Wealth Migration from the Northeast Intensifies for Florida
Internal Revenue Service data collected between the years 1995 and 2010 shows that more than $86.4 billion in adjusted gross income (AGI) traveled to Florida from high-tax northern states such as New York and New Jersey. While those numbers are staggering, research shows that this proverbial snowball of financial gains has only begun its long roll down the hill. OK, so a snowball may not be the best analogy to use when talking about the Sunshine State – but in this case it is a fitting one, and the trend lines bear it out.
Recent data provided by Politifact Florida shows that more than 1,000 people per day are now relocating to Florida. Moody’s estimates that the population in Florida will grow by 360,000 in 2013. Referencing census numbers, Florida Governor Rick Scott recently told CNN that 230,000 new residents had arrived in 2012. Pretty astounding numbers, especially when you consider that these are net migration gains: people coming minus people going. That makes for a lot of moving vans traveling south on I-95, filled with people, their wealth, and their earning potential.
But there are even more interesting facts. This past summer, based again on US Census data, Florida’s population hit 19.3 million, while New York’s came in at 19.6 million. It is estimated that Florida will soon edge out New York as the third-most populous state in the nation. Only births and new immigrants kept New York’s population from falling even lower. Not to single out New York, but apparently an increasing number of New Yorkers either can’t afford to remain in their home state due to high taxes, or can’t find work there and are moving to states with friendlier business climates to seek new opportunities.
Why Florida? Your first thought might be trading in your snow blower for a jet ski, but that is only one part of it. Even higher on the list is economic freedom from the high-tax states up north. Florida, after all, is one of only nine states with zero personal income tax. This means that if you move from New York or New Jersey, you can keep nearly 9 percent more of your paycheck, and have 9 percent more buying power. Obviously states that allow residents to keep more of their money and run businesses without undue burdens create higher personal income growth and draw steady streams of people from other states. In the category of gained AGI revenue, Florida stands as number one.
Along with this influx of population comes the need to build the infrastructure and facilities necessary to support it. Providing for these needs spells “j-o-b-s.” Florida’s unemployment rate in April fell to 7.2 percent, down from March’s 7.5%. Job growth in Florida has been moving in a positive direction for the past 21 months.
As we all remember, during the great recession of 2008, the real estate market was essentially frozen. No matter how discontent people were with the tax burdens of their home states, the simple fact for many was that if they couldn’t sell their home, or their business, moving away was just not an option. But today, all that is beginning to change. Property values are increasing and homes are again selling. People have liquid assets again and are free to seek out the best environment in which build their businesses, create wealth, and raise their families. While Florida’s $86.4 billion in AGI gain over fifteen years is certainly impressive, it may pale in comparison to what the Sunshine State stands to gain over the next fifteen.