since Connecticut implemented an income tax. No use wishing for the past. I find it almost laughable that you complain about Connecticut's income tax but yet are considering moving to two states that have comparable income taxes. On top of that you are considering two counties where property taxes are higher than what you would pay here. Makes little sense to me. Jay

[MrGompers]

Originally Posted by RonaldusMagnus

To reference the blog posted one page back:

Somehow the people of Connecticut failed to notice that they got rich precisely by being a haven of low taxes. Prior to 1992 Connecticut had no income tax at all. High income people flooded into the state, but not into the whole state. Overwhelmingly the wealth was concentrated in that tiny panhandle that sticks out in the southwest corner of the state, toward New York City.

Between 1992 and 2014 (the most recent year for which Internal Revenue Service taxpayer data is available), Connecticut lost $12.36 billion in net adjusted gross income (AGI). Perhaps not surprisingly, the bulk of this outwardly migrating AGI went to states that do not punish work by levying an income tax. The state of Florida won the lion’s share of Connecticut’s fleeing AGI, with $7.96 billion leaving the Nutmeg State for the Sunshine State.

I'll say it again but this data is useless UNLESS they can separate the people who moved for retirement reasons. Cold weather states will always lose population to warm weather states.

The income data is also framed in a way to make it look negative. It would be better to state a percentage of the total AGI that left the state instead of using raw dollars. This is par for the course though since most people are bad at math.

One aspect that no one has mentioned yet and I doubt it could be calculated. In the era before computers it was much easier to shift and/or hide income between states. Since computer power and data collection has become so much easier and reliable there's no reason to live in CT and work in NY (to avoid income taxes) because that isn't possible any more.

People were even shifting purchases between states due to sales tax before. When CT's sales tax was 8% NY's was less (I think it was 6%)

While there's no more sales tax arbitrage between CT and NY - you can still see sales tax arbitrage in action in NH or DE every weekend.

[kidyankee764]

Originally Posted by RonaldusMagnus

I wouldn't say "flock" Bc u know a guy. I can tell you a town like Westport to my family is alluring Bc of the relatively lower property tax but still not as alluring if there was no income tax. But the larger data (not the anecdotes) point to the net outflow.

There was a report released last year that showed population shifts of each area. SW CT saw a major influx of those from New York (actually so did New Haven County). The shift was great enough for me to be confident in using the word "flock".

[RonaldusMagnus]

Originally Posted by JayCT

I am not being defensive. I want people that come to this forum to know the facts. It has been more than 20 years since Connecticut implemented an income tax. No use wishing for the past. I find it almost laughable that you complain about Connecticut's income tax but yet are considering moving to two states that have comparable income taxes. On top of that you are considering two counties where property taxes are higher than what you would pay here. Makes little sense to me. Jay

1. I wasn't " wishing for the past. I simply posted a blog with interesting statistics that aggregated just how much wealth left the state since the tax was put in and pointed out the obvious. There is a trend on this forum by some to discount the fact that people and businesses flow in predictable patterns. The golden anecdote is usually brought out as "proof" of the counter argument.

2. It is NOT laughable to compare all the factors when it comes to moving a family. The Lower property tax is a consideration but it is not such a swing that it takes all other considerations off the table. If it were property tax PLUS no income tax then it becomes a game changer. It makes plenty of sense.

[RonaldusMagnus]

Originally Posted by MrGompers

I'll say it again but this data is useless UNLESS they can separate the people who moved for retirement reasons. Cold weather states will always lose population to warm weather states.

The income data is also framed in a way to make it look negative. It would be better to state a percentage of the total AGI that left the state instead of using raw dollars. This is par for the course though since most people are bad at math.

One aspect that no one has mentioned yet and I doubt it could be calculated. In the era before computers it was much easier to shift and/or hide income between states. Since computer power and data collection has become so much easier and reliable there's no reason to live in CT and work in NY (to avoid income taxes) because that isn't possible any more.

People were even shifting purchases between states due to sales tax before. When CT's sales tax was 8% NY's was less (I think it was 6%)

While there's no more sales tax arbitrage between CT and NY - you can still see sales tax arbitrage in action in NH or DE every weekend.

Did people suddenly begin moving for retirement reasons and discover FL in 1992?