by Michele Jacklin
A new report by Moody’s Investors Service has concluded that the federal tax law that took effect in 2018 has not led to an anticipated out-migration of Connecticut residents, at least not at first blush.
The analysis, published in the April 10 edition of The Hartford Courant, concluded that the federal cap on state and local tax deductions has had little effect in Connecticut and other higher-tax states in motivating residents to move to lower-cost regions. The new federal tax law limited to $10,000 the amount of state and local taxes that taxpayers can deduct from their federal liabilities, which has resulted in thousands of Connecticut residents having to pay higher federal taxes for 2018.
“Domestic migration patterns offer no discernible signs yet that the federal cap on state and local tax deductions is causing residents to flee high-tax states, resulting in population loss,” the Moody’s report said.
However, Moody’s cautioned that Connecticut could still witness a loss of residents due to other factors, particularly lagging economic growth and an aging population. The drivers of any potential exodus, the report noted, “will be jobs and demographic trends, not taxes.”
According to Moody’s, Alaska, Delaware and North Dakota led the nation in 2017 in out-migration, although none are in the upper echelon of states with high state and local taxes. Indeed, the most popular destination for residents moving from Connecticut is New York, where personal income tax rates and property taxes are typically higher than Connecticut’s.
To view a copy of the story, please visit: