From June of 2018. An excellent article on what happens when you tax the super-rich.
Institutional Investor reports:
For more than a decade, Paul Tudor Jones’s home in the Belle Haven district of Greenwich, Connecticut, hosted one of the most elaborate Christmas light shows on the East Coast. Each December, cars snaked through the secluded area, occupants craning necks to get a peek at light-sculpture angels, wise men, and stars as they burst onto the lawn of his Monticello-inspired mansion. Christmas music was even piped into the local FM radio station, including a rendition of “Oh Come All Ye Faithful” by Jones’s daughter Caroline, an aspiring country singer-songwriter.
Given the extravagant holiday tradition, it might be hard to argue that Greenwich is not where Jones’s heart lies — often a key element in determining whether one is domiciled in a state, and therefore must pay its income taxes. So, much to the chagrin of his Christmas display spectators, after Jones bought a $71 million home in Palm Beach, Florida, in 2015 and was seeking nonresidency tax status in Connecticut, he canceled the light show.
To be sure, Jones — whose net worth is estimated by Forbes at $4.5 billion — still owns his Belle Haven manse, and Tudor Investment Corp., the hedge fund firm he runs, is still headquartered in Connecticut. But Jones, who was one of the wealthiest taxpayers in Connecticut for years, no longer pays any income taxes to that state.
There's more:
Jones is hardly alone in claiming a change in domicile — or at least wanting to do so. Changes in the tax code last year, which limit the amount of state income and property taxes individuals can deduct from their federal income taxes, have made moving to lower-taxed locales a topic of consideration for many of the metropolitan area’s wealthy.
Florida — which has no state income tax and no inheritance tax — has become a lure for several billionaire financiers who in recent years have managed to keep luxurious homes or significant business operations (or both) in the high-tax states of Connecticut, New York, and New Jersey while avoiding paying these states’ income taxes.
In addition to Jones, these men include Edward Lampert, Barry Sternlicht, and Thomas Peterffy — all current or former residents of Greenwich — and Leon Cooperman and David Tepper of New Jersey. All have changed their domicile to Florida.
Perhaps the most famous case is that of hedge fund manager Julian Robertson, a New York state resident who also has a Manhattan apartment. In 2010, Robertson won a years-long battle with the city of New York over $26,702,341 plus interest the city claimed he owed, based on the statutory requirement that led to extraordinary efforts he made to limit his days spent in the city to meet the 183-day test.
“It is a growing problem,” says Kevin Sullivan, speaking on the final day of his job as Connecticut’s commissioner of revenue services last month. “If one of the very top should go . . . that’s a noticeable blip on the radar.”
If Connecticut is feeling the loss, it should come as no surprise. Hedge funds, led by Tudor, moved to Greenwich in droves in the early 1990s to escape New York City’s high taxes. But in recent years Connecticut’s marginal tax rate on the highest earners jumped to 6.99 percent, up from 4.5 percent a few years ago. Now it’s close to New York state’s top income tax rate of 8.82 percent — though New York City residents pay an additional 3.88 percent. New Jersey’s top marginal income tax rate has also been rising and is now 8.97 percent.
The top 1 percent pay an estimated third or more of total state income taxes in these states — or at least they used to. New Jersey acknowledged it faced a budget crunch when Tepper, its wealthiest resident, who is worth $11 billion, quit paying state income taxes in 2016, reportedly costing the state hundreds of millions of dollars in income taxes. This year Tepper ranked second on Institutional Investor’s Rich List of the top hedge fund earners, earning $1.5 billion in 2017, on top of $700 million in 2016. That’s $2.2 billion that won’t get taxed by New Jersey, despite the fact that Appaloosa Management, his hedge fund firm, maintains its office in Short Hills, New Jersey. (It also opened one in Miami Beach, Florida, where Tepper lives most of the year. He declined to comment.)
This long article, is well worth your time.
