Given the impact of COVID, a lot of NYC residents have left NYC to live with family / friends outside of NYC. Given that NYC has a rule that if you live in NYC for more than half the year, you are subject to the NYC income tax, do people who have been out of the city for more than 6 months qualify for this, even though their address may still be NYC? If they're in another state, are they expect from NY State tax, and would have to pay the state tax of the state they're living in?
Kind of an interesting dynamic, especially with lots of Wall Streeters not in NYC this year. It would probably wreck the city's budget.
G.O. bonds aren't what they used to be, that's for sure. Those tax pledges look mighty slim when you have shifts like this.
It's not Detroit level - but I think we are seeing some of the higher tax states (NYC, IL, CA) feel the effects of the layers of taxes they've put in place. As people migrate, claim residency in other places, log where they work, etc. it will eat at the margins. Visitation to these places eats away too - should workers go remote full time, tax base erodes, borrowing costs go up, budget gets pressured - there's a reason large cities that shut down begged for CARES act money and Powell made it rain to the tune of $150billion to state and local. Despite their personas - these folks aren't that stupid to not recognize this.
Munis are in for a similar comeuppance as many corporations have had - too much borrowing, slicing of services, skimping on pension payments, etc. Just bridging the gap to get by. bJust look at Illinois - it won't be the last.
My brother is going through this. He changed is state income tax to his home state because he plans on being out of NYC for longer than 6 months. It’s better to get the money now and pay it back if you don’t crack the 6 month mark - unless there’s a big penalty for underpaying taxes. I’m not sure
Yes, there's a penalty for underpaying taxes, if you're more than 10% below you get hit with it. I guess the question the legality of it. Most likely upon filing taxes next year I would file for a refund in NY and get it all back.
The city is accounting for this impact.
The question is whether this is a permanent shift. People have been saying this about NYC for years and it hasn't really come true yet. You also have to understand that SALT deductions come back in the foreseeable future (7 years or so) unless a Democratic President moves to overturn - which is likely if Biden wins.
Can you expand on SALT tax deduction comment? It makes sense dem's would want to repeal what trump did (effecitvely capping it at 10K). Is biden planning on keeping this in place? I'm uninformed on this but just bought a condo earlier this year and was pretty sad when it capped at 10 G's here in Cali
Someone with greater understanding of the legislative process is free to step in, but my recollection is that the 2017 Tax Cuts and Jobs Act (lol), being a stupid and partisan piece of legislation, did not garner enough support in the Senate to defeat a filibuster, and thus was passed as a budget reconciliation bill. Most of the provisions contained therein have a 10 year sunset as a result (not the corporate tax reduction, incidentally, though I can almost guarantee you Biden will try to bring that back if he wins). So in 2027, the SALT deductions will kick back in.
The thought was that the SALT cap targeted liberal states, so dems want to repeal it. Never thought we'd hear Dems trying to lower taxes by reducing the cap, but it's a crazy world we live it.
It's not as easy as living 6 months away from NYC. NY tax collection regime is notoriously aggressive and they will come for you.. if not next year- 5 years from now. I recently got overdue tax bill from 2014 from when i moved to the city and didn't file an NY tax return because i only lived here 2 months.. stupid me. I still automatically had taxes deducted, so I was ok. But it shows how aggressive they are.
This bloomberg piece explains it well- https://www.bloomberg.com/news/articles/2020-07-22/new-york-s-taxes-wil…
Ugh. So I guess just leaving isn't enough. Blood suckers...
That’s you not filing taxes though bud
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