A Wall Street Journal story today captures the power of interstate tax competition:
One of the oldest names on Wall Street is moving to one of the fastest‐growing cities in the South, reinforcing a recent shift in finance jobs to cheaper parts of the U.S.
AllianceBernstein Holding LP plans to relocate its headquarters, chief executive and most of its New York staff to Nashville, Tenn., in an attempt to cut costs, according to people familiar with the matter. That largely ends a 51‐year presence in the nation’s traditional finance capital.
… In a memo to employees, AllianceBernstein cited lower state, city and property taxes compared with the New York metropolitan area among the reasons for the relocation. Nashville’s affordable cost of living, shorter commutes and ability to draw talent were other factors.
… Wall Street’s migration began after the last financial crisis as banks and money managers looked to trim expenses or take advantage of lower tax rates. Hiring in lower‐cost regions can mean millions of dollars in annual savings.
A new tax plan passed last year by Congress also reduced tax breaks that many in the New York region heavily lean on, such as the deductibility of mortgage interest and state and local tax deductions.
Tennessee “is low cost in every respect compared to New York” including housing and transportation, said William Fox, an economist and director of the University of Tennessee’s Boyd Center for Business and Economic Research.
… AllianceBernstein, which manages $550 billion in assets, considered as many as 30 cities as part of its search, according to part of an internal memo seen by the Journal, and analyzed factors such as housing, education, weather and cost of living.