Is it firms like Jacksonville-based HCI Group — third-ranked on Inc.’s 5,000 Fastest Growing Private Companies list, with $25.5 million in annual revenue — that account for Florida’s economic growth?
Or might 5,933 New Yorkers who moved there with $766 million in net adjusted gross income in a recent year (2009) be even more of a factor?
Rapidly growing private companies like HCI Group, a health care company; Orlando-based retailer UbreakiFix (with $17 million in annual revenue); or Sarasota-based Integrity Funding ($11.1 million), all companies with 3-year average annual growth above 10,000%, add nicely to Florida’s revenue base.
They are the three Florida-based Inc. 5000 companies that can be found among that list’s Top 20 (the entire list has hundreds of Florida companies).
And yet their revenue contribution pales in comparison to the “free” money brought by tax migrants from other states, which totaled $3.5 billion in 2009, the last year for which data compiled by the Tax Foundation was available.
Indeed, the tax research group’s analysis, “Migration of Personal Income,” released this week, puts the income built up over careers in other states closer to the league of Fortune 500 companies based in the state, such as Boca Raton-based Office Depot, with $10.7 billion in annual revenue.
But that’s not all. The Tax Foundation analysis of IRS data shows that over a period of 10 years — from 2000 to 2010 — Florida and other tax-friendly states (the Sunshine State is one of seven with no individual income tax) have been the biggest beneficiaries of interstate migration, to the tune of $67.3 billion in Florida’s case.
Indeed, the U.S. Census Bureau shows New York to Florida was the most common state-to-state move in 2011, with 59,288 movers, while neighboring Georgia sent 38,658 new residents to the Sunshine State.
The Tax Foundation report quantifies these moves in terms of personal income gained or lost, and the list of winners is as unsurprising as the list of revenue losers. After Florida, the biggest 10-year gainers were Arizona ($17.7 billion), Texas ($17.6 billion), North Carolina ($16.2 billion), and Nevada ($11.2 billion). Texas and Nevada, like Florida, do not tax individual income.
New York lost the most revenue by far, bleeding $45.6 billion in tax returns and nearly 540,000 residents from 2000 to 2010. About a third of them moved to Florida, sending about $13.3 billion in net adjusted gross income to Tallahassee rather than Albany.
Neighboring New Jersey took in the second-largest huddled mass of New Yorkers — 81,000 — but the No. 3 relocation site was tax haven North Carolina, which attracted 52,000 former Empire State residents.
California’s refugees spread out to Nevada (93,000), Arizona (87,000), Texas (76,000) and Oregon (58,000), taking with them net AGI of $6.5 billion, $5.6 billion, $4.5 billion and $4.3 billion, respectively, over 10 years. In total, California lost 382,000 residents and $29 billion in revenue over the period, with the more affluent residents seemingly heading north to the Beaver State and its less wealthy making their homes in Arizona.
Illinois lost third most in personal income, totaling more than $20 billion from 2000 to 2010. Of the 233,000 taxpayers departing the Prairie State, the largest cohort chose Florida (38,000) as their new home, followed by neighboring Indiana (24,000), tax and sun havens Texas and Arizona (23,000 each) and neighboring Wisconsin (22,000).
While people might choose to relocate for a variety of reasons, including better weather, health care or retirement options, it has often been speculated that tax considerations play a role. A Wall Street Journal editorial this week critiquing Minnesota for enacting a new 10% gift tax on top of its existing 16% estate tax, had this to say:
“A successful New York business owner with, say, $50 million of lifetime savings can move his family and company to Florida, Georgia, Texas or 29 other states and cut his death-tax liability by up to $8 million.”
Recently golf pro Phil Mikkelson stirred controversy when he openly wondered whether newly enacted taxes were reason enough to move from his home state of California.
A wealth tax in France sent that nation’s wealthiest citizen, Bernard Arnault, looking for tax relief from Belgium, while actor Gerard Depardieu accepted Russian citizenship but then settled in a Belgian village bordering his native France.
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