States like New Jersey and New York have increased taxes on the wealthy to balance their budgets. This, according to analysts, could harm them in the long run. “This for a relatively small revenue hole has the potential to become a self-fulfilling prophecy. If you’re worried about the revenue losses because people aren’t coming back, then probably the worst thing you can do is impose very taxes that would make them not come back,” Tax Foundation vice president of state projects Jared Walczak said.
Conservatives have long warned of wealthy individuals leaving high tax states for low taxes. But sociologist Cristobal Young said wealthy individuals are neither as concerned with taxes nor as mobile as policymakers often think. Wealthy people travel a lot, but they’re tied socially and financially to where they live. They are also more likely to avoid taxes by hiring creative consultants that moving, Young told CNBC.
That could change post-pandemic, however, as many wealthy individuals are no longer bound to their offices or their children’s schools as they once were. CNBC wealth reporter Robert Frank said these decisions are even easier for wealth management firms who have smaller headcounts, many of which are hedge funds.
Source: FXPro