How Miami ‘Caught a Wave’ and Became the Hot New Tech Hub
A business-friendly mayor helped. So did the quick Covid reopening and the loss of SALT deductions.
This city has become the favorite destination for people escaping progressive dystopias like San Francisco and New York. During the pandemic it had the country’s hottest real-estate market, which has yet to cool despite a likely recession.
Miami has had real-estate booms before. The last one went bust in 2008, and property values took a decade to recover. Is Mayor Francis Suarez worried about a repeat? “Not at all,” he says in an interview. “There, you had a world-wide financial bubble based on bad financial principles. Here, you have a migration of $2 trillion”—the assets under management of firms that have moved to Miami since the start of the pandemic. Citadel, one of the largest U.S. hedge funds, recently announced that it’s moving here from Chicago.
Miami has “caught a wave,” as Mr. Suarez likes to say, in part because he’s rolled out the welcome mat for businesses. The city leads the nation in tech-job growth and migration and is among the top 10 U.S. cities for venture-capital investment. CrunchBase news reports that Miami-based companies raised $2.6 billion in capital in 2021, a more than 20-fold increase from $128 million in 2018.
Mr. Suarez sees a self-reinforcing aggregation of talent and capital: “If you’re an ideator and you’re a creator, you’re going to go to the place where there’s the best concentration of other people who can help you accomplish your goals.”
A broader trend is also at work: intensified competition among states. Progressives have long sought to use federal power to neutralize the competitive advantages of states with low levels of regulation and taxation. A poisonous example is the federal income-tax deduction for state and local taxes, or SALT. Part of the tax code for more than a century beginning in 1913, the deduction protected high-tax state governments by reducing their residents’ incentive to move elsewhere, while punishing low-tax states by transferring part of their responsibly forgone revenue to profligate neighbors.
Thus the 2017 tax reform, which capped the SALT deduction at $10,000, was historic. By exposing high-income workers in blue states to the full brunt of their states’ levies, it restored the natural incentive to move to places like Florida and Texas. In-migration was already increasing when Covid hit.
Government and private-sector responses to the pandemic created new reasons to move. Remote work weakened connections to offices in California, Illinois and New York. Those same states stuck to oppressive Covid-19 mandates, softened their crime policies, and pushed woke indoctrination in schools. Gov. Ron DeSantis went in the opposite direction, defying what he called the “woke mob,” reopening quickly, and declaring Florida “the freest state in these United States.”
The 15 months between April 2020 and June 2021 saw a net migration of nearly 300,000 people to Florida, more than any other state. Among those earning more than $200,000 a year, four times as many people moved to Florida as to New York in 2019 and 2020. Florida led the country in income migration, gaining more than $20 billion in net income from 2019 to 2020, while California and New York each lost almost as much.
Florida has been trending Republican, but many of its big cities lean Democratic, and both parties have a vibrant presence in Miami. Many Sunshine State Democrats are more conservative than their counterparts in places like California and New York. Rep. Val Demmings, a member of the Congressional Black Caucus and Sen. Marco Rubio’s likely challenger in November, promises to protect Florida from woke ideas. “Defunding the police?” says one of her commercials. “That’s just crazy.”
“Part of our secret sauce in Miami is that we have bipartisan support for transforming Miami into a hub for innovation and entrepreneurship,” says Felice Gorordo, CEO of the networking platform eMerge Americas. Mr. Gorordo cites the good relationship between Mr. Suarez, a Republican, and Miami-Dade County Mayor Danielle Levine-Cava, a Democrat. Mr. Gorordo himself served in the George W. Bush White House and was recently nominated by President Biden for a senior post at the World Bank.
Read the full article at the Wall Street Journal.