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Comment by helen___keller | Hacker News Reader

I'm not sure I see any evidence the latter one happens in the forseeable future. Many high tax states hold top-performing cities which are struggling to handle massive incoming migration that has been happening a good 20 years.

The biggest gripe in my cost of living is by far housing. If I moved back to my home town in Florida, it would be so I can live near my parents and so I can afford a house . Not for taxes.

I suppose states without top cities, like Vermont, might run into problems. But even that is speculation - how many people actually uproot their lives just to save on state income tax?

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What do you mean “many?” Basically just SF and LA. There is huge net domestic outmigration from day NYC.

NYC’s population keeps growing. It had a peak in the 70’s, but it’s never been larger than right now. https://en.m.wikipedia.org/wiki/Demographics_of_New_York_(st...

NYC might be okay, it's one of a kind, but I think NJ/CT/IL are in for a slow long term decay. Their debt numbers are staggering, and they don't offer anything unique that other places don't.

https://www.watchdog.org/illinois/by-the-numbers-illinois-re...

New Jersey has the second highest household income in the United States. That’s a significant draw.

In terms of debt to GDP it’s South Carolina and New York that’s in real trouble. https://www.usgovernmentdebt.us/state_debt_rank

PS: All states combined is 14.79% and NJ stands at 15.69%. So it’s not great, but it’s not that far from average.

None of the sources in that link seem to include unfunded defined benefit and other post retirement employment benefits as debt, which they are.

Percentage of taxes going towards paying debt service including benefits for retired government employees is going to far outpace increase in incomes for NJ/CT/IL. Plus they have a lot of infrastructure debt to pay.

They're not the worst states to live in, especially if you're making a high income from NYC or Chicago and need a suburb to live in, but for 90% of people there's probably a place they can get more bang for their buck tax wise in the long run.

Pensions have frequently been reduced in the US, making such long term obligations somewhat less dangerous.

Lack of large scale migration means people actually like living there even if they don’t like specific aspects. SC on the other hand seems to be in a far worse situation without any clear mechanics for improving the situation.

PS: Looking at federal spending you can see many states are already on life support.

I don't know about frequently, I've only heard of 2 cases of pensions being reduced, with Detroit and Rhode Island being very recent and very new phenomenons. Even then, they are still a large portion of the budget. In IL, there is state constitutional amendment protecting defined benefit pensions, and I would love to see the battle between non government employee voters versus government employees play out.

Either way, you can be sure that the situation will be bad before pensions start getting cut. And South Carolina might not be good, but there's a bunch of other states with high growth in incomes, increasing high income populations, and well funded governments.

It’s really common across a wide range of states.

https://www.nasra.org/files/Spotlight/Significant%20Reforms....

Most of these have limited impact on current retirees, but changing inflation calculations and capped annual increases really add up.

I don’t see anything in that about cutting accrued benefits, which require bankruptcy to change, and would be huge news as it was for Detroit and Rhode Island. NJ has hundreds of billions in unfunded accrued benefits, I.e. debt.

It’s designed to seem that way.

Arizona: Retired and current active members Replaced the Permanent Benefit Increase (PBI) with a compounding COLA to be based on CPI for the Phoenix region, with a 2% annual cap. This was done to save money over time, even if people see the same check today it’s noticeably lower in 10 years. Over a possible 40+ year retirement the difference is huge.

Arkansas: Current retirees Reduced automatic COLA from 3%, compounded, to the lesser of 3% or CPI, compounded. Again a single year at 2% compound vs 3% compound reduces outstanding debt by 1%. Over 20+ years it makes a huge difference.

Colorado: (2018) Retired and current active state employees. Suspended COLA for two years(2018 and 2019) They did more, but that alone reduced their liabilities by around 5%. They had already done a similar thing in 2010 by requiring retirees to wait over 1 year for their first COLA and reducing the cap from 3.5% to 2%.

I could go on but you find a lot of these changes that often add up to a 10+% reduction in benefits and thus costs.

Yes, while those states are doing a better job, that won’t do anything to lower the unfunded accrued liabilities. It’s going to come out of future tax receipts, effectively giving future taxpayers the option of paying more taxes and/or accepting reduced services. Other solution will be for Fed to print more dollars and inflate away some of the debt, which I’m sure they will do as they always have.

Lowering long term benifits for current retirees directly reduces liabilities.

If I sell a bond paying 5% interest, then say sorry only paying 4% that’s a lower liability.

Going from living in VT to NH right now, for those very reasons. A huge number of VT tax refugees along the border of VT and NH.

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