1,100 People Per Day Flee High Tax States for Low
Posted by Bill Dupray
on May 18 2009 Filed under Politics.
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It is because of the same old leaky bottom in the liberal philosophy: You can raise taxes on the rich, but you cannot make them stay put and pay them. There are some great insights in this piece in the Wall Street Journal.
Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts.
That last sentence is the definition of a brain drain. Anybody with the talent and tenacity to create or run a business (and more, importantly, the jobs that go with it) will go where they can best operate unencumbered by oppressive taxes and regulations.
Here is a point lost on the soak-the-rich liberals. Did you ever wonder why the states with the highest taxes always seem to have the biggest deficits that have to be “closed” with new, higher taxes? Of course, high spending, which must never be cut, is one reason. But the other is that when all of your producers have moved out and taken their jobs and tax base with them, all you have left is unemployed workers and government programs supporting them, but nobody to pay for it.
Did the greater prosperity in low-tax states happen by chance? Is it coincidence that the two highest tax-rate states in the nation, California and New York, have the biggest fiscal holes to repair? No. Dozens of academic studies — old and new — have found clear and irrefutable statistical evidence that high state and local taxes repel jobs and businesses. . . .
Finally, there is the issue of whether high-income people move away from states that have high income-tax rates. Examining IRS tax return data by state, E.J. McMahon, a fiscal expert at the Manhattan Institute, measured the impact of large income-tax rate increases on the rich ($200,000 income or more) in Connecticut [and New Jersey and New York] . . .. Over the period 2002-2005, in each of these states the “soak the rich” tax hike was followed by a significant reduction in the number of rich people paying taxes in these states relative to the national average. Amazingly, these three states ranked 46th, 49th and 50th among all states in the percentage increase in wealthy tax filers in the years after they tried to soak the rich.
Liberals should, but won’t, learn from the lessons of Texas, which has no income tax.
Gov. Perry and Texas have the jobs and prosperity model exactly right. Texas created more new jobs in 2008 than all other 49 states combined.
But alas the Liberals will not learn that lesson, and maybe that is why, as Scott notes, that today, for the first time since 2005, the Republicans and Democrats are dead-even in party identification among voters.
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- New York To Soak The Wealthy With 31% Tax Hike
- Democrats’ Big Lie: Bush’s Tax Cuts Were for the (evil) Rich
- Bankrupting states: Thanks, Barry
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