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Wealthy buyers increasingly ditch their high-tax states for Florida

Andrew Cuomo and the Miami skyline (Credit: Getty Images)

As top earners flee their high-tax states for low-tax states like Florida, public officials like New York Gov. Andrew Cuomo are sounding the alarm.

Cuomo said the new federal tax law, which caps the deduction for state and local taxes to $10,000, is the reason for a $2.3 billion state shortfall, as New Yorkers increasingly head to Florida. The Tax Cuts and Jobs Act, passed in December 2017, also limits the amount of mortgage interest that can be deducted to loans up to $750,000.

Overall, the Sunshine State reported the highest level of net domestic migration between July 2017 and July 2018, according to recently released U.S. Census data. New York and Illinois reported the biggest net losses.

As a result of the new tax law, Cuomo said someone in the top tax bracket in New York City who previously faced a combined tax rate of 45 percent would see that increase by 12 percent to more than 50 percent. “A taxpayer in Florida would see no increase, probably would see a decrease, and Florida also has the advantage of no estate tax,” he said, according to the Wall Street Journal.

The increase in domestic buyers, which includes other high-tax states like New Jersey, Illinois and California, has helped offset the condo market slowdown in Miami, which has been due in part to a drop in foreign buyers.

Home values are also growing faster in low-tax markets than in high-tax areas, the newspaper reported. [WSJ] — Katherine Kallergis

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