Americans Try to Outrun State, Local Tax Hikes

Linda Stern
Fox Business
5/23/2011

Alan Dlugash is a New York accountant who specializes in high net worth Manhattanites, but lately he’s been fielding a lot of calls from clients in neighboring states — Connecticut and New Jersey.

“The big deal right now is ‘how do I change my residency?'” he said. And the reason is almost always the same: High local taxes.

Given the extension of the Bush era federal tax cuts for two years, a cut in Social Security tax this year, and the rise of anti-tax sentiment evidenced in last November’s election results, tales of tax migrants may seem out of sync. Just last week, a number of ‘we’re undertaxed’ reports surfaced suggesting that Americans were facing their lowest tax burdens since 1958.

That ignores the idea that just as all politics is local and personal a lot of taxes are too – and in recent years the states and cities have been busy offsetting federal tax cuts with local tax hikes, largely aimed at higher income earners.

Since the beginning of 2009, some 31 states have hiked taxes on everything from income, estates, and investment gains to cigarettes and plastic bags, with annual net increases pushing $50 billion, according to data from the National Conference of State Legislatures. City and county governments have been piling on too, raising sales and property taxes in many areas even as home values drop…

…”If Kansas legislators ever did to their farmers, or Texas did to their oilmen, what New York does to its financial community, they would have been run out of town on a rail,” Dlugash said…

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