The Boo Boo’ed Blue States on “Fiscal Crack” While We (!!) Attract the Affluent

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Phillips Creek Ranch houseDare I say it — after all I’m a transplant, too, from Illinois, though I got here as quick as I could: tell these immigrants they are welcome, but leave their higher tax and social spending mentalities back in their previous home state!  

Last couple weeks have been a real estate blur. I was up in Frisco at Phillips Creek Ranch, where the dirt is flying as Republic Property group develops 957 acres into 547 home sites, bringing in more than 2,500 homes and 12,000 residents — whew! Across Legacy, Craig Ranch is getting hot. In fact, go north of Legacy and you may need a bandanna — dirt is just blowing in the wind as the ‘dozers prep homesites for thousands of families. I spoke to the marketing director of a large national home builder who knows his website stats forward and backwards: people are moving to Texas in droves, he told me, and the top feeder states are the boo-boo blue states California, Illinois and New York, in that order.

Which correlates totally to what Joanna wrote awhile back: it may not be our lower taxes that are bringing in all these transplants. It may be our great housing prices.

The blue states, writes Joel Kotkin, seem pretty intent on keeping that steady stream of affluent migration to us streaming. Shall we thank them? Pretty soon the only folks left behind in the “boo-booed” blue will be the very rich and the poor:

They appear to have chosen an economic path that essentially penalizes their own middle and upper-middle class residents, believing that keeping up public spending, including on public employee pensions, represents the best way to boost their economy. Yet the gambit of raising state income taxes could not be coming at a worse time. The president’s adopted tax reforms have eliminated write-offs for state taxes for those individuals with incomes over $250,000 and families earning over $300,000. As a result, the affluent residents of these states — California, New York, New Jersey and Illinois alone count for 40% of these deductions nationally — now can expect to get whacked coming and going.

The affluent, notes Kotkin, are not billionaires. Between 2006 and 2009, he writes, California lost a net 45,000 taxpayers earning between $5 million and $300,000 a year, according to the Ca. State Department of Finance. That’s your work-horse population: they are abundant, hard-working, procreate and consume. They also pay taxes but are the ones who seem to get really whacked, as Kotkin calls it, whenever Washington or the state legislature needs money. Why? Well the poor slug earning $30,000 a year isn’t going to pay up, and the billionaires have at their fingertips staffs of CPAs and off-shore trusts — minimum investment $500,000 — where they can minimize taxes and run their estates like corporations. Look at corporations like Facebook, Wells Fargo, and General Electric who apparently pay no taxes.

Another plus for us: those $300K to $5 million a year wage earners moving to Texas also buy houses, often plural. I’m hearing now that US Air execs are starting to house hunt in Dallas, moving here from Phoenix.

Kotkin says that last year, all ten of the leading states gaining domestic migrants were low-tax states, including five with no income tax: Texas, Florida, Tennessee, Washington and Nevada. The highest rates of outward-bound migration came from New Jersey, New York, Illinois and California. That will leave those states with fewer to support the tax raises and pension benefit increasing they are enacting — which may act as a fiscal band aid at first, the “fiscal crack”, as revenues increase and the economy appears to recover.

But then, slowly, the $300K to $5M a year worker bees say we’ve had enough, see ya’, wouldn’t want to be ya, and they come to Texas.

Dare I say it — after all I’m a transplant, too, from Illinois, though I got here as quick as I could: tell these immigrants they are welcome, but leave their higher tax and social spending mentalities back in their previous home.



Candy Evans

A real estate muckraker, Candy Evans is one of the nation’s leading real estate reporters. She is also the North Texas real estate editor for, CultureMap Dallas, Modern Luxury Dallas, & the Katy Trail Weekly. Candy has written for Joel Kotkin’s The New Geography, Inman Real Estate News, plus a host of national sites. Constantly breaking celebrity real estate news, she scooped former president George W. Bush's Dallas home in 2008. She is the founder and publisher of her signature, and, devoted to the vacation home market. Her verticals have won many awards, including Best Blog by the venerable National Association of Real Estate Editors, one of the nation’s oldest and most prestigious journalism associations. Candy holds an active Texas real estate license but does not sell. She is on the Board of Directors of Braemar Hotels & Resorts (BHR).

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