Laura Beck
Sep 17, 2024
As DeLuca said, many of the states that could see the biggest impact on upper-class paychecks are also major contributors to the national GDP. The interplay between tax policy, economic growth and income distribution is complex and multifaceted.
As the 2024 presidential election approaches, high-income earners are paying close attention to the potential financial impacts of a Kamala Harris presidency, especially in certain states where tax policies could hit the wealthy harder. GOBankingRates spoke to financial experts to analyze where these impacts might be most significant.
California and New York: High Tax Burdens
Cliff Ambrose, founder of Apex Wealth, highlighted that states like California and New York, which already have high state income taxes, could see upper-class paychecks shrink further under Harris' proposed tax increases on high earners.
Anthony DeLuca, CFP, reinforced this, stating, "Any state that already holds state income tax will become quite burdensome to any upper-class member." He specifically pointed out that New York residents might face "a 43.9% federal-state capital gains tax" under a Harris administration. He also noted that both New York and California are home to many S&P 500 headquarters, suggesting broader economic effects in these states.
Florida: Federal Tax Impact
Though Florida lacks a state income tax, it may not be immune to changes. Ambrose explained that the impact on Floridian upper-class residents would likely come from federal tax increases rather than state-level changes.
New Jersey and Massachusetts: High Combined Tax Rates
DeLuca added New Jersey and Massachusetts to the list of states where wealthy individuals could see significant impacts, with these states, along with New York and California, expected to rise "above the 40% mark" in combined federal and state tax rates for high earners.
Wyoming and New Mexico: Energy Policy Effects
Beyond income and capital gains taxes, DeLuca pointed to potential energy policy impacts in states reliant on fossil fuel industries. He highlighted Wyoming, which produces 41% of U.S. coal, as being at risk under Harris' policies. Similarly, New Mexico, responsible for 13% of U.S. crude oil production, could face challenges if funding shifts to alternative energy sources.
The Broader Picture
Harris’ proposed tax increases on higher earners are aimed at funding broader programs like healthcare and infrastructure, which could have wide-reaching economic effects. DeLuca noted that many of the states likely to be impacted are also key contributors to the national GDP, making the interaction between tax policy, economic growth, and income distribution complex.
Lastly, it's important to remember that campaign proposals don't always become policy, and any tax changes would need to pass through Congress.