Llano County #4 in the Nation!
Where America's Money Is Moving
Jon Bruner,
06.14.10, 02:30 PM EDT The Link is Forbes.com. Wealth
Where America's Money Is Moving
Jon Bruner, 06.14.10, 02:30 PM EDT Low taxes, warm sunshine and deep discounts on real estate. No wonder IRS data shows the wealthiest among us are headed south.
Surprise: America's wealthy like warm weather and low taxes. That's the takeaway from IRS data, analyzed by Forbes, on moves between counties. We looked for counties that the rich are moving to in big numbers.
Topping the list: Collier County, Fla., which includes the city of Naples. Tax returns accounting for 15,150 people showed moves to Collier County from other parts of the country in 2008, the latest year for which IRS data is available. Their average reported income: $76,161 per person--equivalent to $304,644 for a family of four. Although slightly more taxpayers moved out of Collier County than into it, the departing residents' average income came out to just $26,128 per person.
Households that moved to Collier County principally came from other parts of Florida, with Lee, Miami Dade, Broward, Palm Beach and Orange counties leading the list. Big northern cities also sent lots of migrants: Cook County, Ill. (home to Chicago); Oakland County, Mich. (near Detroit); and Suffolk County, N.Y. (on Long Island) each sent more than 100 people to Collier County during 2008.
In second place is Greene County, Ga., with a population of just 15,743 at the Census Bureau's last estimate. The IRS data show that in 2008, 788 people moved to the county, about 75 miles east of Atlanta.
Rounding out the top five: Nassau County, Fla., near Jacksonville; Llano County, Texas, 70 miles northwest of Austin; and Walton County, Fla., 80 miles east of Pensacola.
The dominance of the list by Florida and Texas--the former has eight of the top 20 counties, the latter four-- makes sense to Robert Shrum, manager of state affairs at the Tax Foundation in Washington, D.C., since neither state has an income tax. "If you're a high-income earner, then that, from a tax perspective, is going to be a driving decider if you're going to move to one of those two states," Shrum says.
After accounting for property taxes, Shrum's analysis shows that Texas has the fourth-lowest personal tax burden in the country, and Florida has the eighth lowest. Shrum also points to eight states that have targeted wealthy households with extra-high tax brackets: California, New Jersey, New York, Maryland, Hawaii, Oregon, Connecticut and Wisconsin. Six of the top 10 counties the rich are fleeing are located in those states.
Pitkin County, Colo., home to the pricey Aspen ski community, where home listings average more than $3.5 million, saw an exodus of rich people in 2008 as the economy began to contract. The 962 tax filers and dependents who left Pitkin had an average income of $71,473 per capita, while the equivalent figure for those moving to the county was $30,000 lower. Of those leaving Pitkin County, 224 moved to neighboring Garfield County where, according to real estate information service Trulia, homes list for 75% less than those in Pitkin County. IRS data also show movement from the resort area to cities like New York, Chicago and San Francisco.
Behind the Numbers
To find places the rich are moving, Forbes used IRS data on household moves broken down by county and income. We included counties where arriving households are richer than households that didn't move and departing households are poorer than households that didn't move. The final ranking orders counties by the difference in per-capita income between incoming households and those that didn't move.
Our ranking of places the rich are fleeing essentially reverses these criteria, looking for counties where departing households are wealthier than the population as a whole and where incoming households are poorer.
In order to find patterns among the wealthy, we restricted the lists to counties where departing or arriving households had per-capita incomes of $35,000 or more. That figure is equivalent to an annual income of $140,000 for a family of four--a very high income for any large subset of the American population (of 3,142 counties with IRS data, only 130 have average incomes above this level). And in order to avoid statistical anomalies, we only included counties with at least 500 people listed as arriving or departing.
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This technique essentially finds new hot spots--places that aren't necessarily wealthy now but where wealthy people are moving. Some upscale places like Westchester County, N.Y., and Teton County, Wy., don't make the list because people moving into those counties aren't as rich as the people who already live there.
The IRS warns that these counts are only approximations; because they don't include households that don't file income tax returns, poor and elderly people are underrepresented. These counts also don't include returns filed after late-September 2009--a small fraction of total returns that tends to include some very rich people with complex returns who file for extensions.