“From Beaumont to Biloxi... sea breeze at your door; Gypsy rains, dang hurricanes... A white silver, sandy shore.”
—from “Stars on the Water,” as performed by Rodney Crowell
Recently I read about a device designed to cool and therefore weaken hurricanes known as the “Salter Sink.” The device is essentially a massive floating ring that cycles warm surface water that sloshes into it down a few dozen meters to be cooled off, thereby draining the storm of some of its energy. If enough were deployed in the path of an oncoming storm, it might lower the power of hurricanes from a Category 5 to a Category 3.
Is it cost effective and practical? I don’t know. But until this or another method is perfected, hurricanes may be the only thing preventing the population of Florida and the Gulf Coast from swelling with new residents.
One of the most significant sections in the Tax Cuts and Jobs Act of 2017 limits deductions on state and local taxes (SALT) to $10,000. Several highly taxed states, including New Jersey, California, Connecticut and New York, are attempting a state tax law workaround. But the IRS may not like it.
In New Jersey, the legislature passed a law enabling cities to create charitable plans to pay for municipal projects. When taxpayers give money to those projects, they receive a 90 percent credit on their property taxes, thus allowing most homeowners to effectively deduct almost all of their property taxes. Multiple states already allow similar charitable deductions, but some say New Jersey’s statute has been created to specifically avoid complying with the new tax law. When push reaches shove, I can’t imagine the IRS smiling on such legislation.
New Jersey was one of the most highly taxed states before the recent tax overhaul. The state features the highest effective property tax rate in the nation. For the last 14 years, property taxes there have increased by an average of 2 percent annually. Last year, residents of Tavistock, New Jersey, paid an average of $30,723 in property taxes. Yikes. They also pay state income tax at a rate of 6.37 percent on income over $75,000 and 8.97 percent state taxes on income over $500,000. Two years ago New Jersey raised its gas tax by 23 cents to 37.5 cents per gallon. That’s right, per gallon.
Twenty million residents paying moderate property taxes will create more revenue than a dwindling population paying exorbitant tax rates. As a state’s population grows, sales tax revenue increases, also. The steady influx into the Gulf Coast of folks from overtaxed states seeking to lower their tax bills is not likely to ebb anytime soon. If scientists ever invent the Hurricane Diverter, I-95 may not be able to handle the influx of new residents headed this way.
Margaret R. McDowell, ChFC®, AIF®, author of the syndicated economic column “Arbor Outlook,” is the founder of Arbor Wealth Management, LLC, (850.608.6121 – www.arborwealth.net), a “fee-only” registered investment advisory firm located near Sandestin.