Americans are moving in record numbers from high-tax states to lower-tax ones.
Do people use taxes to determine where they want to live? The Tax Foundation crunched numbers and found some revealing, but not surprising, statistics.
Andrey Yushkov, Katherine Loughead, and senior policy analysts at the Tax Foundation wrote in a report last week that “every year, millions” of Americans move to another state, giving them unique insight into what they value when deciding on where to work, live and raise a child. The latest IRS and Census statistics show that businesses and people prefer states with low tax rates and structurally sound systems. This can have a positive impact on the state’s economy and government coffers.
Analytics can help explain what is in fact common sense. While you and I may instinctively understand that people move to low-tax locations when they want to vote with their feet, government officials deny this correlation.
We’re not referring to normal people here; rather, we’re referring to government officials who treat their subjects as if they were milking cows. They prefer doing so without consequence. It’s a cottage business of pundits, like Stanford sociologist Cristobal Young who wrote The Myth of Millionaire Tax Flight. They tell politicians exactly what they want. Illinois lawmakers passed a bill in 2018 to recoup tax breaks for “any business that moves all or part its operations and jobs created by their business outside of the State.”
Jeanne Ives, a Republican representative at the time, joked: “We could build a fence along the border and have gates that tax people who leave the state because they don’t want to do business here.” “This bill is absurd.”
States will do anything to stop you from moving. They even refuse to acknowledge your move.
CNBC reported in 2019 that “If you are thinking about moving away from a high-tax area, your state’s income taxes auditor will not let you go without a fight.”
Our study shows that tax incentives have a significant impact on inventors’ geographic mobility. Tax policy can have a significant impact on the location and level of innovation. This was the conclusion of Ufuk Acigit, University of Chicago, and three other academics in Microeconomic Insights last year.
Our results indicate that taxes can affect cumulative technological progress which is an important feature of economic growth, because the impact of taxes occurs over time and not all at once.
The fact that states with high taxes are eager to give their citizens all sorts of goodies they don’t really need, means that states with high taxes will continue to have high tax rates and states without high taxes will continue to grow economically and increase their population.