Miami has experienced a remarkable surge in millionaires over the past decade

The recent influx of ultra-wealthy individuals to Miami has transformed the city's dining scene, making it increasingly challenging to secure reservations at the hottest restaurants in town. According to Charlie Garcia, who has witnessed this shift firsthand since moving to Miami, the surge in billionaires relocating to Florida has caused significant disruptions. US Wealth Report 2023More Info

Miami has emerged as one of the premier destinations for millionaires and billionaires seeking a change of scenery. Over the past decade, the millionaire population has surged by 75% in Miami and an astounding 90% in West Palm Beach, according to a 2023 wealth report from investment migration firm Henley & Partners. This growth positions both cities among the top four in the nation, with Miami leading the pack as the home to the largest number of millionaires, centi-millionaires, and billionaires.

For Charlie Garcia, managing partner of R360, an exclusive community catering to ultra-wealthy individuals and their families with an average net worth of approximately $400 million, this influx of wealth presents both opportunities and challenges. Despite the increased competition for luxury experiences, Garcia's club has witnessed a surge in membership, particularly in Florida. He attributes this trend in part to recent tax law changes in states like Washington, which imposed a 7% capital gains tax in 2022, prompting affluent individuals to seek tax-friendly alternatives like Florida.

"It's not what you have or what you make, it's what you keep," emphasizes Garcia. "What you keep every year, what you keep when you die... what you keep if there's a slip and fall in your house and they come after you for everything."

In Florida, the wealthiest individuals can retain a significantly larger portion of their wealth compared to states like Connecticut, New York, or Washington, which impose taxes on estates and capital gains. Consider the case of Jeff Bezos, Florida's most prominent recent billionaire transplant, who departed from Washington, where he amassed his fortune, to settle in Miami. His relocation is estimated to result in savings of approximately $600 million in taxes over the next year as he divests Amazon stock.

This migration trend unfolds against the backdrop of a national dialogue on the prospect of implementing a federal wealth tax, or "billionaires tax," a concept supported by President Joe Biden but unlikely to gain traction in Congress. With little progress on the federal level, some states are taking matters into their own hands by enacting or proposing additional levies on the wealthy to finance social programs. Notably, these states include some of the nation's wealthiest residents: California, Connecticut, Hawaii, New York, and Washington.

"Not only does Florida not tax capital gains, it has no state income tax or estate tax. That makes it ideal for the ultra-wealthy who are considering estate planning," explains Garcia. He anticipates a continued influx of affluent individuals to the Sunshine State in the near future.

However, while Florida and other low-tax havens like Texas may attract more wealthy and ultra-wealthy residents, New York—despite its estate tax, state income tax, and other levies—remains home to the largest number of millionaires and billionaires in the country, and it holds the title of the richest city in the world. Although some wealthy individuals are relocating, Henley & Partners reports a 40% increase in high-net-worth residents over the past decade. The Bay Area, Los Angeles, Chicago, and Houston follow New York as the top American cities with the most high-net-worth residents.

According to Barbara Goodstein, another managing partner at R360's New York office, few people move solely for a tax break. Many members, she notes, still find significant value in being in a place like New York, whether it's because it's where they launched their business or to remain close to family.

Goodstein emphasizes that tax laws alone aren't sufficient to prompt relocations; people weigh various factors. "They’re not going to move just to save money in the long term; it's a multifaceted decision," she says.

Yet, as Garcia hinted, Florida offers more than tax benefits. Its warm weather, diverse housing, and vibrant cultural scene all contribute. Alongside flourishing art and culinary scenes, attractions like the Miami International Autodrome for Formula One races and the presence of a footballing legend add to the appeal.

Source: Yahoo Finance, Fortune.com