Earlier this year, the Hertz Corporation – a Fortune 300 company and the world’s largest airport rental car business – announced that it would move its corporate headquarters from its 25-year home in Bergen County, New Jersey to the Southwest Florida city of Estero. On the Tuesday before Thanksgiving, Florida Governor Rick Scott, Hertz CEO Mark Frissora, and other government officials officially broke ground at the site; providing residents of Lee and Collier counties with even more reasons to be thankful given the projected economic impact of this important occasion. While critics will say this is just another run of the mill business migration, it actually holds greater significance than reported.
How so? Glad you asked. Continue reading
In a recent piece for CNBC, Robert Frank contends that state taxesmake “little difference” in where millionaires live. However, my research – based on nearly two decades’ worth of Internal Revenue Service and U.S. Census Bureau data – certainly suggests otherwise.
Frank cites a UBS and Wealth-X study that examines a static and relatively narrow dataset: millionaires’ states of residence during the past year. My book How Money Walks, on the other hand, looks at long-term trends. These trends, which illuminate where millionaires have moved in the past and suggest where they might move in the future, paint a much fuller picture than just one year’s worth of data. Continue reading
As soon as Office Depot and OfficeMax merged, it became necessary to address the challenges and opportunities presented by the consolidation of two major office-supply companies. First, both companies’ boards of directors needed to select a new CEO to run the combined entity. Then they needed to decide on a new corporate name and, finally, through in-depth analysis, decide where to locate their new corporate headquarters.
On November 12, the board named Roland Smith as the new chairman and CEO of the merged company. Mr. Smith is considered an expert in managing complex mergers and company integrations. He also has a wealth of experience in the retail arena and is known for increasing profit margins for the companies he has transformed. A final decision was also made that the Office Depot name would emerge as the identity of the new company. Continue reading
The recent tax hikes in France to a top marginal rate of 75% have reignited the debate over the mobility of high earners. High taxes levied on high earners create an incentive to move to a jurisdiction that is more welcoming – in other words, money walks. Of course, mobility is the highest for high-skilled workers and superstar athletes; the very people who are often singled out by high tax rates are also the most mobile. A new study, “Taxation and International Migration of Superstars: Evidence from the European Football Market” shows conclusive evidence of this mobility.
The study focuses on wealth migration in Europe and finds a huge impact of taxes on the mobility of top athletes. By looking at publicly available data on the earnings of top soccer players in Europe and the tax rates in various countries, researchers Henrik Kleven (LSE), Camille Landais (Stanford), and Emmanuel Saez (Berkeley) found a very large impact of tax changes on overall player mobility. Because tax rates vary dramatically across different countries in Europe, they provide a data-rich environment for research. In addition, changes in tax policies over time created a quasi-experiment allowing for the identification of causation. The study finds a strong and negative impact of taxation on the mobility of players amongst countries. Continue reading
As the IRS data makes clear, wealth and income goes where it’s welcome, with over $2 trillion in total income migration in the United States over the last 18 years. Of course, tax-related migration is not only a US phenomenon. Internationally, money walks to where it is most welcomed in terms of low taxes and the protection of investor rights. The latest evidence of tax migration comes from China, where the affluent are leaving in droves and taking their money with them. According to the Boston Consulting Group, wealthy Chinese now have $450 billion stashed in offshore investments. BCG expects this number to double in the next three years as more and more Chinese seek security for their assets. Continue reading
“Turning a battleship around” is the metaphor often used when describing the difficulty in planning and implementing a major change in direction, be it by governments or huge corporations. Boeing Aircraft is now in the process of making one such massive corporate decision. The difference is, this decision needs to be made by year-end, giving the company less than six weeks. With 259 orders now in hand for the 777X aircraft, Boeing has no time to waste in finding a new place to build it.
Boeing officials had intended for their new modified wide-body passenger aircraft, with its state-of-the-art composite wing, to be manufactured and assembled at the immense Boeing manufacturing facility in Everett, Washington. This facility was the birthplace of a long list of Boeing aircraft, including their first jet-powered commercial airliner, the 707, along with their game-changing 747 models. Everett stands as the largest Boeing manufacturing facility in the world. Continue reading
When you are a governor running for re-election in November 2014, any indication of increased job growth is welcome news. Such is the case with Governor Rick Scott of Florida, who just announced an additional 8,800 jobs created in the metropolitan area of Naples. This represents the most significant job growth of anywhere in the state.
IRS data shows that between 1992 and 2010, Collier County, Florida – and, more specifically, the Naples-Marco Island metropolitan statistical area (MSA) –gained a $10.8 billion share of Florida’s total $96 billion in positive adjusted gross income (AGI). This area outpaced the growth of the Orlando, Tampa, and Miami MSAs. Continue reading
If you are a Midwestern businessman considering relocating your company, the first two destinations that come to mind are probably Texas and Florida. After all, both states garner national recognition for being very welcoming to business, and neither has a state income tax. Both have high-profile governors aggressively pursuing out-of-state businesses with all manner of enticements. But, overall, these two states play second fiddle to the state of South Dakota.
Granted, winters in South Dakota are a bit chillier than winters in Florida and Texas. OK, maybe a lot chillier — but the climate for businesses and their employees is warm and inviting. No personal income tax? Check! No corporate tax? Check! How about no individual capital gains tax? Check there, too.
According to a poll conducted by CNBC.com, in 2013, the state of South Dakota has an overall ranking of number one when compared head-to-head in 51 relevant categories. Categories include things like the cost of doing business, the state economy as a whole, the strength of the workforce, business friendliness, and overall quality of life. The report goes on to say that these weighted categories result in the overall criteria that the states actually use to sell themselves. South Dakota can also tout a low (3.9%) unemployment rate. Continue reading
When you’re born, you begin life in a home state that is certainly not of your choosing. (In my particular case, it was the state of New Jersey.) If you moved to a different state during your childhood, the relocation decision was your parents’ call, not yours. They undoubtedly had their reasons, which you were too young to comprehend. You simply said goodbye to your friends, hopped in the car, and off you went.
But as you grow older, go to school, start a career and begin a family, creating and staying within a budget becomes critical. You start scrutinizing your pay stubs and notice the huge disparity between your gross and net income. You examine all of the line-item withholdings and discover that most of them are taxes. Very high taxes. Ever-increasing taxes. It begins to dawn on you how much more money you could take home, if you could just reduce or eliminate some of those taxes. Eventually, often out of frustration, the discussions and research begin. After a while, with facts weighed and a destination selected, you pack up the family and head out. This time it is your call! Continue reading
Recently, the Atlanta Braves announced that they will not be renewing their lease with Turner Field, the home of major league baseball in Georgia for the past 17 years. Instead, the team will build a new stadium north of Atlanta in Cobb County. While a new Braves stadium will provide needed upgrades from a facility and neighborhood attractiveness standpoint, there is one alarming factor being overlooked in talks over the estimated $672 million project. The Braves want $450 million in public funds from Cobb County – roughly 67 percent of the total cost – in order to build this grandiose baseball cathedral.
While it’s true that using public funds to finance extravagant stadium renovation and construction projects is the most popular trend among team owners, what is particularly interesting in this case is that the Atlanta Falcons are also requesting $300 million of hotel tax revenue from the city of Atlanta to fund their $1.2 billion dollar football stadium. Opening day for each stadium is tentatively set for the start of the 2017 season, yet taxpayers should refrain from celebrating that day, given the immense tab they are on the hook to pay. Continue reading