The wealth is not spread. The same few companies still control that $2T, they just moved their offices. All that happened is that now NY&CA lost some jobs/tax revenue.

Did they even lose tax revenue other than income tax from some admin jobs? Most states have moved to market based sourcing rules for corporate taxes, so revenue is taxed where the services are received. If the clients are still in CA/NY, I presume it does not change much.

In either case, changes in income quintile/decile would be a better measure than whatever this article is supposed to show.

> Did they even lose tax revenue other than income tax from some admin jobs?

There's no doubt that there is more to lose than just the direct job losses. There's the GDP impact of those people traveling to the city, eating lunch, taking out clients, sticking around after work to socialize. It's not easy to put a number on it but it's definitely much larger than just the direct income tax losses.

> Most states have moved to market based sourcing rules for corporate taxes, so revenue is taxed where the services are received. If the clients are still in CA/NY, I presume it does not change much.

It doesn't work like that for managing assets as the client is delivering the assets to the manager in their jurisdiction. Where the manager's revenue is taxed is based on the location of those employees and the company headquarters. Not where the customer assets came from.

[delayed]

FTR: NYC's income tax ranges between 3.078% and 3.876%.

While not as authoritative as I would like, a quick search came up with this:

https://www.mhmcpa.com/insights/article/evaluating-economic-...

> States are currently electing to move from performance-based sourcing methods to market-based sourcing, which may prove difficult for PE/VC firms that will be required to allocate management fees to the home states of their investors rather than where they conduct business. The management company may be considered to have economic nexus in a state where its fund’s investors are located if management fees are allocated to those states and economic nexus thresholds are exceeded.

https://rsmus.com/insights/services/business-tax/state-nexus...

> The management company may be considered to have economic nexus in a state where its fund’s investors are located if management fees are allocated to those states and economic nexus thresholds are exceeded.

Ha! One cannot even imagine the wave of litigation that will fight this effort. I don't see the States winning the cases either.

Market based sourcing rules have been in effect for many years now. Any litigation would have already happened.

I believe a big chunk of the NY city budget is property taxes on the big boi buildings all over, as well as private houses. This is why NY is squeezing so hard on things like parking tickets and the MTA, because they are having budgeting issues :( Remember that time where they were overly aggressive ticketing people for seatbelt usage (I loved that because it made people actually buckle up) and it was 100% because they needed revenue.

Sounds like spreading the wealth to me

It seems you're talking about different senses of spreading. Geography versus economic structures.

It also creates jobs in Florida and Texas…

How many Walmart's worth? Big numbers are meh, just tell us what the state income tax delta is (federal taxes still getting paid). It's not a total loss, people will still move and work in the locales these jobs moved from, as well as pay property taxes (as real estate prices and rents aren't going down in CA and NY from all available data).

If California and NY want those dollars back, extract it through the federal government and the top 40% who pay federal income tax and can't avoid it (congresscritter hustle). You know, like red states do.

Not enough to even notice. I live in Texas. They always have some blurb about X company moving to Dallas and "creating" 500 jobs, and that's the last time you hear about them until they pop up in a WARN notice.

Yeah, but they vote the “wrong” way so they’re not important. /s

I hope to see a lot more of this kind of thing. I never liked or understood that massive Google San Jose project. Hope they change course and spread that investment around more of the country.

This basically just decreases NY/CA tax revenue from the investment firms, it does nothing to move the money.

What does this even mean? The tax money moves to another state, so it’s being spread out.

Unless the $2T moves to Texas Banks and trades on Texas exchanges (are there any?), The $2T stays where it is and so is irrelevant to the story, just there for the click baiting.

Nothing in the article suggests the $2T moves. At most it suggests at least some of the jobs managing it will, but that's not the same thing.

It is about race to the bottom - which state taxes corporations at the lowest rate, or has other corporation friendly laws. There is a reason why huge number of businesses are incorporated in Delaware, a state with a minuscule population of about 1 million. NYC by contrast has 8.5M.

The residents of Delaware perhaps benefit in some minuscule way, but the money isn't being spread out.

I think this is a deeper point that really gets to the heart of what's happening. If you or a corporation have some money, where does it reside? Unless the money is in something tangible (briefcase of cash, gold bullion, or real estate), it doesn't really reside anywhere. On the other hand, you do, which is what determines your tax liability.

An individual’s tax liabilities are different than a business’ tax liabilities, which are mostly dependent on where the services are received. Even independent contractors are subject to market based sourcing rules for determining tax liabilities, similar to how a store without a presence in your state still has to collect and remit sales tax to the jurisdiction that the item was shipped to.

Do you have links to read up on this? I know only if personal finance; makes sense that it's not correct for corporate.

I am not an expert either, and it seems each state has different rules. Searching some variation of “market based sourcing rules for income” should bring up relevant results.

For reference, the method used before was typically called “cost of performance”.

If it's moving to lower tax states then it's less spread, isn't it? The taxes should be progressive and more re-distributive than business profits.

Real estate price changes are maybe good for NY and CA but of course you get rising prices in the new states.