High earners are leaving the Northeast and moving to the South.
High earners are leaving the Northeast and moving to the South.
The Great Migration: Affluent Americans Flock to New Destinations
A rising tide of affluent consumers are loading moving vans and leaving their cities in this post-pandemic era, mostly due to high taxes and even higher costs of living. It’s a trend that has been steadily growing over the past few years, and the exodus shows no signs of slowing down. Popular destinations for these wealthy individuals include Florida and Texas, which have become magnets for those seeking a more favorable lifestyle.
According to a report by SmartAsset, Florida and Texas are the top choices for affluent Americans on the move. The Sunshine State gained 27,500 new high earners, while the Lone Star State welcomed 9,000. Meanwhile, California and New York saw the most affluent residents fleeing, with a combined loss of over 76,000 residents. It seems that high taxes and a burdensome cost of living are driving them away.
But what is it that makes Florida and Texas so appealing? Bob Chitrathorn, vice president of wealth planning at Simplified Wealth Management in Corona, California, believes that the absence of state income tax is a major factor. “Texas and Florida have no state income tax, and Tennessee has a more favorable income tax than most,” Chitrathorn explains. This tax advantage is attracting both individuals and businesses to these states, creating a ripple effect that further fuels the migration.
It’s not just the lack of taxes that is drawing people to these states. The favorable climate, diverse job opportunities, and lower cost of living compared to cities like New York and San Francisco are also major attractions. As Chitrathorn points out, “Lower taxes also attract businesses. More business moving can cause employees to move with them.” This speaks to the powerful impact that these migration patterns can have on local economies.
The U.S. Census Bureau supports the notion that more Americans are on the move. Last year, approximately 27.3 million people in the country relocated, representing a 4% increase from the previous year. Notably, there has been a significant rise in people crossing state lines, with 41% of movers opting for a new state, according to a study by Higher a Helper. In fact, both “moves to a different county within the same state” (24%) and “moves crossing state lines” (17%) reached their highest levels since the start of the millennium.
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To paint a clearer picture of this migration phenomenon, the SmartAsset study honed in on high earners making a minimum of $200,000 annually. The findings reveal that affluent individuals are flocking to seven particular Southern states: Florida, North Carolina, South Carolina, Tennessee, Georgia, Alabama, and Arkansas. These states are experiencing the largest influx of wealthy residents, significantly contributing to their prosperity.
Conversely, states like California, New York, Massachusetts, New Jersey, and Connecticut are losing high earners each year. California saw a staggering loss of over 45,000 affluent residents, while New York saw 31,000 leave its borders. It’s evident that the allure of lower taxes and a more attractive cost of living is proving too enticing for many individuals to ignore.
As for where these high earners are headed, Chitrathorn shares that his clients and co-workers are mainly relocating to Texas, Florida, Tennessee, and Nevada. Interestingly, he notes that some California residents are opting for Nevada in order to maintain close ties with family members still residing in the Golden State. This further reinforces the significance of personal connections when it comes to choosing a new destination.
While the reasons behind this great migration are mainly financial, there are broader implications to consider. The arrival of affluent households contributes to the growth of local economies, bringing an influx of higher-income individuals and potentially attracting more businesses. This virtuous cycle can lead to job creation, innovation, and a higher quality of life for all residents.
In conclusion, the migration of affluent Americans to new destinations represents a growing trend fueled by high taxes and soaring living costs. Florida and Texas have emerged as the top choices for those seeking a more favorable financial climate. While the allure of lower taxes is a significant factor, the overall appeal of these states’ climates, job opportunities, and lower cost of living cannot be underestimated. As more high earners make the move, the positive impact on local economies becomes increasingly evident. The great migration continues, heralding a new chapter of prosperity for those willing to seek it out.
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