As an NJ resident I was interested in this story as I was not familiar with it. If you are referring to the person I think you are, it seems he moved back to NJ “for family reasons”.
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It was David Tepper.
There may have been other pending Federal tax stuff going on that motivated him to move, according to that article. But if NJ had a lower tax rate perhaps he would have stayed.
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He moved back but I wonder if he’s a Florida resident for tax purposes. Plenty of people maintain two homes but you need one to be your primary residence for tax purposes.
Along similar lines, Washington State passed a wealth tax on the uber-rich. Whether it would/will cause a mass exodus is debated, but the suggestion in this article is that they are too rich to be bothered:
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Washington state have one of the friendliest state tax systems for those with lots of money, as in lack of state income tax. So even adding some taxes on wealth may still leave it as very friendly to those with lots of money.
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As @vpa2019 noted, he moved back in 2020. It is unclear whether he retained FL residency or not. The articles I found were contradictory. I guess NJ had something to offer as I bet he could have easily relocated to NC where he owns football and soccer teams there.
The Massachusetts tax is called the Millionaire’s Tax, which was approved by voters last year and went into effect in 2023, applies to Massachusetts residents with incomes over $1 million. The new tax adds an extra 4% on earnings above that threshold , making the state’s income tax rate one of the highest in the U.S.
Given the huge appreciation in real estate values in the state, many people whose income is typically well below $1 MM will be subject to this tax when they sell their houses. It will also affect another, much smaller category of people who are working and whose income will be augmented by RMDs to exceed $1MM. Probably other groups, but the group that probably shouldn’t get hit with the extra tax is the first group as they are not really earning more than $1 MM.
At least the new 7% WA capital gains tax doesn’t apply to sales of primary residences, but there is already a graduated add-on excise tax on the entire sale proceeds, cost basis included. And now cities are already salivating to pass local capital gains taxes.
There is a decent bit of capital gains exclusion on the sale of a primary residence. So your scenario is not really hitting any actual (upper) middle class families.
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“To be clear, a couple of sociopaths might pick up and move. … But we rich people will still have more money than we know what to do with.”
Weird. To call people who decide they don’t want to pay higher taxes “sociopaths”. Creepy, really. Everyone wants to avoid paying higher taxes, no matter their tax brackets. But calling them sociopaths? Ugh.
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Keep in mind the $1 million would have to be profits on the sale of the house. You will need to subtract the base cost from that. It will hit hardest those who have held onto their home for many years (so more likely older people).
NJ has what they call the goodbye tax. Based only on the value of the house when sold.
http://www1.njcountyrecording.com/njcr/Account/TransferFeeCalculator.aspx
I think if I was selling a home in MA right now (I am not, I am selling a home in NJ), I would consider this millionaire tax a part of my selling costs (like realtor fees, etc.)
I think the more interesting ramification would be for those who get a large stock award from their company. Typically, you hang on to them, but are taxed on the value when they are awarded. This extra tax may force you to sell off some to pay it. This might actually not be possible if the restricted stock award is not executable until a future date (often the case).
I remember many moons ago my husband getting awarded some company shares. He was taxed on the value at that time. Then the market tanked (2008) and they were never actually worth anywhere near the amount at the time of the award.
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Woohoo. I got a letter from SS saying they underpaid me all of 2023 and need to make up for their shortfall. Instead of a $20 net deposit, I will now get $53 a month. Not bad.
In case you are wondering…I’m subject to the offset and windfall provisions related to SS. I did work in SS states for well over 10 years…but my benefit is reduced by 2/3s.
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US income tax rules on stock and stock option awards from employment can be very complicated, with implications for when taxable events occur, capital gain versus ordinary income tax rates, and alternative minimum tax. They were probably written under the assumption that the only people dealing with such things were CEOs who hire tax lawyers and accountants with their pocket change.
In central states, to the north.
For a few years here and there, DH had stock award, but it went to ‘maturity’ in future years. We kept track, and worked with the brokerage firm they were listed with which the company set up. As soon as any matured, we cashed out. I believe they set it up for longer term versus short term profits, and maybe also as an incentive to remain with the company (at time of award, or when cashed out). Not a lot of money, but a form of a bonus.
Sounds like you are saying IL without saying it. Not sure why.
Yea. I have options in a number of companies. If you make an election (I think it is called a Section 83 election) and the strike price is equal to the value of the company at the time of the issuance of the option, then you don’t owe tax until you exercise the option. Not too many of these have produced value yet (and one went under). With one Canadian company that was sold, we had to deal with a different tax regime and it was a big mess. Last week, another company just repriced their options (reducing the strike price) given the decline in the market – they needed to do that to keep their employees and my options were in the batch with the employees.
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I can’t speak for @SOSConcern , but I’ve been asked where we live and I prefer to not answer. It’s not only that some people make unfounded judgments based on a person’s residence, but it’s also one small way to preserve at least a little anonymity. I’ve probably overshared on some threads and would rather not be too easily identified in case a relative or acquaintance read my posts.
As for the property tax and state tax discussion, we moved to a community which voted to increase property taxes for its schools and now pay more for our retirement home than we did for our previous home that was nearly three times the size. Overall, our taxes are still lower than in many places but we’re fortunate to be able to afford staying here even if taxes increase again. Being near grandchildren was our reason for moving.
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Yep, we had a similar situation. The tax owed was considerably greater than the stock value after a sudden dramatic decline. I recall having to draw on our HELOC to pay taxes that year.
I agree about living near grandchildren as being important - we may not be achieving that year-round, but do plan to be near them in the next couple of years when they totally settle where they are at. The summer months, I want to be in other states; the school year is the busiest time, and when it is most appreciated by the parents for us to be involved. And it may be that DH is at another place (for his activities) for some of the time when I am needed by the parents/grandkids. Having 2 residents is going to take a lot of planning after being in one place for so many years.
The investment made with good schools in the community where you live/have property, does help maintain or raise property values. The thriving community where you have the range of ages and all the businesses close, along with the jobs for working family members.
Yes, it would not take much ‘detective work’ with stringing together various posts on remaining anonymous. I talk about College Confidential info with friends in book club and other one-on-one, and only one very good friend is on CC - I ask, and tell people about the parent forum. I found out about CC from this one friend – her children are older than mine and she investigated a lot of things first.
Each household can decide where they want to live in retirement - what fits best for them.