WEBVTT - The Global Investment Pivot 0:00:03.760 --> 0:00:06.880 Welcome to Bloomberg Opinion. I'm Vonnie Quinn. This week we 0:00:07.080 --> 0:00:12.280 have a period of writing taxes and squeezed expenditure as 0:00:12.320 --> 0:00:16.400 we moved towards an election. He will start cutting taxes. 0:00:16.560 --> 0:00:19.680 Adrian Woodridge on newly minted British Prime Minister Richie suonacs 0:00:19.720 --> 0:00:23.079 plans to stabilize UK markets and the economy. I will 0:00:23.120 --> 0:00:28.120 deliver on its promise that embraces the opportunities of Brexit 0:00:28.560 --> 0:00:34.200 where businesses invest, innovate and create jobs. We'll also speak 0:00:34.200 --> 0:00:37.440 with Alexis Leanders on stage shopping for tax purposes. That 0:00:37.560 --> 0:00:40.680 is first though to the sentiment shift in China markets 0:00:40.720 --> 0:00:44.240 this week. Stocks dived Monday, the un weekend, and foreign 0:00:44.240 --> 0:00:48.080 investors dumped everything, such that rebounds on subsequent days paled 0:00:48.159 --> 0:00:51.320 in comparison with Monday's moves. I spoke with Bloomberg Opinions 0:00:51.320 --> 0:00:55.440 Shulely wren So Shui what changed exactly post Party Congress. 0:00:55.600 --> 0:00:57.720 We didn't get a reversal of COVID zero, but by 0:00:57.800 --> 0:01:00.800 last week we weren't really expecting that anyway. Global markets 0:01:00.800 --> 0:01:04.160 have been questioning china Is so called investibility since late 0:01:04.280 --> 0:01:07.640 last year, when they Ching's regulatory crackdown on big tech 0:01:07.680 --> 0:01:10.600 and real estate companies whipe trillions of dollars off of 0:01:10.680 --> 0:01:14.080 investors books. But this time they are really worried because 0:01:14.240 --> 0:01:17.160 it does seem like President she Jinping is solidifying his 0:01:17.240 --> 0:01:20.720 power and packing the future Chinese leadership with all his 0:01:21.000 --> 0:01:24.360 long time aids, and they're worried that she's so called 0:01:24.360 --> 0:01:27.880 new economic development model. It's just not good for financial market. 0:01:28.080 --> 0:01:30.160 And the last few months we've seen investors look at 0:01:30.240 --> 0:01:33.120 various parts of the China market very differently. So each 0:01:33.120 --> 0:01:35.880 time there was a crackdown on internet gaming, for example, 0:01:35.959 --> 0:01:38.520 or on education stocks, they sold off for the rest 0:01:38.520 --> 0:01:41.319 of the market held up. That's not happening this time around. 0:01:41.360 --> 0:01:43.800 The whole market is selling off as one. Is that 0:01:43.959 --> 0:01:47.000 warranted or should investors be taking a pick and choose 0:01:47.000 --> 0:01:51.080 approach here? I think it's interesting. It's really a verdict 0:01:51.240 --> 0:01:55.360 um the entire Chinese political landscape, right, It's no longer 0:01:56.000 --> 0:01:59.920 spector specific. So so yeah, I think the market has spoken. 0:02:00.200 --> 0:02:02.920 Chinese companies traded in the US are now trading it 0:02:03.040 --> 0:02:07.000 under six times forward earnings, so somebody and that many 0:02:07.040 --> 0:02:10.960 people are valuing these companies really cheaply. Are these valuations 0:02:10.960 --> 0:02:14.360 are founded right now. That's the thing. Chinese companies are cheap, 0:02:14.440 --> 0:02:17.000 but do you want to buy in too? Sometimes you know, 0:02:17.160 --> 0:02:19.160 things are cheap for a good reason, right Like do 0:02:19.200 --> 0:02:21.840 you want to buying to cheap goods? Do they have 0:02:21.919 --> 0:02:24.800 good shelf life? That's the big question right now. So 0:02:24.840 --> 0:02:27.680 you're talking about my do dot Com, Pendo, Door, JD 0:02:27.840 --> 0:02:30.400 dot Com. I mean it's not just one type of company. 0:02:30.440 --> 0:02:33.160 These are across the board. Yes, Actually they tend to 0:02:33.200 --> 0:02:36.480 be consumer tech companies that e commerce, social media. And 0:02:36.520 --> 0:02:39.200 the problem is that these companies they are no longer 0:02:39.680 --> 0:02:42.400 favored by Beijing. Beijing these days they want to develop 0:02:42.480 --> 0:02:46.360 so called industrial teching, aerospace, easy supply chain or like 0:02:46.400 --> 0:02:50.120 trip manufacturing, quantum computing, and all these companies that are 0:02:50.160 --> 0:02:52.880 in consumer tech, they're just not in it and also 0:02:53.080 --> 0:02:56.720 shooting things. Likes to talk about this slogan of common prosperity, 0:02:57.080 --> 0:03:00.280 basically to broaden the middle class and narrow the world scap. 0:03:00.400 --> 0:03:04.360 But global investors associate the phrase common prosperity with wealth 0:03:04.400 --> 0:03:07.880 destruction because the phrase was coming out late last year 0:03:08.040 --> 0:03:11.440 during the crackdowns, so they get scared when this phrase 0:03:11.480 --> 0:03:14.560 gets mentioned again. At the Party Congress, you mentioned a 0:03:14.600 --> 0:03:18.120 moment ago that she has solidified his power, and he 0:03:18.160 --> 0:03:20.960 has also packed the Standing Committee with allies. I don't 0:03:20.960 --> 0:03:22.799 want to make too much of a comparison, but one 0:03:22.800 --> 0:03:25.040 of the things I do, and Wildridge mentioned when talking 0:03:25.080 --> 0:03:28.200 about the UK, is that markets will like Rigi Sunac 0:03:28.280 --> 0:03:30.360 because he's no nonsense and he'll run number ten and 0:03:30.400 --> 0:03:34.239 his chancellor will run number eleven very well. Obviously, not 0:03:34.360 --> 0:03:36.520 to make a directing merison, but you do mention in 0:03:36.520 --> 0:03:38.640 a recent piece that financial markets tend to prefer a 0:03:38.640 --> 0:03:43.360 focused administrative team to in fighting and competing objectives among politicians. 0:03:43.360 --> 0:03:46.600 Surely that's a positive and not a negative in some ways. Yeah. 0:03:46.760 --> 0:03:51.960 Interestingly enough, financial markets don't mind dictators. They think it's 0:03:52.000 --> 0:03:54.880 good to have a focus at administrative team. And actually 0:03:54.920 --> 0:03:57.880 they liked it in twenty twelve when she first came 0:03:57.880 --> 0:04:01.520 into tower and seventeen when he flexed his muscles to 0:04:01.640 --> 0:04:04.840 solidify his power. But this time around they're worried that 0:04:04.960 --> 0:04:08.720 his vision is wrong. So they're worried that his age, 0:04:08.840 --> 0:04:11.800 long time age, are just going to drive China's economy 0:04:12.000 --> 0:04:15.320 and the financial markets to the ground. What's the basis 0:04:15.360 --> 0:04:18.000 for that, Because yes, narrowing the wealth gap and the 0:04:18.120 --> 0:04:20.800 role of the state and the economy is paramount to see. 0:04:21.120 --> 0:04:25.120 But that doesn't have to spell financial market trouble, does it. Well. 0:04:25.240 --> 0:04:27.960 The problem with the financial markets these days is that 0:04:28.040 --> 0:04:32.120 they are packed with companies that are not in policy priorities. 0:04:32.880 --> 0:04:36.719 For instance, Ali Baba pintot So. These stocks which used 0:04:36.720 --> 0:04:39.440 to be well loved by global investors because they were 0:04:39.560 --> 0:04:43.360 played directly to China's rising middle class. These stocks are 0:04:43.400 --> 0:04:47.200 getting dumped. And another problem is that after the party reshuffled, 0:04:47.360 --> 0:04:50.560 basically the economic team is being hollowed out. We know 0:04:50.800 --> 0:04:53.440 that China will have a new central bank governor, a 0:04:53.480 --> 0:04:56.600 new banking regulator, and a new finance minister. We don't 0:04:56.600 --> 0:04:59.440 know who is going to run the national team, so 0:04:59.520 --> 0:05:02.640 that is not reassuring to financial markets. Will she have 0:05:02.680 --> 0:05:05.640 been surprised by the market reaction enough to cause him 0:05:05.680 --> 0:05:08.599 to do something to come or support markets in some way? 0:05:08.920 --> 0:05:12.279 I think she doesn't care about how much money investors 0:05:12.400 --> 0:05:14.760 have lost. I don't think he cares. I mean he 0:05:14.760 --> 0:05:17.400 didn't care about optics right and if he did, he 0:05:17.480 --> 0:05:20.400 will pack the politeberal with just one woman. Right now, 0:05:20.400 --> 0:05:23.640 there is zero or like help cooking. How his predecessor 0:05:23.720 --> 0:05:26.880 to leave the congress in the nicer way, but like 0:05:27.040 --> 0:05:29.159 he didn't seem to care about the optics. But I 0:05:29.200 --> 0:05:31.960 think at some point he will care because China still 0:05:32.080 --> 0:05:35.360 needs the financial markets to be open to finance the 0:05:35.560 --> 0:05:39.680 fiscal deficits and to raise funds for companies such as 0:05:39.760 --> 0:05:43.320 Evy and chip manufacturing, which he will need in order 0:05:43.360 --> 0:05:46.159 to support young people coming into the labor market as well. Surely, 0:05:46.200 --> 0:05:48.839 for those who hadn't seen it or hadn't noticed, just 0:05:48.960 --> 0:05:51.800 explained the hoosion to how episode that happened at the 0:05:51.839 --> 0:05:54.960 Party congress. It was extraordinarily surprising, and we'll never fully 0:05:55.000 --> 0:05:58.200 know what happened, as Kara Ferra Marquez says in Bloomberg Opinion, 0:05:58.279 --> 0:06:00.800 but will you explain to us what happened? It seems 0:06:00.839 --> 0:06:03.840 like coaching how. He didn't look very well. He looked 0:06:03.920 --> 0:06:07.680 quite freel and somehow two men were trying to escort 0:06:07.800 --> 0:06:10.320 him out of the big Hare and one of the 0:06:10.360 --> 0:06:13.440 politicians Leach and Shue, he used to be president, shooting 0:06:13.520 --> 0:06:16.559 Kings chief first stuff, he's retiring. He tried to stand 0:06:16.640 --> 0:06:20.040 up and aid hooching how and shooting Kings strategist one 0:06:20.080 --> 0:06:23.039 who in basically padded le chansu and they stand down, 0:06:23.240 --> 0:06:25.960 it's none of your business. Just don't get involved. And 0:06:26.000 --> 0:06:29.479 then shooting, how God escorted out and Shi King just 0:06:29.560 --> 0:06:32.360 look down, didn't say a thing, and on his way 0:06:32.360 --> 0:06:35.640 out hooching, how had likud chongs shoulder and Li Ku 0:06:35.800 --> 0:06:39.000 Choun looked like he almost recoiled. So it was a 0:06:39.120 --> 0:06:42.680 very very strange scene. And I guess my take is 0:06:42.760 --> 0:06:48.080 that it's just a real glimpse into China's top political circles, 0:06:48.480 --> 0:06:52.520 how rigid and nervous all the politicians are. Now we 0:06:52.600 --> 0:06:55.560 learned that before we got the execuities and you and Slump, 0:06:55.720 --> 0:06:58.680 the Foreign Exchange Regulator and the BBOC vowed to maintain 0:06:58.880 --> 0:07:01.440 the healthy development of the country's stock and bond markets 0:07:01.440 --> 0:07:05.039 and keep the new unstable. Obviously they weren't expecting this 0:07:05.160 --> 0:07:07.520 kind of reaction. Just you know, a day or two later, 0:07:08.040 --> 0:07:11.000 what can they do in order to stabilize the bond 0:07:11.080 --> 0:07:14.160 markets on the un Well, that's a very good question 0:07:14.320 --> 0:07:18.360 because if you read the p BOC statement that the 0:07:18.440 --> 0:07:21.560 pledge to stabilize the markets is not at the friend 0:07:21.600 --> 0:07:23.960 and center of their statement. It's like weigh in the 0:07:24.040 --> 0:07:26.080 back and then like the friend and center is all 0:07:26.120 --> 0:07:29.960 about that. In present, she's fought following the party's leave, 0:07:30.240 --> 0:07:33.640 and I just feel like there's so much power, vacuum 0:07:33.680 --> 0:07:36.920 and uncertainty that bureau quests are not doing anything right now, 0:07:36.920 --> 0:07:39.400 They're not going to do anything for while it's really 0:07:39.440 --> 0:07:42.960 quite phenomenal. Suddenly the market thinks that China is completely opaque, 0:07:43.120 --> 0:07:46.200 and seemingly a few months ago it seems to think 0:07:46.200 --> 0:07:49.240 it was transparent. Okay, so let's move on to what 0:07:49.440 --> 0:07:52.440 she does have in terms of economic priorities. He has 0:07:52.480 --> 0:07:54.520 a new development model, and you go into this in 0:07:54.560 --> 0:07:57.680 your column. First of all, tell us what you think 0:07:57.880 --> 0:08:02.400 common prosperity will turn out to be. So she actually 0:08:02.400 --> 0:08:06.280 wrote about what common prosperity is and it's not late 0:08:06.360 --> 0:08:10.400 last year he basically said that it's not egail and terrnism, 0:08:10.760 --> 0:08:13.080 and then you know, he wants the whole economic pipe 0:08:13.080 --> 0:08:16.160 to be bigger and everyone to be richer. But he 0:08:16.240 --> 0:08:20.640 did one against the exorbitant wealth that's collected by a 0:08:20.680 --> 0:08:23.440 few people at the top. So what the market this 0:08:23.680 --> 0:08:26.600 is that she will at one point launch a major 0:08:26.760 --> 0:08:30.400 wealth redistribution, perhaps taxing the very rich at a much 0:08:30.480 --> 0:08:33.880 higher rate than before. And they feel that common prosperity 0:08:34.000 --> 0:08:37.560 is just a nicer name for wealth redistribution. You have 0:08:37.600 --> 0:08:41.000 some suggestions for what season things could do in order 0:08:41.000 --> 0:08:43.920 to make China quote unquote investable. Again, this has been 0:08:44.040 --> 0:08:46.080 such a watchword over the last year in terms of 0:08:46.080 --> 0:08:48.800 Wall Street notes and so on. But at the moment, 0:08:48.800 --> 0:08:51.880 I guess the market things China is uninvestable. What are 0:08:51.920 --> 0:08:55.880 your suggestions. I think optics mended. President Shimki needs to 0:08:55.960 --> 0:08:59.400 show what common prosperity is not, so one thing that 0:08:59.440 --> 0:09:02.440 he could do is to invite those type billionaires such 0:09:02.480 --> 0:09:06.040 as Ali Baba's Checkma tens for Migma and made one 0:09:06.200 --> 0:09:09.440 launching to Beijing, not to summoner, but to invite them 0:09:09.480 --> 0:09:12.960 to attack conference to talk about how the private sector 0:09:13.040 --> 0:09:16.040 can help push China's take front here, just to show 0:09:16.120 --> 0:09:19.199 to the world that China is not against entrepreneurship or 0:09:19.240 --> 0:09:22.560 self made billionaire. That's one thing. And another thing is 0:09:22.640 --> 0:09:25.880 that I think global investors are worried that China is 0:09:25.920 --> 0:09:29.079 closing herself to the world because President Sinking. He has 0:09:29.120 --> 0:09:33.559 another economic slogan called duo circulation. Basically, he wants to 0:09:33.600 --> 0:09:38.120 boost China's domestic economy and explort goods and services that 0:09:38.160 --> 0:09:41.079 are of higher value adds such as eb supply chain, 0:09:41.440 --> 0:09:44.080 and along with three years of COVID zero and the 0:09:44.200 --> 0:09:48.040 close borders, people rightfully think that China is closing herself 0:09:48.120 --> 0:09:50.400 to the world and it's going back to chain dynasty. 0:09:51.040 --> 0:09:53.640 So one thing that Beijing could do is to reopen 0:09:53.679 --> 0:09:56.480 the border as soon as possible, lower the number of 0:09:56.559 --> 0:10:00.280 quarantine days for foreign travelers so that foreign business can 0:10:00.320 --> 0:10:03.120 come to China to see for themselves what China is like, 0:10:03.559 --> 0:10:06.520 and overseas Chinese to come home to visit their families. 0:10:06.800 --> 0:10:08.719 I mean, it has been three years. So these are 0:10:08.720 --> 0:10:12.360 the optics and gestures he can make to stabilize the market, 0:10:12.559 --> 0:10:16.240 and they would be pretty cheap gestures in many ways. 0:10:16.280 --> 0:10:19.160 So the other thing is COVID zero is going to 0:10:19.200 --> 0:10:21.800 get reversed at some point. Wall Street is talking about 0:10:21.800 --> 0:10:24.640 March of next year. It's not that far away. I mean, 0:10:24.679 --> 0:10:28.560 investors could possibly hang on until March. If COVID zero 0:10:28.720 --> 0:10:32.640 was suddenly reversed, would that make a huge difference. I 0:10:32.679 --> 0:10:36.640 think if COVID zero was suddenly reversed earlier the next March, 0:10:36.720 --> 0:10:39.800 it will make a huge difference, right because the investors 0:10:39.800 --> 0:10:42.000 are still trying to figure out whether they should stick 0:10:42.000 --> 0:10:45.520 around or just sell everything. But next March it's still 0:10:45.600 --> 0:10:48.040 quite a few months away, and COVID zero is very 0:10:48.160 --> 0:10:52.199 very expensive. According to Morgan Stanley estimates, COVID zero costs 0:10:52.440 --> 0:10:56.400 the Chinese government to trillion un this year alone. And 0:10:56.600 --> 0:11:00.800 how that's going to be sustainable. It's a big question market, 0:11:00.800 --> 0:11:03.959 and it's going to create a huge track on China's 0:11:04.000 --> 0:11:07.400 fiscal deficits right now. We also had, of course, the 0:11:07.400 --> 0:11:10.000 delay of some economic data. Speaking of economic data this 0:11:10.040 --> 0:11:13.120 week and GDP then finally came out and it was 0:11:13.160 --> 0:11:15.960 actually better than forecast. It was, you know, an anemic 0:11:16.120 --> 0:11:19.160 enough in China terms at three point, but we don't 0:11:19.160 --> 0:11:22.400 have the full years GDP figures yet. Even that wasn't 0:11:22.520 --> 0:11:26.000 enough to cheer the market. What does the market want 0:11:26.000 --> 0:11:28.839 to see in terms of China growth? See, that's the 0:11:28.920 --> 0:11:32.200 interesting thing that the rosier economic data is just not 0:11:32.280 --> 0:11:34.800 going to cheer the market, right Like the GDP data 0:11:34.880 --> 0:11:37.960 is better than expected, but investors to brush that away. 0:11:38.200 --> 0:11:41.040 Housing numbers starting to take up a little bit, they 0:11:41.080 --> 0:11:43.880 still brush that away as well, and I think they're 0:11:43.920 --> 0:11:47.760 just more worried about optics. You know that Shi Jinking 0:11:47.960 --> 0:11:50.640 is going to do wealth destruction, and that he's going 0:11:50.679 --> 0:11:52.880 to close China to the rest of the world, and 0:11:52.960 --> 0:11:55.920 possibly he's even going to invade Taiwant. They're just worried 0:11:55.960 --> 0:11:59.560 about those big picture topics. Yes, the time. One question 0:11:59.640 --> 0:12:01.800 is death early on investor's minds, and if that were 0:12:01.800 --> 0:12:06.040 to happen, I guess investors would completely flee China, right, yes, correct, 0:12:06.280 --> 0:12:08.439 So right now they are trying to figure out what 0:12:08.480 --> 0:12:11.840 to do because China is cheap and if there's a rebound, 0:12:11.840 --> 0:12:14.160 it could be a very very big one. Right. But 0:12:14.400 --> 0:12:17.720 on the other hand, if Taiwan conflict play us up 0:12:17.920 --> 0:12:19.959 a lot of investors, they will have no choice but 0:12:20.040 --> 0:12:22.480 to sof And then we have seen that with Russia exactly. 0:12:22.559 --> 0:12:24.880 And as you say, China may not want to close 0:12:24.920 --> 0:12:28.000 itself off, but some of that is not China's choice 0:12:28.040 --> 0:12:30.760 at this point. Obviously we're seeing a lot of export 0:12:30.800 --> 0:12:33.040 controls from the United States and so on that's also 0:12:33.120 --> 0:12:37.280 having an impact on China's choices. Yes, absolutely, that actually 0:12:37.520 --> 0:12:41.920 ends the investing China story as well. Is there anybody 0:12:41.960 --> 0:12:45.800 understanding committee that we should be aware of? I think 0:12:45.880 --> 0:12:48.600 Lee Chiang is interesting. He's already number two of the 0:12:48.640 --> 0:12:52.000 standing committee. He used to be shinking ship of stuff 0:12:52.080 --> 0:12:55.360 when she was party secretary at Georgian Province. He is 0:12:55.480 --> 0:12:58.880 currently Shanghai's party secretary and he's going to be the 0:12:58.920 --> 0:13:03.120 future premier. Another person that I think global investors don't 0:13:03.160 --> 0:13:05.800 look at it enough is one who Yan. He is 0:13:05.880 --> 0:13:10.480 basically the Stebandon of China. He he is basically president, 0:13:10.600 --> 0:13:14.319 she's strategist, and he is very left leaning. It's interesting 0:13:14.679 --> 0:13:18.960 to see what he's saying in public because he appears 0:13:19.000 --> 0:13:22.480 to influence. She's thought quite a bit. Give us a 0:13:22.559 --> 0:13:26.040 rundown of what we know about how he thinks. Well, 0:13:26.280 --> 0:13:30.640 he basically didn't like United States America and he is 0:13:30.760 --> 0:13:34.160 very eloquent. He was on debating as early as ninety 0:13:34.280 --> 0:13:37.120 nineties and actually he was very very talented. But that 0:13:37.200 --> 0:13:40.160 he's very very left leaning, and he thinks the US 0:13:40.240 --> 0:13:43.320 democracy is not working at all, and that the US 0:13:43.480 --> 0:13:47.160 is in decline and what will it mean for china 0:13:47.320 --> 0:13:51.560 domestic policies. It's interesting because now she is talking about, 0:13:51.640 --> 0:13:56.160 like her, China offering an alternative path to modernization. Perhaps 0:13:56.200 --> 0:13:59.360 she was being influenced by one winning thinking that US 0:13:59.559 --> 0:14:02.960 is in evitable decline and China has a past towards 0:14:03.040 --> 0:14:07.760 being the top global economy, so that perhaps gives drinking 0:14:07.800 --> 0:14:11.160 a lot of confidence. Shuley ran, there, don't forget. We're 0:14:11.160 --> 0:14:14.120 also available as a podcast on Apple, Spotify or your 0:14:14.160 --> 0:14:17.160 favorite podcast platform, and do get in touch. We love 0:14:17.200 --> 0:14:19.000 to hear from you. I'm at Vanni quent on Twitter 0:14:19.080 --> 0:14:22.440 or email vequin at Bloomberg dot net. People moved states 0:14:22.560 --> 0:14:25.280 mid and post pandemic for lots of reasons, but one 0:14:25.320 --> 0:14:28.680 reason people consider moving even in non pandemic times is 0:14:28.760 --> 0:14:31.920 obviously state income tax. But what evidence do we have 0:14:32.040 --> 0:14:35.560 that people move to say Florida or Texas primarily because 0:14:35.640 --> 0:14:38.960 those dates don't tax at the state level. Well, Bloomberg Opinions, 0:14:38.960 --> 0:14:41.480 Alexis Leander's has been looking at some data. We do 0:14:41.640 --> 0:14:44.600 have to figure it all out, So, Alexis, we all 0:14:44.640 --> 0:14:46.880 noticed when a hedge fund or a big investment firm 0:14:46.920 --> 0:14:49.440 moves Alliance Bernstein for example, moving to Nashville back into 0:14:49.440 --> 0:14:51.760 thousand eighteen, which is obviously nothing to do with pandemic. 0:14:51.800 --> 0:14:54.280 It was pre pandemic. Citadel announced this summer it's moving 0:14:54.280 --> 0:14:57.240 it's HQ to Miami from Chicago, which was a big deal. 0:14:57.440 --> 0:15:00.440 But what about individuals? Right? It feels like you can 0:15:00.480 --> 0:15:03.360 always find research supporting one side or the other. There 0:15:03.440 --> 0:15:05.880 was a recent report from the Tax Foundation that actually 0:15:05.920 --> 0:15:08.640 did provide some pretty compelling evidence that not only do 0:15:08.760 --> 0:15:11.040 just wealthy people move for tax reasons because they are 0:15:11.080 --> 0:15:12.840 The evidence seems to be a bit clearer. If you 0:15:13.160 --> 0:15:15.080 really pay a lot in taxes, then perhaps you are 0:15:15.160 --> 0:15:17.080 much more conscious of where you're living, and especially if 0:15:17.120 --> 0:15:20.880 you're retiring. But across the board, we are seeing that taxes, 0:15:21.120 --> 0:15:24.200 especially as of late, are driving people's decisions to relocate. 0:15:24.400 --> 0:15:28.160 What are the states that are accepting incoming A residents. 0:15:28.560 --> 0:15:31.320 The most popular states right now seem to be Florida, Texas, 0:15:31.320 --> 0:15:34.040 and Arizona. And that's true at all income levels. And 0:15:34.080 --> 0:15:36.520 I should say that the tax Foundation data is based 0:15:36.560 --> 0:15:38.680 on I R S data, So this is some of 0:15:38.680 --> 0:15:41.160 the most comprehensive data we're seeing. This covers, you know, 0:15:41.240 --> 0:15:43.920 hundreds of millions of taxpayers their returns, and it also 0:15:44.000 --> 0:15:46.920 includes their adjusted gross income. The tax Foundation, we know 0:15:47.240 --> 0:15:49.520 is right leaning. I guess it's fair to say, but 0:15:49.600 --> 0:15:51.800 this data steaks for itself, right And they looked at 0:15:51.840 --> 0:15:54.160 three different factors when they were trying to figure out 0:15:54.240 --> 0:15:56.360 is their correlation and the first thing they looked at 0:15:56.520 --> 0:15:59.320 is their top marginal tax rate. They're also looking at 0:15:59.320 --> 0:16:01.560 the struct sure of the tax code in that state. 0:16:01.880 --> 0:16:04.760 Is it considered, you know, very complex and difficult or 0:16:04.800 --> 0:16:08.160 is it more straightforward? And then they're also looking at 0:16:08.200 --> 0:16:11.640 the state and local tax collections per capita. What is 0:16:11.680 --> 0:16:15.080 the state's total tax coffer, the income tax they're collecting, 0:16:15.080 --> 0:16:18.160 the property tax they're collecting, the sales tax that they're collecting, 0:16:18.200 --> 0:16:21.760 divided by the population. So across all three of those boxes, 0:16:21.920 --> 0:16:24.440 it seems as though the states that score well in 0:16:24.560 --> 0:16:27.520 terms of being low tax having good tax structures, have 0:16:27.680 --> 0:16:30.760 low state and local tax collections per capita, those are 0:16:30.760 --> 0:16:33.040 the ones that seem to be attracting the most taxpayers. 0:16:33.080 --> 0:16:35.320 Aside from the Tax Foundation data, I looked at some 0:16:35.360 --> 0:16:38.480 of these other ways that other groups kind of assess 0:16:38.640 --> 0:16:41.720 the overall tax picture for each individual state. And when 0:16:41.720 --> 0:16:43.320 you look at a state like Texas, and I actually 0:16:43.320 --> 0:16:45.680 had a reader email me after reading my column to 0:16:45.800 --> 0:16:48.200 say that she had moved from New Jersey to Texas 0:16:48.360 --> 0:16:52.000 partially because of taxes. Texas obviously has no income tax, 0:16:52.000 --> 0:16:54.240 New Jersey has one of the higher rates in the nation. 0:16:54.720 --> 0:16:57.920 And she said, but with property taxes. She's really feeling 0:16:57.920 --> 0:17:00.280 as though it's not just like a win win on 0:17:00.320 --> 0:17:02.800 the tax front, right exactly. So you may not occlude 0:17:02.840 --> 0:17:04.800 all of the savings that you think you might accrue 0:17:04.960 --> 0:17:06.760 just because you're not paying the state tax. Right. And 0:17:06.760 --> 0:17:10.080 look at a place like Florida where, unfortunately after Hurricane Ian, 0:17:10.359 --> 0:17:12.960 now homeowners down there, especially if they move from New York, 0:17:12.960 --> 0:17:15.080 thinking they would save on taxes, but maybe they're paying 0:17:15.080 --> 0:17:18.280 more on things like insurance or you know, damages now 0:17:18.359 --> 0:17:21.080 from this hurricane. So it's it's really something to think 0:17:21.119 --> 0:17:25.000 about and not just be motivated by the tax picture. Now, 0:17:25.040 --> 0:17:27.240 have we seen states try to change their rate of 0:17:27.280 --> 0:17:30.680 income tax in hurry post pandemic. We actually are seeing 0:17:30.720 --> 0:17:33.280 lots of states do things, and most of them are 0:17:33.320 --> 0:17:36.840 cutting their income tax rates. They're either moving to perhaps 0:17:36.920 --> 0:17:40.159 just a flat tax. They're cutting their rates. Twelve or 0:17:40.200 --> 0:17:42.840 thirteen states have moved in the last year or two 0:17:43.200 --> 0:17:45.520 to change their rates, and it will be very interesting 0:17:45.560 --> 0:17:47.920 again to see for the states that don't make any 0:17:48.000 --> 0:17:51.000 kind of moves, will they see more people leaving? And 0:17:51.040 --> 0:17:53.000 for the states that do cut their rates, will they 0:17:53.040 --> 0:17:55.440 see more people coming there? And some of the tax 0:17:55.480 --> 0:17:59.360 Foundation data also looked at just because you have taxpayers leave, 0:17:59.480 --> 0:18:02.920 that doesn't always mean that the adjusted gross income goes 0:18:03.040 --> 0:18:05.760 up or down exactly. And I'm sure it's not always 0:18:05.760 --> 0:18:08.400 the case that states want an influx of people. They 0:18:08.400 --> 0:18:10.840 want an influx of rich people exactly right. And some 0:18:10.920 --> 0:18:14.080 of the Midwestern states, they saw that in the data 0:18:14.119 --> 0:18:16.720 that we were looking at, showing basically that while more 0:18:16.760 --> 0:18:20.119 taxpayers moved there, their a g I didn't necessarily go 0:18:20.200 --> 0:18:22.520 up because probably what was happening if those people were 0:18:22.520 --> 0:18:24.680 coming from high tax states, they were being paid more. 0:18:25.000 --> 0:18:26.960 When they moved to the Midwestern state, they may have 0:18:27.000 --> 0:18:28.920 been paid less, and as a result, there the a 0:18:29.000 --> 0:18:31.480 g I overall went down. And it's really corporations that 0:18:31.520 --> 0:18:34.639 they want to attract more so than probably individual residents, 0:18:34.640 --> 0:18:37.640 although I guess if you go to micro level, municipalities 0:18:37.640 --> 0:18:40.080 may want to attract residents or what have you. Well, 0:18:40.119 --> 0:18:42.119 I can understand that it might be easier for people 0:18:42.119 --> 0:18:44.880 to move to the next door state, right, So contiguous 0:18:44.880 --> 0:18:47.840 states can maybe buy with each other for different people. 0:18:47.920 --> 0:18:50.720 What are you noticing in terms of individual states and outliers. 0:18:50.960 --> 0:18:53.399 South Carolina is a really good example, So that was 0:18:53.440 --> 0:18:56.480 the state that was number five for attracting wealthy taxpayers, 0:18:56.720 --> 0:18:59.440 and I believe taxpayers overall, but it still imposes a 0:18:59.480 --> 0:19:02.760 graduate individual income tax rate that tops out at seven percent, 0:19:02.840 --> 0:19:06.200 which is relatively high. And on the flip side, Virginia 0:19:06.320 --> 0:19:08.439 lost a lot of high earners, but it has a 0:19:08.440 --> 0:19:10.720 relatively middle of the road run of the mill top 0:19:10.760 --> 0:19:14.000 marginal rate of five point seven. They were always going 0:19:14.040 --> 0:19:15.959 to be states for which, you know, the weather is, 0:19:16.040 --> 0:19:18.920 you know, a bigger attraction, or there are other things 0:19:18.960 --> 0:19:20.720 that are driving people to move there. I mean so 0:19:20.760 --> 0:19:23.840 many times obviously with moving it's based on a personal decision. 0:19:23.880 --> 0:19:27.800 And wonder what it could be from Miami. I guess 0:19:27.800 --> 0:19:29.720 we won't know until we see more of these studies 0:19:29.760 --> 0:19:31.560 come out, but you know, you have to wonder do 0:19:31.640 --> 0:19:34.080 people move and then sort of reverse their decision. It's 0:19:34.080 --> 0:19:35.879 not easy to move, especially if you have families, so 0:19:35.920 --> 0:19:38.480 it's obviously a major decision. But I guess you can 0:19:38.600 --> 0:19:40.280 undo it if you want to as well, and I'm 0:19:40.280 --> 0:19:42.639 sure that happens. It's such a great point. So because 0:19:42.680 --> 0:19:45.880 there was an extension for taxpayers to file their return 0:19:46.200 --> 0:19:48.040 in the midst of the pandemic, you didn't have to 0:19:48.080 --> 0:19:51.680 file in April you had until July. So you're seeing 0:19:51.760 --> 0:19:54.960 that these addresses capture some of the moves that happened 0:19:54.960 --> 0:19:58.080 early on in the pandemic up until July. But obviously 0:19:58.119 --> 0:20:00.800 so many people didn't move right away. So I think 0:20:00.800 --> 0:20:03.159 it will be really interesting to see what ORI Statis 0:20:03.240 --> 0:20:07.560 shows in the coming years. Number opinions. Alexis Leander's UK 0:20:07.680 --> 0:20:10.840 markets stabilized this week after Richie Soonak moved into Number 0:20:10.840 --> 0:20:13.600 ten Downing Street and appointed a cabinet. I will place 0:20:14.080 --> 0:20:19.879 economic stability and confidence at the heart of this government's agenda. 0:20:20.400 --> 0:20:24.919 This will mean difficult decisions to come. I spoke with 0:20:24.920 --> 0:20:28.560 Bloomberg Opinions Adrian Waldridge on what to expect. So Adrian 0:20:28.600 --> 0:20:31.639 the FT's opinion page is questioning so next competence and 0:20:31.640 --> 0:20:33.720 I wonder what you think about that he was Chancellor 0:20:33.800 --> 0:20:37.000 under Boris Johnson and maybe embraced policies he didn't particularly 0:20:37.040 --> 0:20:39.360 believe in. Does he do a you turn now and 0:20:39.400 --> 0:20:42.240 go back to things like small state policies for example. 0:20:42.720 --> 0:20:45.959 I think that the question is competence is very questionable. 0:20:45.960 --> 0:20:49.160 I think he's been extremely competent in every single job 0:20:49.280 --> 0:20:52.400 that he's done, and even when he was working for Boris, 0:20:52.960 --> 0:20:56.160 he may have overspent a little bit and he may 0:20:56.160 --> 0:20:58.200 have undertaxed a little bit. Actually, I mean there is 0:20:58.200 --> 0:21:00.760 a problem with the balancing of the books. That's more 0:21:00.880 --> 0:21:03.480 because Boris was edging him in or pushing him in 0:21:03.480 --> 0:21:07.280