A few words about the new tax reform.
Many people say that the rich (and very rich) will benefit from it, but a simple calculation shows that this statement is not quite correct. Everything is being determined by what state you live in.
In the states with high rates of state and local taxes, rich people will have to pay more. Suppose that you are very rich and your taxable income is in the millions of dollars.
Under the old system, you had to pay 39.6 percent of your taxable income after the deduction of your state and local taxes.
Under the new tax law, you will have to pay a different amount because the deduction of state and local taxes was eliminated and the maximum federal tax rate was lowered to 37 percent.
This means that if the combined state and local tax rate is more than 6.6 percent, a rich taxpayer begins to pay more in federal taxes, so states with high taxes may start to see rich people leaving.