How will the tax cuts affect states like California and New York as opposed to Texas and Florida?
Taxes hurt. Here’s a list of all the taxes you’ll cough up to the government.Source: Tax Foundation (Not 2022 updated)It definitely hurts, and no doubt millions of skilled human capital will move from CA and NY to TX due to high taxes over time: So Long, California. Sayonara, New York - WSJAlthough there is a strong correlation between lower taxes and moving to Texas and Florida, that’s not the only attraction.Most of the biggest gainers are cities seem to have other attractive factors, such as being rich in economic opportunity, strong hiring, and affordable housing. Tech workers still move to San Francisco which puts “net migration of Linkedin users” slightly positive because of high pay, generally speaking.However, the cities within the Texas triangle are one the richest in terms of economic growth and hiring.As you can see again, the cities that gained the most are Denver (flat 4.63% state income tax), Seattle (0% state income tax), Austin (0% state income tax). Florida (0% state income tax) is also a runner up. However, these numbers are not reflective of the highest income earners.Anecdotally, under a physician’s salary in Texas, I would essentially pay 2% effective state tax burden as a % of personal income, while pre-tax income is actually higher than NY/CA, on top of low cost of living. On top of that, real estate is a huge boon when you consider risk-adjusted returns and leverage using physician mortgage loans on multifamily property. No squatters with favorable Texas landlord law with high rental yields mean great returns.Not to mention, excellent Texas tort reform puts physicians under better legal and asset protection. It’s basically a 2x multiplier for my total income after taxes and cost of living essentials. After you count in Texas college and medical school tuition are the nation’s lowest (a difference of $500,000 for cost of attendance in my case, not including interest for state flagship), you’ll see that it’s closer to a 3x multiplier, personally speaking.And you’ll see there are also many excellent art/museums, parks, culture and entertainment options available. You’re really not missing out, and if you are missing something in particular elsewhere, you can always visit for vacation with extra cash. Texas has some of the best high schools in the nation too, as well as economical cruise options, even on the high-end. Texas has a whole range of weather in its geography, and the Texas heat doesn’t bother me one bit, since I’m mostly indoors in the hot summer anyways.If you have a chance to move, you should definitely consider these factors when you decide. (Assuming you have similar opportunities in your industry)Of course, high tax states such as NY aren’t static. The new tax bill is still strong enough to the point that New York is getting worried about an exodus of human talent and trying to find a workaround to the tax bill. Employers are skeptical whether it will actually work, as they think the IRS may fight the NY governor’s actions.New York Found a Fix for Some Hit by Tax Law. Employers Are Skeptical - WSJ