High net worth folks with several homes often strive to avoid being counted as a resident of a high-tax state. Traditionally, that's meant keeping careful count of how many days are spent in said state, and there are apps for that. But as Paul Sullivan reports in his Wealth Matters column, states such as New York and California have become more sophisticated in their efforts to tax the rich.
in New York, at the Public Library.
Days spent in state represent only one of five tests New York applies. "The state also looks at the size and cost of the New York home compared with those in other states, a person’s business and family ties to the state, and a category that looks at where 'near and dear' items are kept."
Days spent in state represent only one of five tests New York applies. "The state also looks at the size and cost of the New York home compared with those in other states, a person’s business and family ties to the state, and a category that looks at where 'near and dear' items are kept."
That last category is popularly known as the teddy bear test.
The new federal income tax cap on SALT deductions has further motivated the rich to flee their domiciles in high tax states. It has also motivated the high-tax states to fight back. In addition to checking for stuffed animals, New York may examine cell phone records and Facebook posts.
From a revenue standpoint the stakes are high. New York gets 46 percent of its income tax take from the top one percent of taxpayers.
Even top one percent New Yorkers who establish domicile elsewhere could be snared by a new proposed revenue raiser: a pied-à-terre tax on second homes worth over $5 million.
Originally posted to the Merrill Anderson Co. Trust Marketing blog by James Mcdonald, Retired Senior Vice President, Merrill Anderson Co. Inc.
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