Growls

An op-ed in today’s Wall Street Journal by Arthur Laffer and Stephen Moore says, “Americans know how to use the moving van to escape high taxes,” and that if you "tax the rich, you lose the rich." They write:

“Here's the problem for states that want to pry more money out of the wallets of rich people. It never works because people, investment capital and businesses are mobile: They can leave tax-unfriendly states and move to tax-friendly states.

“And the evidence that we discovered in our new study for the American Legislative Exchange Council, "Rich States, Poor States," published in March, shows that Americans are more sensitive to high taxes than ever before. The tax differential between low-tax and high-tax states is widening, meaning that a relocation from high-tax California or Ohio, to no-income tax Texas or Tennessee, is all the more financially profitable both in terms of lower tax bills and more job opportunities.

“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.”

Richard Vedder also authored a Policy Analysis for the Cato Institute in 1996 in which he pointed out that just “(a)s ancient Rome lived in splendor off the tribute raised in the provinces, so in modern America the political capitals are prospering economically at the expense of the rest of the nation.” He pointed out “(t)he income differential between Washington and the rest of the nation rose from 25.9 percent in 1980 to 32.1 percent in 1990.

ACTA analyzed IRS migration data for a story that appeared in ACTA’s July 28, 2003 issue of The ACTA Watchdog (requires Adobe), and concluded that taxes in Arlington County were a factor in out-migration from the county.

Jim Bacon, who founded the e-zine Bacon’s Rebellion, looked at the same data from a state-level perspective. He wrote on September 8, 2003 that “other factors are at work. People aren't just leaving Arlington County -- they're joining a migratory stream headed toward the urban periphery,” adding  “(p)eople move to new locations in order to better their lives. They seek a bundle of attributes, of which taxes most definitely are one.”

You can find the ALEC study, “Rich States, Poor States” here.