Jeff Bezos, the founder of Amazon and the third-richest person in the world, has lived in Washington state for nearly 30 years. It was in the garage of a Seattle-area home that Bezos launched Amazon in 1994. The company today is worth more than $1.4 trillion, and Bezos’s net worth has grown to $162 billion.
In an Instagram post last week, Bezos announced that, although he has “amazing memories” of Seattle, he has decided to relocate to Miami. “It’s an emotional decision for me,” he wrote. “Seattle, you will always have a piece of my heart.”
Washington will have to content itself with that piece of Bezos’s heart. Because once he becomes a Florida resident, the Evergreen State will no longer have a piece of his fortune.
Bezos says he is moving to be near his parents, who recently returned to Miami, where the family once lived. He will also be closer to Cape Canaveral, an increasingly active operations center for Blue Origin, Bezos’s rocket company. Are those the only reasons that Amazon’s creator has decided to change his domicile? They’re the only ones he mentioned on social media. But as the Tax Foundation’s lead researcher, Jared Walczak, immediately observed, Bezos is almost certainly going to save money — a lot of money — once he is no longer subject to Washington’s tax laws.
To begin with, Washington has a new capital gains tax, which was upheld by the state’s highest court in March. The tax takes a 7 percent bite of all investment gains above $250,000. In 2020 and 2021, when Bezos sold several million shares of Amazon stock, the proceeds totaled $15.7 billion. Assuming he disposed of stock he had owned since Amazon went public in 1997, Walczak calculated, Bezos “saved nearly $1.1 billion in taxes by selling those shares before the new state capital gains tax went into effect.” By relocating to Florida, he ensures that future stock sales will likewise remain untouched by Washington’s new capital gains levy.
That’s not all.
Washington had no estate tax during the years when Bezos was building Amazon into a commercial giant, but that changed after 2005. Now Washington has the steepest death tax in the nation, with a top rate of 20 percent on estates worth more than $9 million. Florida, on the other hand, has no estate tax at all. For a man with a personal fortune of more than $160 billion, the move from Washington to Florida could be worth $30 billion or more to his heirs.
That’s still not all.
Democrats in the Washington Legislature have been pushing for the adoption of a 1 percent wealth tax on all state residents with $1 billion or more in assets. Virtually all the revenue raised by such a measure would come from the minuscule number of superrich billionaires living in the state, Bezos among them. Of the $3.2 billion a year that state economists estimate the tax could raise, some $1.4 billion, or 45 percent, would have come from Bezos alone. By decamping to Florida, the Amazon founder has at a stroke rendered those estimates meaningless.
He has also provided fresh evidence of an economic fact of life: When taxes get too high in one state, the wealthy can move to another one.
For some reason, that is a lesson Massachusetts policy makers cannot seem to get through their heads. For years, the Bay State has been losing residents and revenue to Florida and New Hampshire, two states with no personal income tax. (Ironically, neither does Washington.) That exodus is sure to accelerate in the wake of the steep new “millionaires surtax” that voters added to the state constitution last year. Between 2010 and 2020, according to the Pioneer Institute, the amount of taxable income that former Massachusetts residents took with them to other states climbed from $422 million to $2.6 billion a year — and that was before the new surtax kicked in. Expect even more residents to migrate away if Governor Maura Healey and Boston Mayor Michelle Wu convince the Legislature to authorize a local transfer tax of up to 2 percent on property sales over $1 million in the Commonwealth.
In progressive circles, it remains an article of faith that high tax rates don’t drive people to flee, but evidence to the contrary is overwhelming. Massachusetts, Washington, California, and Illinois can keep waving goodbye as prosperous taxpayers keep relocating to Florida, Texas, Arizona, and New Hampshire. Or they can pull their heads out of the sand and acknowledge that reality isn’t optional. In the real world, when you try to soak the rich, you’re apt to lose the rich.