Travis H. Brown, who runs the website howmoneywalks.com, does a county-by-county analysis of the U.S. using IRS data to calculate how much money is moving into an area. From 1992-2018, he calculates that $11.75 billion in taxable income migrated to Sarasota. This doesn’t count the dollars newcomers bring that aren’t taxed.
All those wealthy newcomers are the result of a number of factors: retiring baby boomers who are inheriting trillions in wealth, Florida’s absence of an income tax that draws high income people, and Sarasota’s triumvirate of riches—our sun, beaches and cultural scene.
Top feeder markets? In order, Cook County, Illinois; Oakland County, Michigan; Fairfield County, Connecticut; Westchester County, New York; and Hamilton County, Ohio. He anticipates even more people from these counties will bring their wealth once he can measure the impact of the 2017 federal tax reform, which he says is hurting the wealthy in blue states like Connecticut and New York. (Brown recommends that Sarasota tourism and economic development officials concentrate their efforts in these markets if they want to continue the influx. “It’s the flock effect,” he says. “We see patterns like ducks on a flyway. People follow friends and family. Chicagoans were here yesterday, there are new ones coming today and more tomorrow.”)
But what is the impact of all this money? Does it trickle down? Or does much of it tend to go back up north where these people have ties and children? Brown says people moving here feed all sorts of industries from construction to restaurants to financial services, and some also start companies. “Early retirees get an itch to do something else after two or three years, especially the baby boomers, and they start second and third careers,” he says. “They’re doing it right now in your community.”
The other sector that benefits, according to Brown, is the nonprofit industry. If you want to convince the state of Connecticut that you’re now a Florida resident—even though you still own a $5 million home in Fairfield—start donating to charities in your new hometown. Whether they give for that reason or pure altruism, it’s undeniable that wealthy newcomers enrich and expand our charities.
So how long can Sarasota count on this influx of wealth? In the short term it will last at least until the next downturn. In the longer run, baby boomers inheriting their parents’ wealth will be streaming in for the next couple of decades.
Source: Sarasota Magazine