The Great Boomer Tax Migration . . .
Inside
P.52 BOOMERS ON THE MOVE
STATE PENSION BAILOUTS
P.59
P.63 CARRIBBEAN TAX HAVEN P.64 FLORIDA’S COMEBACK
BEST
STATES
TO
LIVE
P.67
Naples, Florida
Stockton, California
. . . And The Coming Blue-State Implosion
50
N E W S M A X | JU N E 201 3
J U N E 2 013 | N E W S M A X
51
High Taxes Have Boomers on the Move
­[
b y da n i e l ru d dy a n d dav i d pat t e n
]
J
ust a few years ago, philadelphia area tle something for his children and grandchildren. “If the
businessman Bruce Jones did the math on his economy stays as strong as it has been, I think that we’ll
personal finances and was none too happy with be in very good shape,” he says.
what he found.
Jones’ transformation from blue-state scion to red-state
The bottom line: The taxes and living costs homeowner and entrepreneur is far from an isolated case.
he was paying in Pennsylvania were so high In fact, he is one of millions of younger baby boomers who
that even after a lifetime of hard work and suc- are voting with their feet against high taxes and regulacess, he might not be able to leave much of an tions by moving to more taxpayer-friendly Southern and
inheritance for his kids.
Western states.
That was when he and
Between 1995 and 2010,
wife Etta began talking about
some $2 trillion in wealth
the future. They decided it
evaporated from blue states
was time for a change.
— those states that favor the
U.S.
U.S.
“We starting thinking
Democratic Party principles
2000 — 2010
Census
Census
about where we could go to
and governance — in favor of
Percent
Highest
Percent
Increase
Income Tax*
Increase
No Income Tax
stretch our income, pay a
low-taxed red states — those
minimum amount of taxes,
that lean toward Republican
Alaska
+8
New York
+2
and enjoy the weather,” Jones
Party principles and goverFlorida
+18
Connecticut
+5
says. The change they made
nance — as part of a seismic
Nevada
+35
Massachusetts
+3
eight years ago was to say
population shift. Since then,
New Hampshire**
+7
Oregon
+12
goodbye to their kids, who
this boomer tax migration
Tennessee**
+12
Minnesota
+8
had just finished college in
has intensified with new fedthe Northeast, and relocate
eral and state taxes helping
Washington
+14
California
+10
from Philadelphia to sunny
to propel one of the great miSouth Dakota
+8
New Jersey
+5
Tampa, Fla.
grations in American history.
Texas
+21
Virginia
+13
“We’re outdoor people, so
But this population exoWyoming
+14
Maryland
+9
this climate was very attracdus is different. It was ignited
Average
+15
Average
+7
tive to us,” he explains. “And
not by natural catastrophe or
*SOURCE: Tax Foundation — 2011 state individual tax collections per capita
then the tax structure down
economic upheaval, but rath**New Hampshire and Tennessee tax interest and dividend income
here is also very attractive in
er by massive tax and regulathat there is no state income
tory structures in blue states.
taxes, no local income taxes, no inheritance tax. All of Combined with the graying of the baby boomer generathose things were very important to us.”
tion, the result is waves of blue-state “refugees,” moving to
Plus they no longer had to run their heater seven red-state havens like Phoenix, Ariz.; Reno, Nev.; Austin,
months out of the year, as they had to do in the Northeast. Texas; and Sarasota, Fla.
In fact, Florida was so easy to work with that Jones was
The new wave of migrating boomers, many of whom
emboldened to go back into business running Duraseal bring with them substantial wealth and means, is boostAsphalt Sealing and Paving.
ing the economies in their new home states. But elseNow 60, Jones tells Newsmax he was able to buy twice where, it is having the opposite effect. States like Califorthe home in Florida he could afford in Philadelphia — and nia and Oregon in the West; Massachusetts, New Jersey,
he pays less property taxes. Things are going so well that New York, Pennsylvania, Maine, and Rhode Island in the
he no longer has to worry about being able to leave a lit- Northeast; and Minnesota and Illinois in the Midwest are
52
Financially
beleaguered
citizens
and small
businesses are
moving on to
states with no
state or local
income taxes.
N E W S M A X | JU N E 201 3
P.50,51: NAPLES/FRANZ MARC FREI/LONELY PLANET IMAGES/GETTY IMAGES / STOCKTON/JIM WILSON/THE NEW YORK TIMES/REDUX
P.52: ZEN SEKIZAWA/TAXI/GETTY IMAGES
Population Growth Comparison
J U N E 2 013 | N E W S M A X
53
Less is More
States where you are taxed the most and least:
“The tax
structure down
here is very
attractive in that
there is no state
income taxes,
no local income
taxes, no
inheritance tax.
All of those
things were very
important to us.”
— Floridians Etta and
Bruce Jones, former
Philadelphia residents on
their move to Florida
54
N E W S M A X | JU N E 201 3
New York’s pension liability stands at $216 billion, and
has an unfunded liability of $66 billion. Small wonder that
states addicted to spiraling tax revenues always seem to
need more.
Now boomers are doing their own math, and they have
figured out that as they retire they can slash their expenses
— especially state and city taxes, and the pass-along costs
these states carry — by relocating. And oh by the way, they
can enjoy year-round golf and beaches in the process.
How much they will save depends on where they live
now and where they plan to move. But David Marotta,
head of Marotta Wealth Management, says that many of
the boomer retirees he represents are relocating due to
four developments over the last year:
the combined tax rate on the
wealthiest residents stands at
12.7 percent. Add in federal
taxes, and the marginal effective tax rate in California is
now 51.9 percent, the highest
in the country. Hawaii is second highest at 50.5 percent,
and New York is a close third,
at 50.3 percent.
The highest federal income tax bracket was increased
to 39.5 percent for those earning more than $400,000. This
puts more pressure on those approaching retirement to
economize.
States like California, New York, and Illinois have increased income and sales taxes, aggravating the disparity
between red states and blue states.
A new Obamacare tax of 3.8 percent on investment income, for those earning more than $200,000
annually, goes into effect this year. That
ratchets up the economic pressure on those
in the higher brackets.
New IRS rules phase out some itemized
deductions and further limit the options for
escaping high taxation.
The result: A migration of businesses
and people to low-tax states. Between 1999
and 2010, some 1.2 million individual taxpayers left New York, New Jersey, and California, according to the foundation. Those
citizens took over $97 billion in personal income with them, a figure that does not include the losses from corporate relocations.
Despite that trend, however, it appears
the blue states have yet to learn their lesson.
In November, California passed Proposition 30, which created three new tax brackets for upper-income earners. The biggest
jump hits citizens earning $1 million or
more, who will see their top state-tax rate
rise from 10.3 percent to 13.3 percent. California will now eclipse New York, where
it wasn’t that long ago most
of their moving jobs nationally were people coming into
Income
Sales
Property
State
Tax
Tax
Tax
Rank
California. “At the end of last
year we started seeing a lot of
1
Maryland
High
High
Medium
companies moving, and we
2
Wisconsin
High
Medium
High
were surprised,” says Simon.
3
Rhode Island
High
High
High
“In December, we moved three
4
Virginia
High
Medium
Low
corporations to Florida. And
5
California
High
High
Low
we’re moving quite a few other
6
New York
High
High
High
corporations to Texas, as well.
“I’ve been intrigued: Why
7
Massachusetts
High
High
Medium
are people leaving California?
8
Minnesota
High
High
Medium
The contrast between the
And the big thing that every9
New Jersey
High
High
High
blue states and Sun Belt states
body says to us is, taxes. They
10 Connecticut
High
High
High
such as Florida and Texas,
say the taxes are too high now
which levy zero state income
in California for corporations.”
LEAST TAX
tax, is growing more obvious
As boomers in the blue
41
Nevada
None
High
Medium
with each passing day. The
states plan their futures, a dra42 New Hampshire
None
None
High
lure for new residents and
matic shift is under way. From
43 New Mexico
Low
Medium
Low
businesses is profound.
every walk of life, they are
“We’re not doing a multithinking long and hard about
44 Alabama
Low
Low
Low
million-dollar marketing camwhether the cost of paying
45 Washington
None
Medium Medium
paign,” Kelly Smallridge, presilarge amounts in extra taxes
46 Louisiana
Low
Low
Low
dent and CEO of Palm Beach
is worth the benefit of staying
47 South Dakota
None
Low
High
County’s Business Developwhere they are.
48 Florida
None
Medium Medium
ment Board, recently told the
While it is impossible to
49 Wyoming
None
Low
Low
New York Post. “We don’t need
predict exact numbers, based
to. They’re coming to us.”
on current trends, a significant
50 Alaska
None
None
Low
Amplifying the migration:
portion of blue-state boomers
SOURCE: Newsmax weighted average of Tax Foundation ranking of each state’s individual
income tax collections per capita (70 percent weight), sales tax (15 percent weight) and
The aging of the baby boomer
will choose to move elsewhere.
property tax as percent of home value (15 percent weight).
generation. The boomers —
According to Simon, the inAmericans born between 1946
crease in those exiting Califorand 1964 — are beginning to retire. The first members of nia has jumped by 30 percent in the past six months.
that group reached 65 in 2011.
A simple comparison between the states with the lowest
There are about 76 million boomers in total, roughly 23 income tax burden versus those with the highest reveals
percent of the U.S. population. Their average annual pur- how high taxes have already contributed to a significant
chasing power is estimated at a staggering $3.4 trillion. As internal population shift within the United States.
they move south, a huge fraction of the economy moves
Based on data from the U.S. Census and the Tax Founwith them.
dation, the nine continental U.S. states that have no perOf course, experts differ sharply on the degree of “tax sonal income tax, Alaska, Florida, Nevada, New Hampmigration” that is taking place. According to the Pub- shire, Tennessee, Washington, South Dakota, Texas, and
lic Policy Institute of California, only about 2 percent of Wyoming, have populations that are growing at double
Golden State job losses between 1992 and 2006 stemmed the rate of those in the nine states with the highest tax burfrom companies that pulled up stakes and relocated.
dens, which are New York, Connecticut, Massachusetts,
But real estate agents, corporate relocation specialists, Oregon, Minnesota, California, New Jersey, Virginia,
and moving companies all tell Newsmax that new taxes and Maryland.
coming online since November in California have been a
The populations of states with no income tax grew
game changer.
15 percent, well above the 10 percent rate for the United
Jamie Simon, a supervisor with Acclaimed Movers and States as a whole. A large part of that growth was attributStorage, a luxury moving service in north Hollywood, says able to an influx of people from other states. Collectively,
MOST TAX
Striking Contrast
JONESES/COURTESY OF DR. RICHARD LAYDEN
all becoming unhinged. Those states have become known
for their powerful unions, high taxes, and heavy regulations. These blue states as a whole have struggled in recent years to balance their budgets. They became bloated
from government services and financial benefits doled out
to state workers, and lower-income residents, in amounts
that threatened to exceed incoming revenues.
These high-taxed states have built massive infrastructures that require further infusions of tax cash from growing incomes and business activity. And faced with spiraling taxes and other costs, their most productive residents,
people like Bruce Jones, are packing their bags and heading south.
The most obvious example: California. The Golden
State spends over $68 billion a year on schools alone.
Backed by powerful unions, the average teacher earns
$67,871 a year. In five school districts, the average teacher
salary is over $90,000 per year. Two of them, Santa Barbara and Santa Clara, pay teachers on average over $101,000
annually. In contrast, compare that to Texas, where teachers draw an average salary of just $49,139.
And then there is the looming unfunded pension crisis.
California faces a total pension liability of $516 billion, of
which $189 billion is unfunded, according to a June 2012
report by the Pew Center for the States.
J U N E 2 013 | N E W S M A X
55
Top State Income Tax Rates
these snowbirds brought with them an immense amount
of wealth when they moved.
According to Travis Brown, whose book How Money
Walks used IRS tax data to analyze whether state-income
tax acted as a magnet to attract people from other states,
over $2 trillion moved between the states from 1995 to
2010. That shift left some states much richer, and others
considerably poorer, in the process.
Based on Brown’s calculation, Florida was the biggest
winner with a gigantic $86.4 billion gain over this period
from new migrants, as measured by the “adjusted gross
income” level indicated on their actual IRS 1040 forms.
This money came in large part from former residents of
blue states, led by New York ($16.8 billion), followed by
New Jersey ($10.2 billion), and Illinois ($6.2 billion).
Brown’s analysis revealed that the nine states without
income tax collectively realized a $146 billion gain in adjusted gross income from migrants into their states between 1995 and 2010. This compared with a $107 billion
loss suffered in the nine states with the highest personal
income tax rates during the same timeframe. That’s a
$253 billion gulf between them.
The Great Boomer Tax Migration
If the blue state to red state migration proves true, it
would certainly not be the first time Americans expressed
their cultural restlessness by voting with their feet.
The first great internal migration in American history
occurred in 1807, after Lewis and Clark returned East following their expedition to what is now the U.S. Pacific
Coast. President Thomas Jefferson sent the explorers to
see what lay beyond the Mississippi River.
The West promised the United States ample living
space far into the future. Over the next century, Americans trekked to the frontier in search of adventure, cheap
land, and the freedom that comes with wide-open spaces.
After the frontier closed in the late 1800s, the American people continued to migrate within the country’s borders. But their movements thereafter became more periodic, and were fueled by narrower motives.
By then, the American wanderlust to find a better opportunity just over the horizon had been seeded deep in
the nation’s soul.
For boomers, the first great shift began in the 1950s.
That trend also involved the Sun Belt.
In the 1970s and ’80s, cities like Buffalo, Pittsburgh,
Detroit, and Cleveland saw their employment base of
young people in their 20s and 30s disappear to states
like California, Texas, Colorado, Arizona, and Florida,
as young people sought opportunities with the emerging
56
N E W S M A X | JU N E 201 3
businesses springing up in high-growth Sun Belt states.
This first great boomer wave had far-reaching political
and cultural repercussions, including a Republican resurgence in the South and the West. For almost six decades
following Franklin Roosevelt’s 1932 landslide, Republicans had been locked out of full control of Congress. The
Democratic Party had become the de facto ruling party of
the nation.
But as young boomers left highly industrialized, highly
unionized states, they began to eschew the political values
of their home states and embraced a more opportunistic
vision espoused by the likes of actor-turned-California
Gov. Ronald Reagan.
The electoral map of Reagan’s 1980 presidential victory demonstrated how powerful the first wave of boomer
migration had been. Reagan won by a 10-point margin,
swept all the Western states, and carried every Southern
state except for then-President Jimmy Carter’s home
state of Georgia.
Reagan’s was the first political earthquake created
by the boomers, and it would help set the stage for the
great blue-red divide that continues to characterize our
current-day politics.
Another measure of the political shift: In 1966, the
state Senate in Texas consisted of 31 Democrats and no
Republicans. Its state House of Representatives had 131
Democrats, and only one Republican. Today, thanks to
the first wave of young boomers, Republicans handily
control both chambers of the state government, and GOP
Gov. Rick Perry presides in the governor’s mansion as
well. Similar GOP dominance is seen in Florida and several other Southern states. The current migration shift,
motivated as it is by not only the carrot of opportunity but
also the stick of burdensome taxes and regulation that
many boomers simply can’t afford to put up with, may
prove even more significant than the first.
Real estate agent Hector Gastelum of Realty Executives Dillon, who had the temerity to run for the state
Senate of California as a Republican, suggests the trend
toward an exodus out of California could be on the verge
of becoming a stampede.
He recently sold a million-dollar home owned by a San
Diego restaurateur who decided to relocate to Florida because the lower tax and regulatory burden allows entrepreneurs to earn more money, hire more employees, and
provide better service to customers.
“In Florida, they get it,” Gastelum says, bemoaning
California’s penchant for higher taxes, meddlesome government inspectors, and frivolous lawsuits. “In Texas,
they get it. In California, it’s the worst.” Gastelum tells
Newsmax that the state’s policies are simply pushing pro-
Highest Statutory Marginal Income Tax Rate by State, Tax Year 2013
WA
None
MT
6.9%
OR
9.9%
ID
7.4%
WY
None
NV
None
CA
13.3%
ME
7.95%
ND
3.99%
MN
7.85%
NE
6.84%
UT
5.0%
AZ
4.54%
CO
4.63%
NM
4.9%
WI
7.75%
SD
None
KS
4.9%
OK
5.25%
TX
None
AK
None
HI
11.0%
IA
8.98%
IN
3.4%
IL
5.0%
MO
6.0%
AR
7.0%
NY
8.82%
MI
4.25%
OH
5.93%
WV
VA
6.5% 5.75%
KY
6.0%
NC
7.75%
TN
6.0%
MS
5.0%
AL
5.0%
PA
3.07%
GA
6.0%
SC
7.0%
LA
6.0%
Progressive Tax
Low
High
FL
None
VT
8.95%
NH
5.0%
MA
5.25%
RI
5.99%
CT
6.70%
NJ
8.97%
DE
6.75%
MD
5.75%
DC
8.95%
Flat Tax
Low
High
No wage income tax
The top marginal rate is the maximum statutory tax rate in each state. It represents the statutory tax rate on the last dollar of
income earned for the highest income individuals in that state. It is not an effective marginal tax rate, which would include the
effects of phase-outs of various tax preferences. Local income taxes (which exist in AL, AR, DE, IN, IA, KY, MD, MI, MO, NJ, NY, OH,
OR, and PA) are not included. NH and TN have an income tax imposed on interest and dividend income only (not wages).
SOURCE: Tax Foundation, state forms and instructions
ductive people to leave. “We have more people on the wagon than we have pushing the wagon,” he says, adding, “It’s
just so frustrating being a productive person in this state.”
James Martin, the chairman of the 60 Plus Association, tells Newsmax that his organization is hearing from
droves of mature Americans who are voting with their feet.
“They’re leaving some of the northeastern, blue, liberal
states with higher taxes and more regulation,” Martin tells
Newsmax. “Primarily, seniors are moving to lower-tax
states because seniors on fixed income are more acutely
aware of the tax situation than probably any other segment of our population.”
Now, the remnant of boomers that stayed behind in
the northern tier of the country is poised to follow in the
footsteps of their parents and the first wave of boomer
migrants, albeit for different reasons. Unlike previous migrations, the new boomer migration will be driven mostly
by hard-headed financial calculations about retirement.
According to financial adviser Steve Cordasco, warmer
temperatures will be less important to boomers this time
around. “People aren’t going to migrate for climate,” he
tells Newsmax. “They’re going to migrate for the wallet.”
He points out that the generation that went to Woodstock is “fearless and self-centered,” and will move south
to low-tax red states because “money will go where it’s
treated best.”
The typical married boomer couple in their 50s and 60s
are realizing that they won’t be able to afford to live in the
blue state they raised their families in, and must move if
they are to remain financially secure during the later portion of their lives.
Some wealthier boomers, who could afford to stay put,
are deciding to leave simply to save large amounts of money. One emerging reason for the exodus now in CaliforJ U N E 2 013 | N E W S M A X
57
nia and elsewhere is pent-up demand. For years after the
“With healthcare keeping people alive longer, and with
meltdown, money was tight, home values were underwa- people leading healthier, active lifestyles, and with the after, and mortgages were almost impossible to come by. But fordability of the cost of living down here in South Florida,
the housing boom-and-bust of the past decade also came people are happy for many years in retirement,” he says.
with a silver lining.
“The cost of living is incredibly low in Florida. It’s a winHome prices plummeted, and although values are re- win situation, but a lot of people don’t know that until
covering, boomers can now move rapidly to red states be- they either visit or end up relocating here, and experience
cause housing is new, abundant, and relatively inexpen- it firsthand.”
sive.
He says a lot of his clients come from the metro New
By selling higher-priced homes in the Northeast, many York area and the Northeast corridor. But rather than just
can create a new nest egg in surplus cash after buying less coming to work on their tans, he says they are motivated
expensive homes in red states.
“to take advantage of the few remaining great buying opThe economic impact of the magnetic attraction of portunities that exist here.”
Sun Belt states is already being felt. Florida, for example,
is emerging as a resilient star while much of the American
economy continues to struggle.
As CNBC commentator Jim Cramer recently noted,
Seeing the changing mood of the country, savvy Repub“Florida is on a major comeback . . . the Sunshine State is lican governors are taking bold steps to capitalize on the
again back as a place to make money.”
angst of blue-state boomers looking to protect their finanFlorida has added some 320,000 jobs since Gov. Rick cial futures. In April, Texas Gov. Rick Perry posted an ad
Scott took office in the midst of one of
on the popular business portal website
the worst economic downturns in the
Crain’s Chicago Business, bearing the
state’s history.
loud headline, “Get Out While There’s
The state’s unemployment rate
Still Time.” The ad proclaimed that
peaked in March 2010 at a staggering
the “escape route from Illinois to eco11.4 percent. But by March 2013, it
nomic freedom leads to Texas.” The
had dipped sharply to 7.5 percent.
timing for Perry’s marketing foray was
With boomers and their businesses
no accident.
relocating to Florida at an accelerated
Facing difficult budget issues, leadpace, there are indications its econoers in the land of Lincoln “temporarmy is now trending up. Home prices
ily” raised the state income tax rate in
in South Florida jumped a whopping
January 2011 from 3 to 5 percent — a
— James Martin, 60 Plus
25 percent in March, compared to the
66 percent increase in a state wracked
Association Chairman
same month one year ago.
by high unemployment. Illinois also
“It’s crazy out there,” South Florida broker Liza E. Men- raised corporate taxes from 4.8 percent to 7 percent. Wisdez told The Miami Herald. She said she recently sold a consin GOP Gov. Scott Walker also responded by immedithree-bedroom, three-bath Miami Lakes townhome. Its ately launching a campaign to lure tax-weary businesses
first day on the market, she conducted 15 showings and in Illinois to relocate.
received four offers — two of them for cash.
The irony is that Illinois progressives are at it again.
As blue state officials rail about the dismal economy, Despite the massive tax hike in 2011, they are proposing to
many Sun Belt states are roaring back strong. Construc- raise it again, this time under the guise of shifting Illinois
tion and exports are all trending up, and the tourist sector from a flat-tax to a progressive-tax state. Of course, the new
is coming back with a vengeance. Nowhere is the come- rate structure also would soak more money from the state’s
back trend as evident as Florida. According to the state’s most productive citizens, revenues that would help protect
tourism marketing agency, 89.3 million people paid a visit a bloated state-employee pension system whose unfunded
to Florida last year — an all-time record, and a 2.3 percent liabilities reportedly are approaching $100 billion.
increase from the year before.
Steven Malanga, senior fellow at the Manhattan InstiBen G. Schachter, broker-president of Century Village tute, says the fiscal hole that threatens to swallow Illinois
Real Estate Inc. in Boca Raton, Fla., says the only com- is growing at an alarming rate, because legislators applaint he hears from folks who relocate to Florida is they proved the 2011 tax hike without corresponding spending
wish they had done it 15 years ago.
cuts or pension reforms.
Pension Bailouts Could Shock State Budgets
B
oomers deciding whether to
stay or go may wish to consider
the massive pension liabilities
now threatening some state
budgets.
Wall Street financial analyst
Meredith Whitney, who accurately
predicted in 2007 that Citigroup would
slash its dividend, and subsequently
gained notoriety for telling CBS’ 60
Minutes scores of municipal-bond
defaults would occur across the country,
calls the state pension crisis “the time
bomb nobody’s talking about.”
Whitney discusses states’ pension
problems in her new book Fate of the
States: The New Geography of American
Prosperity, which debuts this month.
According to a September 2012
report issued by the Republican
members of the U.S. Senate’s Joint
Economic Committee, state pensions’
unfunded liabilities now amount
to a staggering $2.8 trillion in debt
obligations — the equivalent of roughly
one-fifth of the entire U.S. economy.
Whitney and others blame the states’
assumption that their pension funds will
earn a 7 to 8 percent annual return, in
an era when Treasury bonds are paying
only 1.7 percent. Automatic cost-of-living
increases for the pensions has taken a
toll as well.
Pension liabilities played a key role
in the recent bankruptcy filings of San
Texas vs. California
58
N E W S M A X | JU N E 201 3
WHITNEY/BLOOMBERG/GETTY IMAGES
COURTESY OF 60 PLUS ASSOCIATION
“People aren’t going
to migrate
for climate,
they’re
going to
migrate for
the wallet.”
CRISIS PREDICTOR
Meredith Whitney
says, in her new book,
Fate of the States, a
pensions crisis is on the way.
Bernardino and Stockton, two major
California cities. But some blue state
officials think they may have found a
solution for their lavish promises to
public-sector unions: Get U.S. taxpayers
to foot the bill.
“Most Americans probably believe a
federal bailout of state pensions would
not only be outrageous, but that it
would never happen,” noted the Joint
Economic Committee’s GOP staff report.
“But the same might have been said
about Detroit and Wall Street in 2007.”
He notes Illinois was laboring under a massive backlog
of $5 billion in unpaid bills before the tax increase took effect. But much of the new tax money was diverted to fund
the state’s pension system, he says, and today Illinois’
stack of unpaid bills has grown to a staggering $9 billion.
“The real offenders in my opinion are the states increasing taxes, mostly on wealthy people, and yet they are
doing nothing to reform their spending at the same time,”
says Malanga. “So the money is just disappearing into a
gigantic black hole.”
Once again, Gov. Walker has responded, hosting hundreds of Illinois manufacturers in the Badger State last
month for a conference with one declared objective: to
demonstrate why businesses in Illinois should move. Wisconsin officials were careful to point out their state is offer-
Sure enough, last year Detroit Rep.
Hansen Clarke, D-Mich., introduced
a federal bill seeking $500 million to
bailout the Motor City, including its
bloated pension program. And in Illinois,
Gov. Pat Quinn’s 2012 budget proposal
stated that “significant long-term
improvements” could be made in the
state’s pension finances from “seeking a
federal guarantee of the debt.”
After all, what better way
to spread the wealth around
than to get taxpayers in fiscally
responsible red states to pay for
pension liabilities incurred by
blue state politicians?
According to Stanford
economist Josh Rauh, the average
U.S. household would have to
pay $1,385 a year in additional
taxes to cover the states’ looming
pension crisis. And that tax would
only grow, as the state-level workforce
expands. But Brad Blakeman, former
White House senior staffer during the
Bush administration, says blue state pols
better forget their dreams of a federal
bailout and start renegotiating with the
unions.
“You have cities which have already
gone bankrupt in California,” Blakeman
says. “Perhaps states will go bankrupt.
This would be a horrible precedent to
set for the American economy, and for
the prestige of America.” — D.R.
ing a tax credit for manufacturers that, by 2016, will grow
to 7.5 percent — effectively erasing their tax liability.
Perry’s effort to lure businesses from blue states to Texas transcends Illinois. He did the same thing in February
on a trip to California.
“Building a business is tough, but I hear building a
business in California is next to impossible,” Perry said
in a radio ad. “I have a message for California businesses:
Come check out Texas.”
Perry went on to say that Texas has lower taxes and
lighter regulations than California.
By running a token radio ad for a mere $24,000, Perry reaped enormous free-media for Texas. In part, that
was thanks to the angry reaction of Democratic California Gov. Jerry Brown. He told reporters that California
J U N E 2 013 | N E W S M A X
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60
N E W S M A X | JU N E 201 3
TEXAS IS BETTER Gov. Rick Perry is
luring businesses to business-friendly Texas
through a creative ad and media campaign.
At right, he visits Illinois to make his case.
The California ad at top shows the backlash.
Obama and the U.S. Congress agreed to raise federal taxes
on those who earn more than $400,000. The payroll tax
holiday was eliminated as well. And don’t forget Obamacare’s 3.8 percent tax on investment income. Plus there
was a “phase out” of some itemized deductions.
For productive Californians, the fiscal cliff was suddenly a reality.
The combined changes meant that Californians earning over $1 million a year, a bracket that includes many
small-business owners, would see as much as 60 percent
of their earnings taken from them by their government.
That begins to approach the confiscatory level of taxation
seen in some European nations.
Talk about spurring migration: Wealthy denizens of
New York City who moved to Florida, where there is no
state income tax, give themselves an 8.82 percent raise
as soon as they cross the Florida-Georgia line. And that
doesn’t include the difference in sales taxes between, say,
New York City’s combined state-city assessment of 8.875
percent, and the sales tax in Fort Lauderdale, 6 percent.
These differences would more than completely offset the
new Obamacare and fiscal-cliff taxes.
American golfer Phil Mickelson, who was born in California and still lives there, briefly became a kindred spirit
to French actor Gerard Depardieu, who opted to become
a Russian citizen in order to avoid a draconian 75 percent
tax he would have paid had he stayed in France.
Mickelson, stung by a wave of new taxes from Washington and Sacramento, complained: “If you add up all the
federal, and you look at the disability and the unemployment and the Social Security and the state, my tax rate’s
62, 63 percent. So I’ve got to make some decisions on what
I’m going to do.”
After realizing that being depicted in the press
as someone who wanted to
avoid paying his “fair share”
was threatening his image
as a corporate spokesman,
Michelson recanted. But
most suspected his original
statement reflected his true
feelings about a 13.3 percent state tax rate that was
higher than any other state
in the country.
So why should the grievances of a few California
millionaires matter?
Small-business experts
point out that many millionaires are, in fact, the
owners and operators of
small businesses. The Internal Revenue Service allows them to claim what is
called “pass-through taxation,” which means that
they file an individual’s IRS
1040 form to pay taxes on
— Texas Gov. Rick Perry their business profits.
Mickelson, for instance,
employs a caddie, a golf teacher, an agent, and others to
help him maximize the profits of his personal brand. So
when the wealthy feel the crunch, a lot of other folks are
liable to be impacted as well.
How many wealthy Americans out there are really small
businesses in disguise? According to Scott Hodge, head of
the Tax Foundation, “fully 68 percent of private-business
“I have a
message for
California
businesses:
Come check
out Texas.”
BILLBOARD, PERRY/AP IMAGES
continues to have many competitive advantages over other states. With his characteristic moonbeam aplomb, he
dismissed Perry’s radio as “barely a fart.”
Like Walker, Perry showed a willingness to doubledown on inducements for blue-state firms to relocate. In
April, he called for the Texas legislature to slash taxes
on Lone Star businesses by $1.6 billion over the next two
years. For debt-laden blue states such as Brown’s California, matching such incentives is virtually impossible.
If Gov. Brown isn’t taking the prospect of a California exodus seriously, Joseph Vranich thinks he’s making
a huge mistake. An executive coach and relocation expert with Spectrum Location Solutions in Irvine, Calif.,
Vranich ought to know.
He runs a national firm that relocates family-owned
companies, ranging from 20 to 1,000 employees, all
around the country. He says the California tax increase
known as Proposition 30, which won approval in November and retroactively raised the tax rate in 2012, marked a
tipping point.
“Since Prop. 30 has passed, overwhelmingly my calls
have been from California companies, and the tenor of the
calls has changed,” says Vranich. “It used to be, What do
you know about Texas? What do you know about Arizona?
Now, the calls have an edge to them. This one guy said,
‘They raised my taxes retroactively to Jan. 1st? How dare
they! Get me out of this state.’”
The big winner in the California exodus by all accounts
is Texas, which already had a thriving rival to Silicon Valley buzzing in trendy Austin. “There’s a running joke in
Texas,” says Vranich. “When you go to get your driver’s
license renewed at the DMV, allow plenty of time because
the lines are full of people moving from California to Texas.” Because he fields relocation requests from all over the
country, Vranich knows which states are hot — and which
ones are radioactive. The big losers right now, he says, are
California, Illinois, and New York in that order. True-blue
Maryland, he adds, “is rapidly climbing the list of undesirable states.”
According to a Cato Institute report, Texas gained a
total of 680,000 interstate newcomers between 2004 and
2010, the highest number of any state in the country. Of
these, 185,000 came from California.
Much of the shift stems from the perfect storm of tax
legislation that hit California last year. Proposition 30
raised taxes on wealthy Californians earning more than
$250,000 per year. For those earning $1 million or more,
the tax rate jumped from 10.3 to 13.3 percent.
Also, California’s sales tax jumped from 7.25 percent to
7.50 percent, making it the highest sales tax in the country.
Add to that what occurred in December, when President
income is earned by taxpayers with adjusted gross income
above $200,000.”
As a rule, tax laws are difficult to understand, but boiled
down to their essence, the new tax increases mean one
thing: When millionaires flee California, or any other blue
state, to escape high taxation, they often take jobs along
with them. Their departures hurt the economy of the state
they left behind.
Yet New York, Illinois, and California have doubled
down on the big-government ethos that former President
Ronald Reagan once described as, “If it moves, tax it. If it
keeps moving, regulate it. And if it stops moving, subsidize it.”
The Great Divide
Wall Street Journal senior economics writer and editorial board member Stephen Moore, who co-authored
Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index tells Newsmax: “The red state-blue state
economic and political divide is more pronounced than at
any time since maybe the end of the Civil War. Red states
in the South are employing Reaganomics, blue states in
the Northeast are employing Obamanomics.
“The Blue States — California, New York, Illinois, Connecticut, New Jersey — have to change or die. They are
losing their capital, businesses, and workers to more competitive red states like Texas and Tennessee.”
Moore, in a recent Op-Ed written with economist Art
Laffer, predicted that within a decade five or six more
Southern states will opt to entirely eliminate their state
income taxes. He envisions a “region stretching from
Florida through Texas and Louisiana [that] could become
a vast state income-tax-free zone.”
Perhaps the perspective of blue-state leaders is best
exemplified by the reaction of then-New York Gov. David
Paterson in 2009, when talk-radio host Rush Limbaugh
announced that he planned to close his alternate studio
facility in Gotham and sell his condo there due to excessive taxation.
“If I knew that would be the result, I would’ve thought
about the taxes earlier,” Paterson shot back to reporters. In
others words: To Limbaugh, good riddance.
Migration patterns suggest taxpayers have heard the
blue states’ message of indifference loud and clear. Due to
population shifts, Sun Belt states have gained 25 electoral
votes from their northern cousins since 1970.
This may account for the fact that since 1960, only
one U.S. president has been elected from a non-Sun Belt
state: Barack Obama. In some ways, says former George
W. Bush senior staffer Bradley A. Blakeman, the migraJ U N E 2 013 | N E W S M A X
61
— Phil Mickelson, pro
golfer and California resident
troit, Cleveland, Rochester, Buffalo, and Providence. The
pattern is obvious.
The implications for the blue states would be devastating enough if only people were voting with their feet, but
businesses are fleeing as well.
Economist Chris Edwards, editor of DownSizingGovernment.org at the Cato Institute, notes that today’s
Information Age businesses are less rooted to any given
geographical region, and are free to do business wherever
they please.
“American industry is more mobile than ever, high tech
industries and service industries can locate in just about
any state these days,” says Edwards. “Industries are more
footloose, so that is causing more competition between
the states that have good policies and the states with bad
policies.” He characterizes the un-virtuous blue-state cycle of escalating taxes and declining tax bases as “a sort of
slow starvation.”
For states blessed with an abundance of natural resources and industries, the process may take time to play
62
N E W S M A X | JU N E 201 3
“P
uerto Rico” means “rich
port” in Spanish, and
the Caribbean vacation
hotspot is indeed
becoming a safe harbor
for wealthy mainlanders
who are hoping to keep more of
their own money.
Known for enchanting tourist
sites — the blue-cobblestoned streets
of Old San Juan, wind-swept El Morro
Castle, and El Yunque, the only
tropical rainforest in the U.S. national
forest system — Puerto Rico is desirable
for an altogether different reason as far
as investors are concerned.
Last year, Puerto
Rico lawmakers
passed a law that
allows new residents
to pay zero federal
taxes on capital gains.
The law’s obvious
intent: attract high
rollers from the
mainland to Puerto
PAULSON
Rico, where their
dollars are badly needed to boost
the economy.
In March, the new law gained
international attention thanks to hedgefund billionaire John Paulson.
Paulson’s prescient bet that
subprime mortgages would implode
made him one of the world’s 100 richest
PUERTO RICO/AP IMAGES / COMPASS/ISTOCKPHOTO / PAULSON/BLOOMBERG/GETTY IMAGES
“If you add up all
the federal and
you look at the
disability and the
unemployment
and the Social
Security and
the state, my
tax rate’s 62, 63
percent.”
itself out, and can even take longer than a single generation. But Edwards sees the ultimate outcome as inevitable, as private enterprise makes the migration to more
business-friendly states.
“So it often takes a couple decades for bad policies to
really bear the negative fruit,” he comments. “It’s not so
much a death spiral as just a long, slow suffocation for enterprise and growth.”
So what does the great boomer tax migration mean for
you and your nest egg?
The answer, of course, depends on where you plan to
live in coming years. Residing in a high-tax blue state today already costs you more than it would to live in a typical
low-tax red state, and this gap is likely to only widen in
the future.
As the more productive citizens and businesses in the
North exit for friendlier climes, those high-tax blue states
are likely to find themselves in a downward spiral. As their
tax bases narrow, and their public unions block any serious effort to cut services or reform pension plans, blue
states will have no choice but to try to replace the tax revenues that disappeared when prosperous boomer retirees
pack up their bags to head south.
The predictable response, as already witnessed in Illinois, is for blue state officials to respond to their diminishing tax base by trying to tax the wealthy even more.
This could provide temporary budgetary relief, as it has
in California.
But raising taxes fails to address the underlying fiscal
problems and lack of competitiveness that generated the
revenue shortfall in the first place.
Raising taxes only ensures the tax-base erosion will
continue. Manhattan Institute expert Malanga describes
the condition as one of “managed decline.”
“You see states and cities racing toward a situation
where they are suffocating growth, where they are driving
their best producers out of the state, and where the state
itself is crowding out private investment,” he tells Newsmax. “All of that has consequences, and we see those consequences, for example, in California’s very high unemployment rate.”
Given its abundance of natural resources, he says, “it’s
not like California is going to fall off into the Pacific Ocean
tomorrow and disappear.” But unless its policies change,
its economic vitality will steadily diminish, he says, as its
most productive citizens and businesses move elsewhere.
These are the trends that threaten to push many boomers out of the blue states altogether. But beyond the stick
of blue-state taxes and regulation, the red states offer an
inviting carrot: powerful, positive economic forces playing
out in the Sun Belt region.
AP IMAGES
tion toward more pocketbook-friendly states reflects what
boomers have always done best: Shop for what they need.
“People are going to go where they feel that they are getting the best bang for their buck,” he says. “They’re making business decisions on where to live just as they’d make
a business decision on what car to buy or what clothes to
wear.” According to U.S. Census data, over the past year,
the fastest-growing metro areas read like a red state honor
roll. They include Raleigh, Austin, Las Vegas, Orlando,
Charlotte, Phoenix, Houston, Dallas, and San Antonio.
The cities suffering the biggest population drain, meanwhile, are in predominantly blue-state strongholds: De-
Puerto Rico: A U.S. Tax Haven in the Caribbean
Florida
Bahamas
Cuba
Dominican
Republic
Puerto
Rico
Jamaica
Haiti
billionaires in 2008. But his success
made him a prime target for those
seeking to soak the rich, a common
preoccupation in New York City.
When the lifelong New Yorker
confirmed he was considering a real
estate purchase in Puerto Rico, the
speculation began in earnest that he
planned to relocate to Puerto Rico to
save millions.
Well-heeled newcomers relocating
to Puerto Rico, which is a U.S. territory,
can sign a deal with the Commonwealth
that excuses them from the 23.8 percent
tax they would otherwise pay on U.S.
capital gains. There are a few
requirements that must be met to
qualify, however.
New residents must spend at
least 183 days a year in Puerto
Rico. And they must demonstrate
they have family and social
connections to the island as well.
Boomer retirees will be migrating to red states with dynamic economies. These states will be among the biggest
beneficiaries, in many cases, of the revolution in domestic energy production that some experts believe will make
the United States energy independent by 2035, and maybe
even sooner.
The red states have become magnets for informationtechnology innovators and biotech companies as well.
And the arriving boomers will bring their wealth with
them. This will spur home building, drive up the value of
existing homes, and will stimulate the economies of their
new states.
The story of Bruce Jones, the lifelong Philadelphian
who moved to Florida to build up a nest egg to pass on to
In March, Paulson quashed talk
he would make Puerto Rico his new
permanent address. His hedge fund
firm, Paulson & Co., announced:
“While Mr. Paulson has considered
real estate investments and has
vacationed on the island, he has
no plans to establish a permanent
residence there.”
But the island’s allure for investors
continues unabated. Island officials
say 10 stateside citizens have already
taken advantage of the law to
relocate and avoid high taxes.
As the higher taxes in the
fiscal-cliff deal and
Obamacare begin to bite,
look for that number to
escalate.
Thanks to the backlash
over spiraling U.S.
taxes, Puerto
Rico may soon
live up to its
name. — D.R.
his heirs, suggests that for many, the great boomer migration now under way will have a happy ending.
W
hen Jones’ adult children saw the value of the
Florida lifestyle their parents enjoyed after relocating, they packed up their bags and moved to
join them. Bruce’s son is a chiropractor, and his daughter is a CPA. For the Jones family, the high taxes and cold
weather of Philadelphia are but distant memories.
“It’s a fun place to be,” Jones says of his new home state.
“I’ve been here for eight years. And when we go out for dinner, we find a little waterfront restaurant, and I look at my
wife and say: ‘You know what? We’re not on vacation. We
live here.’ And that’s really a nice feeling.”
J U N E 2 013 | N E W S M A X
63
Gov. Scott
Crafts a
Sunshine
State
Comeback
A
EXCLUSIVE INTERVIEW
BACK TO WORK Businesses are being welcomed with open arms by
Scott. As a result, construction, like this project in Miami, is booming.
[
b y a n d r e w h e n ry
laser beam’s effect intensifies the lon
ger it stays on its target.
Just ask voters in Florida, where Gov. Rick
Scott’s relentless focus on unemployment has helped add
320,000 jobs to the Sunshine
State economy since he took
office in January 2011.
In May, Fast Company magazine
named Florida the No. 1 state in the
union for business innovation (below).
It noted Florida now ranks as the No.
2 state for most
new-business
creation, and
No. 3 for annual revenue generated per startup. Also, several
of its biotech and business
incubator sites have won national awards. The success
of Scott’s effort to make
Florida a spawning ground
for new business is drawing attention nationwide,
especially considering the
64
N E W S M A X | JU N E 201 3
]
woeful condition the state’s economy was in when Scott
took office. Florida had lost close to a million jobs in the
four years before Scott took office, and its debt had risen
by $5.2 billion. Scott responded by vigorously trimming state spending and
hacking away at regulations that made
it harder to do business.
He also supported a law in 2011 that
required state workers to begin kicking
in 3 percent of their earnings each year
to help fund the state pension plan for
some 623,000 state workers.
That law, upheld by the Florida Supreme Court, not only saves the state an
estimated $861 million a year, but averts
any possibility of a future state pension crisis.
Florida has seen 32 consecutive months of positive job
growth and a steady economic resurgence. The Politifact.
org site has stated Florida’s economy “shows many signs
of perking up over recent months,” and credited Scott
with being “laser-focused on employment.”
Scott’s not slowing down, either. Taxes have not increased during his term, and he spent much of April
barnstorming the state in support of a plan to eliminate
the sales tax that Florida manufacturers pay when they
Florida is No. 1
on Fast Company’s
list for business
innovation. The
governor has been
working hard to
make it so.
J U N E 2 013 | N E W S M A X
65
Newsmax: What’s the single
biggest factor contributing to
the big turnaround under way
in Florida?
Gov. Rick Scott: The four years
ating jobs for our families. The federal government needs
to follow what Florida is doing, because we are growing
jobs and creating opportunities for businesses to expand
and hire more workers.
Florida was once the place to retire. How are you working to
make Florida the undisputed best place to retire?
We fought to cut spending, reduce taxes, and paid down
debt by $2 billion. We are seeing a clear turnaround in our
state and know it’s working. Instead of debt, Florida now
has a projected budget surplus. We are now growing jobs
and able to invest in our families. Our low cost of living,
combined with our superior quality of life, makes Florida
the best place to live and work.
What immigration reform do states need from Washington?
We can’t put our companies at an economic disadvantage with a work-visa program that doesn’t work. So
we ought to work on those three things: securing our border, having a logical immigration plan that gets the right
workers into our country, but we make sure terrorists don’t
come into our country, and having a work-visa program
that absolutely works.
You have a re-election campaign coming up. What themes
will you run on?
I focused on seven steps to
700,000 jobs over seven years,
and it’s working. Last year, we
increased K-12 education fundbefore I became governor, the
ing by over $1 billion, because
state lost 832,000 jobs. Unemwe watched how we spent our
ployment went from 3.5 to 11.1
money in other agencies.
percent, the housing market
This year, my proposal
collapsed, and we increased
is another billion-dollar indebt by $5.2 billion. So I said
crease in K through 12, bewe’ve got to cut regulations. EDUCATION MATTERS Scott laughs with kids at Cunningham
cause it’s the right thing to
Elementary School in Fruit Cove, Fla. He has increased education
And we cut 2,300 regulations.
do for our children. As part of
funding dramatically, including pay raises for teachers.
We streamlined the permitthat, we will implement a pay
ting process so you can open up your business faster, and raise of $2,500 for all of our classroom teachers. And why
we went out and competed.
is that? We’re now No. 6 as far as eduWe called on companies. And so in just over two years, cation quality of any state in the counthe private sector’s now generated nearly 300,000 private- try. Our teachers are doing a great job
sector jobs, and we’ve had the second biggest drop in un- there. Our fourth graders are No. 2 in
employment.
the world in reading. And, according
to the World Council for Teacher QualWe do see an increasingly stark contrast in economic health ity, we have the most effective teachers
between red states and blue states. What are Republicans in the country. If you get on
doing to help states like Florida thrive economically?
Twitter, on @ItsWorkingFL,
We are reducing spending and getting rid of unneces- you’ll see what’s happening
sary rules and regulations that hinder businesses from cre- every day.
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buy equipment. His efforts paid off in early May when the
state legislature passed that proposal, which Scott says
will make Florida businesses more competitive. Also, he
recently launched the new “One Way” campaign to encourage businesses from high-tax states like Illinois to relocate to Florida.
He even invited business executives to contact his office on
their next trip to Florida. “We
hope you make it a ‘one-way’
trip,” Scott wrote, “because we
have the perfect climate not just
for vacation, but also for the fuFlorida Gov.
RICK SCOTT:
ture of your business.”
Federal government
Scott reports that Florida has
should follow Florida’s
enjoyed the second biggest drop
example for business.
in unemployment in the country
SEE VIDEO AT:
over the past two years.
newsmax.com/SeeTV
And he vows, “we aren’t letting
up until everyone who wants a job in our state has one.”
In an exclusive interview, Florida Gov. Rick Scott joined
Newsmax to talk about the economic revival under way in
Florida. He also shared his thoughts on federal immigration policy, and his plans for
the 2014 election.
The Top
States
for
Boomers
to Live
BOXES/HERRERA/THINKSTOCK / FLAGS/ISTOCKPHOTO
MIAMI/JOE RAEDLE/GETTY IMAGES
L
[
1. Florida
b y dav i d a . pat t e n
]
ike beauty, the best state to retire in all depends on
the beholder’s eye. But given their search for a comfortable
standard of living, many boomers are packing for sunnier
climes.
And who can blame
them? A survey earlier this
year by TD Ameritrade revealed the average baby
boomer is short by about a half a million dollars on what he or she needs
for retirement. With affordability for
one’s golden years more important
than ever, the South offers reasonable
home prices, booming economies, and
a modest cost of living.
Newsmax considered taxes, the
fiscal health of state and local governments, job opportunities, a business-friendly environment, cost of living, crime, weather, quality of
educational opportunities, and overall quality of life to determine
which states are likely to attract more boomers in the years ahead.
Picking
the right
destination
for retirement
doesn’t have to
be a daunting
challenge.
Here’s where
to begin.
THE SUNSHINE STATE
That the Sunshine State
is No. 1 on our list probably
comes as no surprise. The
Tax Foundation ranks Florida as having
the third-lowest tax burden of any state in
the union, surpassed only by Alaska and
Wyoming. Florida has no state income
tax, so wealthy Californians receive a 13.3
percent raise the moment they cross the
Florida state line. Affluent New York City
residents see a similar decline by making a
quick two-hour flight to Florida.
The state is business-friendly, and its
easy access through major international
airports, including Miami and Orlando,
make it a premiere destination.
Florida is fiscally sound. Budget and
pension reforms initiated by Gov. Rick
Scott will protect taxpayers from liabilities
in the future.
The state’s three great retirement
enclaves — Miami north to Palm Beach,
Orlando including the famous Villages
community, and Tampa-St. Petersburg —
have a developed infrastructure of cultural
and lifestyle amenities ranging from toprated hospitals to first-class golf courses.
Another big advantage is Florida’s
affordable real estate market: There are
still excellent bargains to be found. Add in
the weather and the beaches, and it’s easy
to see why newcomers to Florida are apt
to roll out the old Jackie Gleason line and
proclaim: “How swe-e-e-e-t it is!”
INSIDER TIP
The housing market in Florida is
tightening up fast, so don’t wait too
long to become a snowbird.
Miami
J U N E 2 0 13 | N E W S M A X
67
2. Texas
3. North Carolina 4. Tennessee
5. Nevada
6. Arizona
7. New Mexico
Galveston
INSIDER TIP
Texas culture varies widely by city:
For warmer weather and a younger,
hipper crowd, consider live-music
mecca Austin. San Antonio has a
vibrant River Walk area. Houston, the
nation’s fourth most populous city
with 2.1 million residents, is far more
sophisticated than its oil-patch roots
might suggest. And Dallas-Fort Worth
is located at about the same latitude
as Charleston, S.C.
— average highs
during the winter
months hover
around 60 degrees.
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N E W S M A X | JU N E 201 3
Last year, CNBC ranked
North Carolina the nation’s
fourth best state to do
business in nationwide.
It has four
Outer
nationally ranked
Banks
hospitals, and
also extraordinary
institutions of
higher learning,
including Duke,
Wake Forest, and
the University of
North Carolina.
Buoyed by the high-tech sector,
Raleigh and Charlotte recently ranked
No. 1 and No. 5 on Forbes’ list of fastest
growing U.S. cities. Asheville and Chapel
Hill are popular with boomers as well.
The state’s impressive topographical
diversity ranges from the highest
mountains east of the Rockies in the west,
to Cape Hatteras and the pristine coastline
of the Outer Banks beaches on its eastern
shore. Enjoy world-class fishing or strolls
along miles of endless beaches. Many
tourists consider the lighthouses in North
Carolina second to none.
As for weather, enjoy a moderate
climate year round. The average high is
54 in December, dips to 51 in January, and
jumps back up to 55 in February.
North Carolina also boasts hundreds of
world-class golf resorts.
INSIDER TIP
AMERICA AT ITS BEST
Tennessee boasts
several of the most diverse,
interesting cities in the
country, including Memphis, home of the
blues; Nashville, where live local music is
practically a way of life; and Chattanooga,
where you can explore Civil War
battlefields at Missionary Ridge, boat on
the famed Tennessee River, and hike along
the amazingly scenic overlooks of Lookout
Mountain.
Enjoy cycling, golfing, horseback riding,
fishing, and some of the best most fertile
hunting grounds
in the country.
East Tennessee
is home to the
Chattanooga
Choo Choo, made
famous in song,
Lookout
and NASCAR calls
Mountain
this area home.
Be advised you’ll definitely feel the
seasons in Tennessee: Average highs in
the winter months dip into the 40s. And
Tennessee remains affordable: U.S. News
named Knoxville one of the best places to
retire in the under $40,000 category.
One reason baby boomers are eyeing
Tennessee is it only taxes interest and
dividend income, at a flat rate of 6 percent.
Its per capita income-tax collections
rank 7th lowest nationally, according to
the Tax Foundation.
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North Carolina’s unemployment rate
stood at 9.2 percent in March, but its
economy appears to be on the mend.
Job hunting in High Point
Tennessee is affordable in more
ways than one. Its cost of living is 11
percent below the national average,
its property taxes are reasonable, and
the median price for a single-family
home in Nashville is $169,000.
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They say everything’s
bigger in Texas — but not
your tax bill. Texas, like
Florida, has balanced the books without
imposing a state income tax.
Texas isn’t quite as forgiving on
taxpayers as Florida, but it still ranks high
on the Tax Foundation’s list of the least
taxed places to live.
One attraction often overlooked: The
Lone Star State’s medical facilities.
The University Medical Center
Brackenridge, for example, is one of the
top hospitals in the country for treatment
of spine, brain, and cardiovascular
conditions. And the MD Anderson Cancer
Center in Houston is one of the world’s
premier cancer-treatment centers.
Its Gulf beaches are serene, and
Galveston Island lures visitors from the
mainland in droves.
FIRST IN FLIGHT
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THE LONE STAR STATE
THE BATTLE BORN STATE
Nevada is among the seven
states that don’t ask for a
dime of your hard-earned
income in the form of state taxes.
It also eschews corporate taxes, but
does assess property taxes and a 6.85
percent sales tax.
Home values in the Silver State
continue to be affordable, although prices
are rising. In fact, from 2011 to 2012, home
values in the Las Vegas metro area jumped
a whopping 24 percent.
Still, the median single-family home
price in Nevada is just $150,000.
In December and January, the average
high in Las Vegas is around 57 degrees.
Nevada also boasts stunning outdoor
attractions, such as Red Rock Canyon and
Hoover Dam. And let’s face it: Nevada is
one state where boomers of any age can
always find some action.
Red Rock Canyon
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Nevada continues to suffer from the
national downturn that took such
a heavy toll on the housing and
hospitality sectors. Its unemployment
rate was at
9.7 percent in
March. Nevada’s
governor, Brian
Sandoval, is
a Republican;
Democrats
currently control
both chambers
of the state
legislature. Gov. Sandoval
THE GRAND CANYON STATE
The Grand Canyon State
is characterized by warm
weather and wide-open
expanses. Tucson and Phoenix are
thriving metropolises, though the state’s
7.9 percent unemployment rate is higher
Desert Hiking
LAND OF ENCHANTMENT
New Mexico’s moniker is
“Land of Enchantment,” and
most boomers who have
made it their second home agree.
Although New Mexico is not as well
known a red state mecca as Florida,
Arizona, or Texas, it is starting to garner
attention nationwide.
Last year, CNNmoney.com rated
Albuquerque No. 1 on its “25 Best Places to
Retire” list, noting it’s one of the few places
in the world where you can ski in the
morning and play golf in the afternoon.
Rock climbers flock to this destination
as the state is known the world over for
its amazing natural rock formations.
Albuquerque does grow cool in December
Albuquerque
than the national average. With Joshua
trees and blossoming Saguaro cacti
standing sentinel-like along its roadsides,
it’s no wonder some find Arizona’s desert
vistas as compelling as fall foliage in the
Northeast. Arizona does assess an income
tax, with a top rate of 4.54 percent — 12th
lowest among those states that levy a tax
on income. Its home values took a major
dive when the housing bubble burst,
but since then valuations have bounced
back. The average high temperature in
February: a balmy 70 degrees.
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Arizona has some of the finest golf
resorts in the country, over 150 of
them are in the Phoenix-Scottsdale
area alone. Mesa
and January, when high temperatures
average around 48.
And don’t forget Sante Fe, whose artsy
charm and quixotic Southwestern culture
has earned it the moniker “City Different.”
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New Mexico
isn’t as tax
friendly as
some of the
other Sunbelt
States. Its
top income
tax rate is 4.9
percent. But
Gov. Martinez
home values are
reasonable: The median price of a
home in Albuquerque is $168,000.
And GOP Gov. Susana Martinez
is firmly ensconced with stellar
approval ratings.
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