When we think about tax shelters, we normally consider investments or charitable contributions that lower a taxpayer’s liability. High earners in New York and elsewhere have a different outlook. They are heading at Florida’s as the best tax shelter and they are moving down I-95 at a rate of about 950 a day.
What analysts previously saw as an uptick in moving business in the Big Apple is now supported by a colossal 13,117 vacant apartments. This is a 122% rise from the previous year. New leases are down by about 23%.
This exodus is also fueled by fears of the coronavirus pandemic. However, the high cost of living, concerns about law and order, as well as the highest personal income taxes for high earners have caused a big increase in New Yorkers voting with their feet and heading for Florida.
Florida has, like most states, taken a heavy hit in unemployment and business closings. A notable exception has been in the real estate market. Signs are that when the pandemic passes, it will be a permanent boon to the Florida housing market. Currently ultra-luxury sales continue to make Miami the front runner and destination for wealthy outsiders.
Florida realtors report they are as busy as ever even in the more reasonably priced markets. Says one south Florida realtor Justin Himmelbaum, “Everyone is calling from those bigger cities saying wow, how can we buy these $300,000 homes and really have more property and more safety?”
So, the droves of people moving from big northern cities like New York and Boston are concerned about population density. They want cheaper priced homes, something with a little more land, and escape from the confines of their small city apartments.
Couple the previously mentioned dreary New York City apartment vacancy statistics with the doubling of home sales in some parts of Florida, and this all spells big trouble for the New York mayor and city council facing a deteriorating infrastructure, a rise in crime, and a sullen, resentful police force.
Then there’s the fact that the top 1 percent of earners pay 46 percent of New York’s state income tax. Governor Andrew Cuomo recognizes that imbalance. He has said that it would only take a small number of those rich taxpayers to leave to drive the state further into financial trouble.
That trouble has already morphed into a $13 billion state budget deficit, and New York lawmakers are contemplating making matters worse with another tax hike. They are looking at revenue bills to raise taxes on everything from expensive Manhattan real estate to increased corporation and CEO taxes.
The New York state Republican Minority Leader William Barclay doesn’t think much of the idea. “New York State isn’t going to tax its way into a long-term, sustained economic recovery,” he tweeted. Making New York state even more unfriendly to business could, as the assemblyman predicts, “send even more NYers running for the exits.”
Those exits are toward I-95 to the safer, warmer, cheaper, and tax-friendlier climates of Florida — away from what a recent New York Post editorial characterized, among other things, as “wrecked city finances.”