Specifically, a few conservative Democrats are now openly endorsing extending the Bush tax cuts not only for low-income taxpayers, but also for high-income ones. However, Team Obama is so far choosing to stand firm on this one: it’s insisting that individuals earning more than $200,000 a year, and families earning more than $250,000, should pay more taxes next year. (HT: Yardeni Research)
So, increasingly, wealthy retirees are reportedly choosing to do whatever they can to avoid this higher tax burden, even if that means picking up and moving to states that don’t tax income. That would include Florida, Alaska, Nevada, South Dakota, Texas, Washington and Wyoming. New Hampshire and Tennessee tax only dividend and interest income.
For years, wealthy retirees from high-tax states in the Northeast and Midwest have been streaming to sunny, low-tax Florida. That stream is now turning into a flood.
“We haven't had a situation like this in quite a few years,” said Greg Rosica, a tax partner at Ernst & Young LLP.
“We have this impending tax increase, and people are trying to looking for ways to hide from that, but they're not seeing many from the federal perspective. One of the ways they're looking to do it is changing their state income tax rate,” Mr. Rosica said.
“This move to no-tax states is absolutely big business,” said Thomas Handler, a partner at the law firm Handler Thayer LLP. “People are doing it all day long, and it's ramping up.”