Let’s Catch Up – In Florida

Let’s Catch Up – In Florida

Maybe it’s time to take the ‘wealth migration’ discussion to where people are migrating.

Looking at the 3-foot snowdrift outside my window, I’m thinking I have to get out of Minnesota for a while this March—maybe to Naples, Fla.

I’m still recovering from last year’s “worst winter ever,” when it snowed from Nov. 3 to May 3 and we endured 50 days with lows below zero and 23 days with wind chills of -25 degrees or colder. Perfect conditions for fishing in an ice house, visiting the sea caves on Lake Superior and experimenting with how fast different foods and liquids will freeze. I love snow and the smell of fresh, winter air. But winters can be long here, and I also love a warm summer breeze and the smell of humidity and vegetation.

A more pertinent reason for heading to Naples next month is that it has become one of the best locations to meet up with Minnesota business owners and CEOs during the winter. This explains why everyone from Cargill CEO David MacLennan and US Bank Chair and CEO Richard Davis to U.S. Sen. Amy Klobuchar and Gopher football coach Jerry Kill have journeyed there in recent winters to speak to the Minnesota Men’s Breakfast Club—snowbirds and former Minnesotans who have been meeting on Friday mornings during the winter months going on more than 50 years now.

Meanwhile, last year, 10 out of 15 people I asked to be a panelist for an event in March declined because they were scheduled to be out of town—for several days, a week or weeks—in Naples, Scottsdale or Palm Springs. At the time I quipped to colleagues, “Given everyone seems to be in Naples, we should have a panel discussion there next March.”

Maybe it’s time to do just that. And the event could focus on how Minnesota is losing its wealth to places such as Naples.

Throughout 2014, most people I asked told me they or someone they know has just moved, or is moving his estate out of Minnesota to some warmer and more tax-friendly location. I’ve written about this before: Our state is losing many of its most successful citizens because our taxes are higher than in places such as Arizona, Colorado and Florida, while state tax collectors seem to be chasing down anyone who dares to become successful financially. One of them is an individual we dubbed a “Young Millionaire” last year. Born and raised in Minnesota, his family now resides in Florida.

He, like others, appreciates all of the good Minnesota and the Twin Cities have to offer. But the state has gone too far with its tax policy. While Minnesota slightly reduced taxes heading into this year, the moves don’t even amount to a drop in the proverbial bucket. Consider:

  • Minnesota’s top personal income tax bracket hits individuals making $154,541 or more per year, and families with household income of $254,241 or more, with a 9.85 percent tax. This is the fourth-highest tax among states levying individual income tax. Florida has no income tax (neither do Texas, Nevada and four other states). Florida also has no tax on pension or Social Security benefits.
  • Our state and local income tax collections per person were $1,404 in 2011—the sixth-highest nationally. And this was before taxes were increased in 2013.
  • The state’s corporate income tax system consists of a flat rate of 9.8 percent and is the third-highest among states levying a corporate income tax.
  • Minnesota’s state and local corporate income tax collections ranked 10th-highest nationally in 2012. Again, this was before the 2013 increases.
  • Minnesota has the second-highest capital gains tax rate, tied with Oregon at 9.9 percent.
  • Minnesota is one of only a handful of states that still collects a death tax—estates with more than $1.4 million in real estate and/or other tangible property or business interests in Minnesota are subject to a tax, regardless of where the estate is based. It includes life insurance proceeds, real estate, 401(k)s and investments. This tax is a leading reason why people move: the 14 states that had an estate tax in 2013 had $92.7 billion in net outflows of adjusted gross income from 2000 through 2010, according to the Fiscal Times.

Some say we have to tax as high as we do to maintain a standard of living that is far superior to that of low-tax locales such as Florida and Arizona. These individuals should be provided a tiny portion of the $1.3 billion in tax hikes enacted in Minnesota in 2013 to cover extended-stay trips to one of those states. They would be surprised to find they have better roads than ours, their public schools (in certain cities) are good, their health care is just as good, and they have a variety of fine arts, good restaurants and more—all this without mosquitoes, wind chill, black ice and the possibility of even higher taxes.

Considering that other states have been in similar spots and found ways to reverse the trend, what if we had an event in Naples where we brought experts in from those states to explain how they pulled it off? Speakers might include Wisconsin Gov. Scott Walker, who has presided over tax cuts worth $800 million; or a political leader from Nebraska, which recently found a way to lower income, property and state sales taxes by more than $410 million a year; or New York Gov. Andrew Cuomo, who helped shepherd substantial corporate tax reform last year.

The audience for such a forum would already be there. And they’d be interested in the subject, given many of them would rather not have to move their assets out of the state and stop visiting their physicians, financial planners, accountants and favorite nonprofits based here in Minnesota.

Let me know if you’re interested and I’ll see you there.

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