The great untethering of wealth

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

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