Tags: Brown | Money | tax | states

Author Travis Brown: Money Takes a Hike Toward Lower Taxes

Tuesday, 20 Aug 2013 08:14 PM

By David Nelson and Dan Weil

High-tax states like New York are seeing money leave their borders in a flight to states with low taxes, such as Florida and Texas, says Travis Brown, author of the book "How Money Walks," which focuses on how people and money move between states.

For New York, $68.1 billion exited the state between 1992 and 2010, as measured by the net loss of adjusted gross income on tax returns, Brown tells Newsmax TV in an exclusive interview.

"Start spreading the news, they're leaving today," he quipped, making a play on Frank Sinatra's song "New York, New York."

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A New York minute now costs $7,100, says Brown, CEO of public affairs firm Pelopidas. That's how much money left the Empire State per minute over the 18-year period.

As for the country as a whole, "we see massive losses from the Northeast in particular," while Florida is "America's biggest winner," Brown said. Florida saw an inflow of $95 billion between 1992 and 2010. The state benefits from having no income tax, he says.

Editor’s Note: Put the World’s Top Financial Minds to Work for You

A total of $18.9 billion left New York for the Sunshine State.

Texas, which also has no income tax, pulled in $25 billion, Brown says. More than $6 billion of that came from California. "Most states are competing for jobs and income. Texas has a great record," he said.

State governments push out people by and businesses by raising taxes, Brown says. "Governments need to be aware that when you raise taxes and export more of your entrepreneurs, you end up with a smaller tax base," he said.

"As a result, you fail to produce the revenue that you once forecasted. And then what happens? Well, if you're not keeping spending and other decisions in check, you're likely to be back raising taxes again."

That's the story in California, Maryland and Minnesota, Brown says.

In addition to taxes and jobs, weather can play a role in money shifts, he says. "We have states like Minnesota that have been losing $3.88 billion to places like Florida and Arizona, not just for tax factors," he said. "We know climate factors are an issue there."

Another interesting shift is financial firms leaving southern Connecticut, Brown says. The state lost $7.22 billion. "And where do they go? Straight to South Florida," he said.

"We're talking about $500 billion to Palm Beach County, $200 million to the Fort Myers area and Naples, with almost $200 million just from Fairfield County, Connecticut."

The big issue going forward is, will high-tax states adopt structural tax relief in the near future, Brown says. Just cutting marginal rates won't make states competitive with Florida and Texas.

"The first thing you can do is get your house in order," he said. "It's going to be a tall challenge for Albany, New York."

Editor’s Note: Put the World’s Top Financial Minds to Work for You

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