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Joe Biden’s “tax agenda” could lead to a “mass exodus” from the very Democrat-heavy states that voted him in, a specialist UK and US tax adviser has said. Michael Lewis, Director at tax firm Frank Hirth, spoke to Express.co.uk about the impact of the President-elect’s win on his own supporters. He warned that Mr Biden’s finance plans for the US could “discourage” Americans to earn high wages.
Mr Lewis told Express.co.uk: “States like California and New York which voted heavily Democrat, and would have been cheering a Biden win, are in dire trouble.
“Biden came in with a tax agenda which was strongly to put up taxes, reverse the Trump tax cuts and go much further.
“The US has some of the highest marginal tax rates in the world, when you combine federal and state taxes.
“So a wealthy person living in California could be paying effectively income taxes and security taxes in their mid-50s to high-50s.”
He continued: “At that sort of level, most commentators would suggest that that really discourages people to actually earn.
“Most people don’t like paying taxes, especially if you’re rich and you’re mobile.
“At a citizenship level, you can’t avoid US tax because, if you’re a US citizen, you’ll always pay your federal tax wherever you go.
“It’s very hard to give up citizenship, but it’s not very hard to move state. We’re already seeing a situation where there was a brain drain going on in California.”
The expert continued: “To a lesser extent, it’s happening at retirement level in New York, where people are choosing to live in surrounding states rather than live in New York when they finish working.
“They’ll move somewhere sunny where they don’t pay as much taxes or any taxes, such as Florida.
“So both are experiencing a massive drain in people, and this is having an impact on their finances. One way to address that problem is to raise taxes, which of course just accelerates the problem.”
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Mr Lewis told Express.co.uk: “What people don’t realise is that if Biden was able to put up these tax rates then he’s going to incentivise even more people to look to reduce their taxes.
“There’s a threshold at which someone might be prepared to pay taxes based on the benefits they get, based on living in a nice state on the coast like California etc.
“There’s a point where you say, ‘enough’s enough, I’m going to leave’. So some people are leaving already.
“People don’t look at their taxes individually, they look at their global tax rate and go: ‘Has my overall tax rate gone up? What can I do to reduce it? I can leave California’.
“So if Biden was able to introduce a tax agenda, this would dramatically accelerate the exodus from places like California.”
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