Quote:
Originally Posted by marothisu
My wife and I together here in NYC have a combined upper income (or so that's what some of the calculators say). The funny thing is that even if we moved to Chicago/Illinois with that salary, our effective income tax rate would come down multiple percentage points even with the proposed graduated tax for Illinois. We pay nearly 10% right now in state and local income tax living in NYC. In Illinois with the same salary under the new plan we'd be a little over 5%. Completely night and day.
In fact, there is not a single dollar amount with that new tax plan where we'd be paying more in Illinois than NYC. Even with a $9M salary we'd be paying a smaller percentage in Illinois than NYC. In Illinois that would be capped at 7.99% but in NYC we'd be paying 12.18%.
At our combined base income (my wife makes commission, so we usually make more) this is what the current tax rates are. Keep in mind, we are considered more upper income by some calculations. Not in the millions of dollars, but the statistic.
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Yeah, I figure with the sizable hints you've dropped that with your combined income together you two earn about double my estimated income for this year and going forward. Chicago is still a relative bargain, but my boss (the CEO of the company) tells me that in his social circle he's had multiple high income professionals planning to move places like Texas. Doctors and lawyers and other executives. They'll definitely save on income taxes but I wonder if they'll actually save overall. I don't see the savings being enough to offset the disruption of moving unless they were already planning to move for other reasons. You and I have pretty similar desires for urban lifestyle and I know I don't want to move because the places I'd wan't to move don't offer savings. I think part of their concern is that once we go to a progressive tax rate, adjusting the upper ends will be easier, so maybe they don't see the initial rates holding and instead see their income just continuing to get eaten up by rising income taxes. I think that may be the larger concern rather than just this initial change. And they're probably right - I'd be surprised if this initial change is the end of the income tax hikes. Especially since the current tax rate was supposed to drop back to 3.75%, which of course it never did. I like Chicago enough that taxes aren't going to be what drives me away unless they get truly insane. But for younger families or people who have a blinding (irrational in my mind) hatred of taxes, it could certainly push them out, especially if they don't fully account for other taxes.
And don't discount the peer pressure - I've seen plenty of high income people make decisions based on peer pressure - certain people feel like if they *don't* move that their peers will think they're dumb for being willing to pay the be tax rates. It seems absurd to me, but I've seen it more than once, so I can't discount that as being a problem. Rich people are sometimes even more sensitive to social pressure since at the high end networking and social status drives a lot of decisions and opportunity.
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