This video details how five states have implemented policies that function as “exit taxes” on homeowners, while six others are currently drafting similar legislation. The narrator argues that these states are creating “toll booths” to capture revenue from residents moving their equity out of state.
The Five States with Existing “Exit Taxes”
1. **New Jersey (1:33-3:45):** Has used withholding requirements at closing since 2004, requiring non-residents to pay a portion of their gains or a percentage of the gross sale price to the state.
2. **Massachusetts (3:48-5:36):** Implemented a “Fair Share Amendment” (4% surtax on income over $1 million), which the state has confirmed applies to one-time events like selling a primary residence.
3. **Washington (7:38-9:49):** Recently enacted a 9.9% income tax on household income over $1 million, which includes provisions that can follow former residents.
4. **California (9:51-15:03):** Proposing a “Billionaire Tax Act” with a retroactive trigger date (January 1, 2026), designed to be inescapable even for those who move.
5. **New York (15:05-16:29):** Proposing an estate tax change that would drastically reduce the homeowner exemption by nearly 90% and increase top tax rates.
Key Takeaways:
**Pattern of Growth:** The narrator highlights that these policies typically start by targeting the wealthy and are eventually expanded to impact middle-class households (17:57-18:49).
**Legislative Strategy:** States are using varied terminology (e.g., “withholding,” “fair share,” “modernization”) to mask the nature of these exit taxes (0:26-0:48).
**Future Outlook:** Several other states, including *Michigan*, *Connecticut*, *Minnesota*, *Maryland*, *Oregon*, and *Illinois*, are actively drafting or considering similar legislation (16:39-17:03).
WHAT CAN BE DONE?
The narrator acknowledges that there is no simple “workaround” for these exit taxes, as they are being baked into the **legal infrastructure** of the states involved (17:21-17:37).
Because these are constitutional or legislative changes, the video suggests the following approach:
* **Recognize the Pattern:** Understand that these policies are rarely just about the “rich.” They follow a historical pattern of starting at the top and gradually expanding to impact the **middle class** (17:57-18:49).
* **Vote with Awareness:** The narrator notes that while voting can feel ineffective, it is the primary tool available when dealing with state-level constitutional amendments. He emphasizes the importance of knowing exactly what you are voting for, rather than just voting against a specific person (20:00-20:18).
* **Stay Informed:** Because these tax mechanisms change depending on the state, the narrator encourages homeowners to stay alert to proposals in their specific area, noting that there are often **six other system-wide failures** compounding these issues that require attention (20:43-21:03).