The state of Connecticut has such high tax rates that they are driving out their highest earning residents in droves. While states like Illinois, New York, and California are driving out everyone, Connecticut’s tax system is particularly damaging to those with higher income levels, and that has them looking for greener grass.
New data reveals just how bad the problem is in the Constitution State. Most of the top earners leaving the state are headed for New York, California, Massachusetts, North Carolina, or Florida.
It appears that even states with very high tax rates like New York and California are less burdensome than Connecticut. As the Hartford Courier reports, the top earners have simply had enough.
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Those who moved out of Connecticut from 2015 to 2016 took with them more than $6 billion in adjusted gross income, or AGI. People who moved to Connecticut brought with them only about $3.36 billion in AGI. The total net loss to Connecticut: $2.7 billion. In one year. That was in the top five of all states, regardless of population.
Out of all states, New York took the most residents (probably due to proximity), with 8,202 taxpayers transferring to the Empire State. Right behind it was Florida at 7,944.
The average gross income for those moving to New York was $111,653, about twice the national median income. But that does not even come close to Florida, where the average tax return for the former Connecticut resident was $253,187 in adjusted gross income.
Between 2015 and 2016, nearly $2 billion in gross income transferred from Connecticut to Florida. If that’s not a sign of a major issue, then I don’t know what is.
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The overall trend of richer people leaving Connecticut has been increasing over the last five years, according to the IRS data. The total number of tax filers and their average AGI for people who moved out of Connecticut was higher last year than at any time since before 2011-12. For example: From 2012 to 2013, more than 48,000 tax filers had moved out of Connecticut, nearly as many as moved out from 2015 to 2016, but the average return was about $112,000 in AGI, compared to over $123,000 last year.
The Courier isn’t willing to say that Florida is without its drawbacks, but clearly something is drawing Connecticut residents, high-earning ones, to move to the Sunshine State. Since it does not collect any income taxes at the state level, that’s certainly an attractive alternative to having large chunks of one’s earning going to the government (particularly a government that has been spending irresponsibly for several decades in a row).
Things are likely going to get worse for the Constitution State before they get better. With the composition of the legislature and governor’s office being largely Democratic, the answer will likely be to raise taxes again to make up for budget shortfalls. But that will only drive people out at a higher rate, creating an even bigger budget shortfall.
It’s almost as if a state cannot tax itself into prosperity and financial security. Who could have predicted that?
Other states will gladly welcome new residents who will contribute to economic growth. The only looming question is if those new residents will leave their big government voting patterns behind them. As we have seen in some states, like Virginia, a solid red state can turn purple very quickly. Hence, why emphasizing these basic political lessons is absolutely critical, lest we see more states fall to the same fate as Connecticut.
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