As New Jersey approved a budget containing a tax hike on its resident millionaires Thursday, one real estate expert warned that high-tax states may have trouble retaining – or bringing back – their richest residents.
Serhant founder and CEO Ryan Serhant told FOX Business’ Neil Cavuto that residents have left some states – like New York – where rates are higher “in masses” over the past few months.
“I think high-tax states will have to get creative and they will have to start luring some of these wealthy buyers who produce a lot of the tax revenue for the states," Serhant said.
Nearly half of wealthy New York City residents, for example, said they have considered leaving over the past four months, citing the cost of living as the primary reason.
New York Gov. Andrew Cuomo has expressed fears that some of the rich who have already left are gone for good.
But cities and states are still struggling with ways to combat coronavirus-related budget shortfalls, with many turning to tax hikes.
New Jersey approved a budget deal on Thursday that includes a provision to raise rates on individuals earning more than $1 million – a measure Gov. Phil Murphy has been plugging for years.
The Nashville City Council approved a budget that contained what it acknowledged would be a “painful” property tax increase on its residents. Colorado and California are also eyeing property tax increases.
San Francisco is considering potentially raising taxes on executive compensation.
New York City Mayor Bill de Blasio has also said that he is not opposed to raising rates on the city’s wealthiest residents – though Cuomo has expressed resistance.
Serhant does see a silver lining for “opportunistic buyers” in places that have lost residents, and he predicts people will eventually return.
On the other hand, there are a number of states benefiting from the exodus.
Overall, Florida remains a popular destination for those fleeing the Northeast. The latest data from United Van Lines shows moving interest to Florida from New York City is up 10% year over last year.
From New York, New Jersey, Connecticut and Massachusetts, collectively, there is a 4 percentage point increase in actual moves to Florida compared with last year.
The top states that have seen the largest increase in move-ins compared with move-outs are Vermont, Idaho, Oregon and South Carolina.