Some wealthy earners are leaving the Golden State. According to a recent report, high-income earners in California are moving to places where the tax burden isn’t as high.
Part of the reason may be due to provisions in the Tax Cut and Jobs Act that capped state and local tax (SALT) deductions at $10,000. This move has been especially burdensome for wealthy earners in less tax-friendly states. That’s because many are now facing substantial difficulties when it comes to protecting their assets.
State political leanings play a role
The new SALT rules have mostly had an impact on liberal states with high-income taxes. For instance, states like New York, which is similar to California in population size and cost of living, has been hit especially hard. According to a recent survey, 140,000 Manhattan residents with incomes of around or more than $200,000 collectively paid around $21 billion in state and local income taxes. And in Westchester, the wealthiest residents paid $65,000 per household on average.
As a result, many are moving to places like Texas, Nevada and Florida, where they won’t have to worry about these burdensome costs.
If the wealthy Californians start to move out in large enough droves, the tax burden could shift to middle and lower-income residents. That’s because nearly half the income taxes paid come from the state’s richest 1% of households.
You deserve to protect your wealth
Taxes can be confusing, especially when you have a large amount of assets that you wish to protect. And when the rules are always changing, you need legal representation can rely on to help keep your best interests in mind.