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| The Basics | Why Las Vegas is a retiree magnet
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More people age 65 and over moved to Nevada than to any other state between 1995-2000 -- and its not due to cards and sunshine. No income tax helps seniors money go further -- but who pays for their benefits?
By Scott Burns
In the labyrinth of MGM Grands ground floor you'll find a sales office for The Residences, a Turnberry luxury condominium project being built on the MGM Grand property in Las Vegas.
In addition to having a nice scale model, the sales office has a completely furnished, full-sized replica of the units to be built. The furnishings are important because that's how the units will be sold -- completely furnished. This will save you the trouble. It will also make them standardized rental units. A one-bedroom, two-bath suite, the salesperson tells me, will set you back between $600,000 and $950,000, depending on the floor. That calculates to roughly $500 a square foot. And up.
It's not for everybody.
"And if you can find a way to make this your primary residence, Nevada offers some marvelous tax advantages," the sales brochure hints.
Nevada, like a handful of other states, has no state income tax.
And that makes me wonder. Is Las Vegas telling us something?
Vegas, by the numbers
It is the fastest-growing city in the United States. At 1,563,282 people in the 2000 Census, it grew 83.3% during the '90s. Its nearest competitor -- Naples, Fla. -- grew 65.3%. Yuma and Phoenix, Ariz., ranked third and eighth at 49.7% and 45.3%, respectively.
Nevada is still young. Only 11.7% of the population is 65 and over. That's under the national average of 12.7%. Florida tops the list at 18.1%. Arizona clocks in at 13.2%.
Are all the new arrivals here young? Some, yes. But Nevada is a geezer magnet. By definition, Las Vegas is as well, since it accounts for three-quarters of the state's population.
How big a magnet for retirees?
The biggest. Nevada topped the list for states with net migration of people 65 and over from 1995 to 2000. Arizona placed second. Florida third.
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Significantly, Florida also has no state income tax. Arizona has one, but it isn't very high. It tops out at 5.04% on income over $150,000. Neighboring California tops out at 9.3% on income over $39,133. Given the difference, it isn't surprising that California is the leading supplier of seniors for both Arizona and Nevada. Where to Retire, a Houston publication that hunts for retirement destinations, regularly ranks Arizona, Nevada and Florida as "tax heavens."
And that raises a serious question.
Will the future work?
Taxes: some other suckers duty?
Think about it. Las Vegas is the quintessential impossible city. It's located in a desert. It makes claim on the Colorado River, the resource that waters the entire Southwest. It will inevitably collide with Denver, Phoenix and Los Angeles. It also consumes vast quantities of electricity. And its entire existence depends on imported money.
What we're looking at is a mass migration of aging tax-phobics. In effect, they are gaming the tax system. They are united by a single belief: that they are entitled to unlimited free medical services, paid for by other taxpayers, for as long as they live. They won't be paying much in state income taxes. They'll abate or defer real estate taxes when possible. And they'll continue to pay less in federal income taxes than those who still work.
Some will avoid taxes out of harsh necessity. They are retired and their income is limited. So they will move to where their money goes furthest. But others will avoid taxes for another reason: because they believe it's some other sucker's job.
Either way, we've got a major collision coming. The supply of taxes from young suckers is starting to look a tad vulnerable. Many are losing their health insurance. Most have already lost employer-funded pensions. And while many (not all) are working at lower-paying service jobs, Alan Greenspan is saying their future benefits will have to be reduced.
It's not a pretty picture.
The morphing of Americas jobs
You can see how un-pretty it is by taking a look at the slow morphing of jobs in America and at the future, as represented by Los Angeles and Las Vegas. In 1970, the United States became a "service economy," as service jobs pulled even with manufacturing jobs. Today, service jobs dwarf manufacturing jobs, 36.8% to 14.7.
In Los Angeles, service jobs are even further ahead, boosted by the entertainment industry. But while Los Angeles is the center for film and television production, Las Vegas is still further down the service road. A quarter of its jobs are in hotels, lodging and entertainment. Manufacturing jobs are a trace element at 3.2%. Las Vegas, the national capital of branding, is all about consumption.
| Las Vegas and the entertainment economy | | Employment source | U.S. 1970 | U.S. 2000 | Los Angeles (a) | Las Vegas | | Agriculture | 4.4% | 2.4% | 0.3% | 0.0% | | Mining | 0.7% | 0.4% | 0.1% | 0.2% | | Construction | 6.1% | 7.0% | 5.6% | 9.0% | | Manufacturing | 26.4% | 14.7% | 14.8% | 3.2% | | Transportation, Utilities and Communications | 6.8% | 7.2% | 10.4% | 5.7% | | Wholesale and Retail Trade | 19.1% | 20.6% | 15.0% | 21.6% | | Finance, Insurance and Real Estate | 5.0% | 6.5% | 6.7% | 4.7% | | Services | 25.9% | 36.8% | 43.6% | 44.6% | | Hotels, Lodging, Entertainment | 2.1% | 3.1% | 8.9% | 24.8% | | Public Administration | 5.7% | 4.4% | 6.1% | 10.8% |
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Sources: Census Bureau; Bureau of Labor Statistics; Los Angeles Almanac; (a) figures in L.A. almanac total more than 100
The fastest way to see the vulnerability beneath the neon is to spend some time with the Las Vegas Yellow Pages. Of its 2,036 pages, only four are devoted to "investments," but seven list pawnbrokers. It also has 40 pages beginning with "liquor-loans" and ending with "loans-lobster." They offer payday loans, car title loans and post-dated check loans. For those with too many payday loans, several sources offer to consolidate them. Most say a credit check isn't necessary. Neither is a bank account.
A whopping 111 pages cover "Entertainers" to "Entertainment." The offers are at once focused and diverse. "Happy Hour Girls -- Two for the Price of One."
Or try "Affordable Asian Teens, Yuki and Kimi."
Then again, there's "Pretty feet and polished nails." Not to mention "Discount College Cheerleaders" and "Barely Legal Teens -- 3 for the Price of 1."
Could anyone seriously think this fragile, marginal world of consumption and "entertainment" will support and deliver the Social Security and Medicare benefits promised decades ago, when America was the greatest manufacturing power in the world?
Somehow, I don't think so.
See Scott Burns' Web site.
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