On December 28, 2020, Ani Hovanessian was quoted in Tax Notes on the unintended consequences of state wealth taxes.
According to the article, states are increasingly looking to the wealthy to plug budget gaps, make up for lost revenue, and address concerns about income equality. The efforts are proceeding on two fronts — relatively simple millionaire’s taxes and a revival of more complicated wealth taxes, which is levied as a percentage of all individual net wealth, not just newly gained income.
Although these new taxes are intended to generate much-needed revenue for the state, they may have the larger consequence of causing ultra-high-net-worth individuals to move out of the state, Hovanessian told Tax Notes.
The taxes could “have the reverse effect of discouraging the very people that you want to keep in your state from staying,” Hovanessian said. Those are the people who are paying high property and income taxes and frequenting and investing in businesses.
Hovanessian said that because of the pandemic, several of her clients who had not previously considered moving have been able to test out living in non-income-tax states like Florida and Texas and have found that they enjoy it there and could get their work done through telecommuting, virtual meetings, and phone calls.
Click here to access the article.