Blue states must cut taxes or face a population drop, says Citadel's Ken Griffin

  • Citadel’s Ken Griffin says the Trump tax plan's cap on property, state and local income tax deductions will hurt Northern states and high-end home values in those geographies.
  • “I still believe that real estate … it’s your home, it’s where you live, it should not be a disproportionate part of your net worth or holdings,” he said.

Citadel’s Ken Griffin predicts Northern states that predominantly support the Democratic Party will be negatively impacted by President Donald Trump’s tax plan.

“Under Trump’s tax proposal the elimination of state and local deductibility is going to put pressure on the Northern cities to either reduce taxes or they are going to face a reduction in population,” Griffin said at the Delivering Alpha Conference in New York last week. “In the next five to 10 years we’ve got to deal with the pressures on the blue states to be competitive with the Southern states to maintain strong workforces, strong employment bases in the northern half of our country.”

Ken Griffin speaking at the 2018 Delivering Alpha Conference in New York on July 18th, 2018. 
David A. Grogan | CNBC
Ken Griffin speaking at the 2018 Delivering Alpha Conference in New York on July 18th, 2018. 

President Donald Trump signed the Republican tax overhaul in December, which lowered the corporate tax rate to 21 percent from 35 percent. The bill reduced tax rates on individuals across the board and nearly doubled the standard deduction — although those changes are in effect only from 2018 through 2025.

But the reform also capped taxpayers' deductions on their property, state and local incomes taxes (SALT) at $10,000, negatively impacting homeowners in states with higher property taxes and home values.

Griffin cited how luxury homes in Greenwich, Connecticut, are difficult to sell in the current environment. He warned investors to not overweight the real estate asset class.

“I still believe that real estate … it’s your home, it’s where you live, it should not be a disproportionate part of your net worth or holdings,” the investor said.

Griffin founded Citadel in 1990. He has a net worth of $9 billion, according to Forbes. His hedge fund firm, which is based in Chicago, now manages more than $30 billion in assets. The firm’s multistrategy fund, known as Wellington, was up 1.52 percent in June and 8.79 percent during the first half of the year.

The full interview with Griffin is available here.

— CNBC's Darla Mercado contributed to this report.

Delivering Alpha

Previous Years

About

One of the most influential investor conferences every year, Delivering Alpha brings together the biggest asset managers and investors, plus influential political and economic figures for a high-level discussion on the critical issues in today’s global economy. The event features one-on-one interviews and panel discussions led by top journalists from CNBC and Institutional Investor.

To request additional information on Delivering Alpha, please contact lyao@ttivanguard.com.