Every fall, in one of nature's enduring miracles, birds fly south for the winter. The Sterna Paradisaea , or Arctic tern, flies as far as three times the distance between the earth and the moon in a lifetime. The Branta Canadensis, or Canadian goose, flies 3,000 feet high at 40 miles per hour and covers over 1,000 miles per day if the weather is right. The tiny archilocus colubris, or ruby-throated hummingbird, crosses the entire Gulf of Mexico in a single 18 to 22-hour marathon trip.
Birds aren't the only brightly-plumed creatures to fly south for winter. Many species of Homo Affluentus leave their homes in the northeast United States for winter nesting grounds ranging from the Carolinas through Florida. Homo Billionairus flies even farther, wintering in Palm Beach, Hobe Sound, and similarly pricey beaches dotted with palm trees and construction cranes.
Now those migratory patterns, which have remained stable for generations, are shifting. Global climate change is driving birds to migrate earlier in the season. And changes in the tax climate mean many of the wealthiest millionaires and billionaires aren't returning north for the spring.
Scientists are still debating the precise activities responsible for today's shifting climate. But we know exactly who to blame for the tax climate: Congress, which passed the Tax Cuts and Jobs Act of 2017 almost two years ago. That law brought us a 21% flat corporate tax, lower individual rates, higher standard deductions and a surprise $10,000/year limit on deductions for state and local income and property taxes. Tax code changes are hardly black swan events — but this one is creating chaos for our migrating species.
The northeast states where Homo Affluentus and Homo Billionairus make their year-round home are known for some of the stiffest taxes in the country. High-earning Manhattanites can pay 40.8% to Uncle Sam, 8.82% to the Empire State, and 3.876% to the Big Apple. Who wouldn't want to duck rates like that? The bills were easier to swallow when the state and local levies were fully deductible. But now they've become an albatross — the 2017 act raised total taxes for some, despite the lower rates.
More and more of those Masters of the Universe are flocking permanently to tax-free Florida. In fact, former Sunshine state Governor Rick Scott started poaching Wall Street bigwigs before the new law had even passed. Now Carl Icahn, who perches at #47 on the Bloomberg Billionaires index with a net worth of $20 billion, is the latest to announce he's moving to Florida. It's clearly more than just a lark — he's told employees that they're coming too, or losing their jobs.
Icahn's new permanent nest is on Indian Creek Island, up the road from trendy South Beach. There are only 38 homes on his gate-guarded street, with an average value of over $20 million each, making it the most expensive street in America. Icahn's neighbors include singer Julio Iglesias, supermodels Elle McPherson and Adriana Lima, and Miami Dolphins coach Don Shula, along with a Russian oligarch or two, and the hedge-fund guy who ran Sears into bankruptcy.
We understand that there's more that goes into deciding where to live than taxes. But we're happy to help you fly the coop, if that's the right move for your lifestyle. Call us before the weather turns and we'll give you something to sing about this winter!
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John Leidy, EA
DIY Books Coach
It was the third day of the very first income tax course when I realized that it will become my mission to help people understand their taxes better to be able to make better decisions and STOP wasting money on taxes they should not have to pay.