In-article:

“For some New York workers, emigrating to the lenient tax climates of Florida means recovering around two months’ net salary”

Le wall street journal baptized her “the great migration of wealth”. During Covid, wealthy Americans in New York and California fled to the sun, under more lenient fiscal skies. Explanation: Covid has made it possible for Americans to work remotely, and many have wondered why they would stay in states like California and New York, which have such high taxes.

Rumor has it that taxation is soft in the United States: this is not the case for income tax, the main source of levies by the public authorities. The maximum marginal federal rate of 37%, above 523,000 dollars (about 501,500 euros) of income, is misleading: in New York, we must add the tax levied by the State – 10.9% at the maximum – and that taken by the city – 3.876% marginal rate – and the tax to finance Social Security, the pay-as-you-go pension organization, up to 6.2% (up to $147,000 in income). In total, the marginal tax rate exceeds 53%. Thus, in New York, the median employee of the stock market sector who earns 440,000 dollars, according to the State Court of Auditors, pays 186,000 dollars of tax, that is to say a real rate of 42%, calculates the Smartasset simulator .

If he emigrates to Florida, where there is no local income tax, the bill is reduced by about $45,000 and the overall tax drops to 32%. New York employees, who do not all work on Wall Street, have a median income of $92,000, according to the Court of Auditors. The corresponding tax – $28,200 – is over 30%. Emigrating to Florida means lowering this rate to 22% and reducing the tax bill to $20,300. In short, leaving New York, where the cost of living is exorbitant, means recovering about two months’ net salary.

Population hemorrhage

Calculations on a case-by-case basis are always more complicated, but the overall figures from the Internal Revenue Service (the American tax authorities), quoted by the wall street journal, are edifying: in 2020, the latest figure available, New York lost $19.5 billion in taxable windfall, California $17.8 billion and Illinois (Chicago) $8.5 billion. The big winners are Florida ($23.7 billion) and Texas ($6.3 billion), which also has no local income tax.

Read also Article reserved for our subscribers In the United States, Joe Biden gives up taxing billionaires

The difference in state taxation was less penalizing until the reform passed under Donald Trump in 2017. Formerly, New Yorkers and Californians could deduct local taxes from their taxable federal income. This deduction was capped at 10,000 dollars for a single person, the Republicans believing that the inhabitants of the least socially protective states did not have to indirectly finance the social state and the expenses put in place by the Democrats in the coastal states.

You have 30.82% of this article left to read. The following is for subscribers only.

source site-30