A friend of a friend runs a real estate business in Manhattan: “We have 18 limited partners,” he said. “Ten years ago, we mailed 18 K-1s to New York addresses. This year it was 0.” Where did the rich limiteds migrate to? “Two went overseas, one to Switzerland. Most of the rest went to states with no income tax. Florida, South Dakota.”
8 thoughts on “Wealth migration from New York measured by K-1s”
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Sounds about right. The affluent seem to have largely left & how many return is unclear. The building where I live has about 400 units and according to employees about half are now vacant. Meanwhile the State Attorney General has brought suit against the NYPD for the use of excessive force and arrests in the riots last summer. Hard to know exactly who in NYC supports that point of view. This is the same AG who sued Exxon for failing to disclose something or other having to do with global warming in its SEC filings. One of the porters where i live, a black guy around 40, was shot in a drive by shooting last summer. He was coming home from work and in a crowd of people when he was shot. He survived but has a bullet lodged close to his spine — the doctors thought it was too risky to remove. His complaint is the police don’t arrest enough people in his neighborhood, a crime ridden part of the City.
Hmm, in which other ways do Florida and South Dakota differ from New York at the moment? Nope, can’t think of anything…
They will have a “pretend” address in those states for tax purposes. Does anyone expect Elon Musk to live in Texass?? We were thinking of that, within the state of California, to get a tax advantage on sale of a rental.
That’s kind of ironic, is it not? These folks are skipping town with others, which will presumably effect the value of real-estate, and perhaps their own business, which presumably primarily deals in real-estate. They want to get a jump on the self fulfilling prophecy.
Senor P: The folks getting the K-1s are limited partners. For each, his/her/zir/their investment in this real estate enterprise is a small percentage of his/her/zir/their net worth. New York City could be pulled down into the Earth’s mantle and it would not have a significant effect on the limited partners’ wealth (the guy who manages the business would be affected, however, but the original post is not about him). If you own the S&P 500 and 1 of the 500 companies goes bankrupt, are you going to cry?
We hear that you Americans also like to flee to Mexico when the going gets tough.
Maybe postage to Cancun in coming years?
Jonas: Mexico is great (people, culture, architecture, food, etc.) and everyone suffering through a U.S. winter (including the Texans, exposed for the first time in 100 years to what we have every January here in Maskachusetts) should go there instead!
But the U.S. taxes worldwide income, so unless you’re going to renounce your citizenship and pay the substantial exit tax, it makes more financial sense to go to Florida (eliminates state tax) or Puerto Rico (eliminates federal tax and brings total tax down to about 4 percent; see https://www.gq.com/story/how-puerto-rico-became-tax-haven-for-super-rich ).
Few of my friends rented apartments in Playa del Carmen (town south of Cancun) and work and school children from there remotely. We went there in December, as we do every year – it was best vacation we had there (fewer people, lower prices). I would be there myself right now, but my wife is a doctor and doesn’t want to abandon practice for too long 🙁