When most people imagine a millionaire in America, they likely think of celebrities in California, finance gurus in New York and oil tycoons in Texas. And there’s a reason for it. Those are the top three states for sheer number of households with at least $1 million in investable assets, according to the 2016 Wealth & Affluent Monitor from Phoenix Marketing International, a New York-based marketing services firm. But though California’s 832,849 millionaire households dwarf NH’s 36,199, the Granite State bests the Golden State—and 43 others—when it comes to per capita households that take home seven figures.
Since 2006, NH has steadily climbed Phoenix’s annual list, which ranks states by number of millionaire households per capita instead of the total number of high net worth households. In the Granite State, 6.82 percent of households were millionaires in 2016—slightly higher than the percentage reported in 2015—ranking behind sixth-ranked Massachusetts with 6.98 percent of households.
In the past decade, the Granite State jumped from 11th to 7th nationally for concentration of millionaire households. And while the overall number of NH households only grew 3.2 percent from 513,923 to 530,424 in that timeframe, the number of millionaire households per capita in NH increased 36.6 percent from 26,498 to 36,199, according to Phoenix’s reports. Vermont and Maine were among the states that saw the biggest one-year declines in millionaire households.
To put that in context, nearly 6.8 million households, or about 5.5 percent of all U.S. households, had $1 million or more in investable assets. That’s a 4 percent increase in the number of millionaire households since 2015, or nearly 250,000 more households. However, over the past decade, the ratio of millionaire households to total U.S. households has remained relatively flat, up from 4.8 percent in 2006.
A simple, unsexy reason behind NH’s allure to millionaires may be its fiscal policies. New Hampshire is one of only five states without a sales tax and one of three that also bars in-state local sales taxes. New Hampshire also lacks a pure income tax, instead joining Tennessee as the only two states to solely tax income from dividends and interest. Perhaps of most interest to affluent Granite Staters, NH is one of 36 states without its own estate tax, leaving just the 40 percent federal estate tax with an exemption on the first $5.49 million of inherited wealth from an individual.
Correlation Without Causation
Yet, as straightforward as this explanation may seem, it doesn’t fully hold up under scrutiny. “There’s a wide variety of tax policies across each state, which makes it difficult to point to any one policy or another as being deterministic for this list,” says Phil Sletten, policy analyst for the NH Fiscal Policy Institute in Concord. When comparing NH to the states surrounding it in Phoenix’s report, Sletten says that while “tax policy may be factor, it’s not the overriding factor.”
Circling back to the tax policies of other states does weaken the narrative of NH as a millionaire tax haven. Of the six states ranking above NH on Phoenix’s list, all but Alaska have a sales tax, income tax and either an estate and/or inheritance tax, with New Jersey (4th) and Maryland (1st) having both. Furthermore, NH homeowners can attest to the state’s high property taxes, with the Tax Foundation ranking the state second highest in the nation behind New Jersey. (It’s worth noting that New Jersey also ranked above NH—third overall—on Phoenix’s list.)
Steve Norton, executive director of the NH Center for Public Policy Studies in Concord, agrees that when you put NH in the context of other wealthy states, the “standard rationale of low taxes leading to a high millionaire population doesn’t really pan out.”
The Role of Geography
Instead of viewing tax policies as the main draw for NH’s millionaire households, Sletten points to a relatively consistent trend among Phoenix’s report–geography. Four of the top 10 states are in the U.S. Census Bureau’s definition of the “Northeast”: New England and the Mid-Atlantic States of New York, New Jersey and Pennsylvania. Add in Delaware and Maryland from the Geological Society of America’s definition, and the Northeast now represents six of the top 10 and just under half of the top 20.
“There’s definitely some geography at play, especially since New Hampshire benefits from suburban and exurban environments in the southeastern part of the state,” says Sletten. He compares the economic benefit from NH’s proximity to the Boston metro area to the effects felt by Connecticut and New Jersey from the New York metro area.
“New Hampshire is not an island. We’re part of a much broader economy,” says Mark Connolly, principal of New Castle Investment Advisors in Portsmouth and former director of the NH Bureau of Securities Regulation. “We’ve always been a beneficiary of the Boston economy expanding.”
Connolly adds that NH is also less expensive to live in than other surrounding states while offering a high quality of life. Additionally, the Granite State’s diverse landscape includes the White Mountains, Lakes Region and Seacoast as well as proximity to major destinations in the Northeast. “If you get the traffic right, you can be in Boston and Portland in a matter of hours,” Connolly says.
Norton agrees that while NH could potentially reform its interest and dividends tax to attract wealthier people, its biggest advantage might be its amenity rich environment. “States can lower taxes, but they can’t create more lakes and mountains,” he says.
Quality of Life in the Granite State
The Granite State’s distance from its neighbors may also be a draw for millionaires, particularly wealthier retirees. “New Hampshire’s towns, and even smaller cities like Manchester, are more approachable than places like Boston and Providence,” says Myles Crowe, a financial advisor in Jackson who spent 15 years working for PricewaterhouseCoopers before starting his own practice in 2001. He moved to the White Mountains to leave behind the congestion and traffic of Massachusetts. “A lot of people I’ve worked with have had successful careers and want to buy a nice home up here to live comfortably in their retired years.”
During his time in the Lakes Region, Robert E. Maloney, managing member of Squam Lakes Financial Advisors in Holderness, recalls his conversations with one of two billionaires who live quietly on Squam Lake. Maloney says the man keeps to himself and drives a relatively plain, six-year old car. If the topic hadn’t come up over a lunch meeting, Maloney would have been none the wiser. “Many of the people I’ve met here came up from states like New York and New Jersey as children for summer camp or to their family’s lake house,” says Maloney. While NH’s taxes may be a draw when they neared retirement, Maloney says a sentimental attachment to the state’s beauty is equally compelling.
Don Cichon, a financial advisor in Portsmouth affiliated with Waddell & Reed, says the low population density and ample natural resources of NH attract wealthier individuals. And while he’s had a few clients move from places like Portsmouth and Dover to Rochester and Wolfeboro because of lower property taxes, he says that isn’t a key focus overall or for his clients who moved from out of state. “For folks who are millionaires, a difference of a few thousand dollars in taxes is worth the quality of life we have in New Hampshire,” says Cichon.