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One of the themes we cover on this blog is the importance of place in a world where people are becoming increasingly untethered. While I'm a firm believer that great local places have enduring value, this does not mean that technology isn't driving greater fluidity in the way people live, work, play, and optimize their taxes.
Over the last decade, the population of ultra-wealthy Americans (those with a net worth greater than or equal to $30 million) has risen noticeably in two states: Texas and Florida. California, a high-tax state, still dominates; however, Texas has overtaken New York, and Florida has overtaken Illinois. Notably, both Texas and Florida have no state income tax — they also have warmer weather than New York and Illinois.
As we have talked about before, there's a longstanding migration trend in the US toward sun, urban sprawl, and lower taxes. But it's not always as clear-cut as a rich person fully relocating to a lower-tax jurisdiction and completely severing ties. The enduring value of place means that many people still travel back and forth to meet whatever personal or professional obligations they might have.
And today, there are apps, such as TaxBird, that will meticulously track the number of days you spend (or your phone spends) in each jurisdiction to ensure you don't cross any important residency thresholds.
The global standard is the 183-day rule (or roughly half a year). In many or most cases, if you are physically present in a place for more than 50% of the year, you are automatically considered a resident for tax purposes. But it's not always this simple, so check with your tax advisor. Regardless, the untethering of life and work is surely allowing more people to tax-optimize in this way.
None of this is surprising.
As Charlie Munger used to say, "Show me the incentive, and I'll show you the outcome." But now we need to think about the longer-term ramifications for colder, higher-tax jurisdictions as capital and tax revenue continue to be siphoned off, not only to Texas and Florida, but to Dubai, Singapore, Hong Kong, Switzerland, Monaco and other places.
Cover photo by Colin Lloyd on Unsplash
There is a nonpartisan, nonprofit think tank based in New York called the Citizens Budget Commission (or CBC). And this week they launched Competitive NYC. The intent is a kind of dashboard that provides insights into NYC's overall competitiveness — specifically its ability to attract and retain both residents and businesses. I won't summarize all of the findings; if you'd like to take a look, you can do that here. But I did want to point out one finding.
Here's a chart showing the top 10 states for people with incomes greater than $1 million:
The work of l'Atelier parisien d'urbanisme (or Apur) is right in my wheelhouse. Run by an architect, they are a group that analyzes, documents, and then develops strategies for urban matters impacting Paris and Greater Paris (la Métropole du Grand Paris). For example, last year they published a book called Paris Atlas, which contains 150 original maps and lots of statistics about the city. And this month, they published a note talking about population and demographic trends in the city. Here's a brief summary of this latest report.
As of January 1, 2022, there were 7,115,576 people in Greater Paris:
Between 2016 and 2022, its population grew by about 0.2% per year or about 14,800 people per year. This is slower than the previous reporting period (2011 to 2015). It's also all because of natural births:
One of the themes we cover on this blog is the importance of place in a world where people are becoming increasingly untethered. While I'm a firm believer that great local places have enduring value, this does not mean that technology isn't driving greater fluidity in the way people live, work, play, and optimize their taxes.
Over the last decade, the population of ultra-wealthy Americans (those with a net worth greater than or equal to $30 million) has risen noticeably in two states: Texas and Florida. California, a high-tax state, still dominates; however, Texas has overtaken New York, and Florida has overtaken Illinois. Notably, both Texas and Florida have no state income tax — they also have warmer weather than New York and Illinois.
As we have talked about before, there's a longstanding migration trend in the US toward sun, urban sprawl, and lower taxes. But it's not always as clear-cut as a rich person fully relocating to a lower-tax jurisdiction and completely severing ties. The enduring value of place means that many people still travel back and forth to meet whatever personal or professional obligations they might have.
And today, there are apps, such as TaxBird, that will meticulously track the number of days you spend (or your phone spends) in each jurisdiction to ensure you don't cross any important residency thresholds.
The global standard is the 183-day rule (or roughly half a year). In many or most cases, if you are physically present in a place for more than 50% of the year, you are automatically considered a resident for tax purposes. But it's not always this simple, so check with your tax advisor. Regardless, the untethering of life and work is surely allowing more people to tax-optimize in this way.
None of this is surprising.
As Charlie Munger used to say, "Show me the incentive, and I'll show you the outcome." But now we need to think about the longer-term ramifications for colder, higher-tax jurisdictions as capital and tax revenue continue to be siphoned off, not only to Texas and Florida, but to Dubai, Singapore, Hong Kong, Switzerland, Monaco and other places.
Cover photo by Colin Lloyd on Unsplash
There is a nonpartisan, nonprofit think tank based in New York called the Citizens Budget Commission (or CBC). And this week they launched Competitive NYC. The intent is a kind of dashboard that provides insights into NYC's overall competitiveness — specifically its ability to attract and retain both residents and businesses. I won't summarize all of the findings; if you'd like to take a look, you can do that here. But I did want to point out one finding.
Here's a chart showing the top 10 states for people with incomes greater than $1 million:
The work of l'Atelier parisien d'urbanisme (or Apur) is right in my wheelhouse. Run by an architect, they are a group that analyzes, documents, and then develops strategies for urban matters impacting Paris and Greater Paris (la Métropole du Grand Paris). For example, last year they published a book called Paris Atlas, which contains 150 original maps and lots of statistics about the city. And this month, they published a note talking about population and demographic trends in the city. Here's a brief summary of this latest report.
As of January 1, 2022, there were 7,115,576 people in Greater Paris:
Between 2016 and 2022, its population grew by about 0.2% per year or about 14,800 people per year. This is slower than the previous reporting period (2011 to 2015). It's also all because of natural births:
The number of "millionaires" in New York state increased from 35,802 in 2010 to 69,780 in 2022, but its share of US millionaires declined the most. Previously it was 12.7%, and in 2022 it had dropped to 8.7%. On the other end of the spectrum, the state with the biggest share gain was Florida.
The tracker goes on to suggest that high taxes may be a factor for households moving out of New York City. Here's a chart showing taxes per $1,000 of personal income:
New York state is the highest and is 56% above the US average, whereas Florida is 31% below the average. Florida also has the sunshine thing going for it. This migration trend aligns with what was talked about a lot during the pandemic. Between April 2020 and July 2022, NYC lost nearly half a million residents, a chunk of which went to Palm Beach and Miami-Dade Counties.
It's a reminder not to take competitiveness for granted, especially when there's a clear trend toward places with warmer weather. People can and will vote with their feet.
Cover photo by Andre Benz on Unsplash; charts from CBCNY
When it comes to migration, more people leave the city each year than come to it:
This runs in contrast to a city region like Toronto, where the vast majority of our population growth comes from positive net migration. This is also true of Canada as a whole. Still, Paris is not immune to lower birthrates and a declining average household size:
Another factor impacting population, according to the report, is the decline in principal residences (homes occupied for more than 6 months of the year) and the rise of what the report calls "unoccupied homes", which includes secondary homes and vacation rentals. As of 2021, the number of "unoccupied homes" was estimated at approximately 19.2%:
However, in four arrondissements (1, 6, 7, and 8), the number of homes not used as a principal residence is thought to exceed 30%! This is making it even harder to build enough new homes. For example, between 2015 and 2021, Paris built approximately 30,300 new homes. (Reminder, the Greater Toronto and Hamilton Area completed about that many in one year last year.) But at the same time, the city counted 14,600 fewer principal residences. This is, I guess, what happens when you're one of the most visited cities in the world.
To end, I'll leave you all with this population density map:
The darkest areas represent more than 250 people per hectare. That works out to more than 25,000 people per square kilometer (just divide the above numbers by 0.01). At the same time, between 2016 and 2022, the population of Paris proper (not Greater Paris) decreased by an average of 12,800 people per year. This is in comparison to an average decrease of 11,900 people per year for the period of 2011 to 2016. As is the case in many/most cities, Paris' population growth is happening largely in the suburbs and in the outskirts.
Cover photo by JOHN TOWNER on Unsplash
The number of "millionaires" in New York state increased from 35,802 in 2010 to 69,780 in 2022, but its share of US millionaires declined the most. Previously it was 12.7%, and in 2022 it had dropped to 8.7%. On the other end of the spectrum, the state with the biggest share gain was Florida.
The tracker goes on to suggest that high taxes may be a factor for households moving out of New York City. Here's a chart showing taxes per $1,000 of personal income:
New York state is the highest and is 56% above the US average, whereas Florida is 31% below the average. Florida also has the sunshine thing going for it. This migration trend aligns with what was talked about a lot during the pandemic. Between April 2020 and July 2022, NYC lost nearly half a million residents, a chunk of which went to Palm Beach and Miami-Dade Counties.
It's a reminder not to take competitiveness for granted, especially when there's a clear trend toward places with warmer weather. People can and will vote with their feet.
Cover photo by Andre Benz on Unsplash; charts from CBCNY
When it comes to migration, more people leave the city each year than come to it:
This runs in contrast to a city region like Toronto, where the vast majority of our population growth comes from positive net migration. This is also true of Canada as a whole. Still, Paris is not immune to lower birthrates and a declining average household size:
Another factor impacting population, according to the report, is the decline in principal residences (homes occupied for more than 6 months of the year) and the rise of what the report calls "unoccupied homes", which includes secondary homes and vacation rentals. As of 2021, the number of "unoccupied homes" was estimated at approximately 19.2%:
However, in four arrondissements (1, 6, 7, and 8), the number of homes not used as a principal residence is thought to exceed 30%! This is making it even harder to build enough new homes. For example, between 2015 and 2021, Paris built approximately 30,300 new homes. (Reminder, the Greater Toronto and Hamilton Area completed about that many in one year last year.) But at the same time, the city counted 14,600 fewer principal residences. This is, I guess, what happens when you're one of the most visited cities in the world.
To end, I'll leave you all with this population density map:
The darkest areas represent more than 250 people per hectare. That works out to more than 25,000 people per square kilometer (just divide the above numbers by 0.01). At the same time, between 2016 and 2022, the population of Paris proper (not Greater Paris) decreased by an average of 12,800 people per year. This is in comparison to an average decrease of 11,900 people per year for the period of 2011 to 2016. As is the case in many/most cities, Paris' population growth is happening largely in the suburbs and in the outskirts.
Cover photo by JOHN TOWNER on Unsplash
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