Americans Still Leaving High Tax States

It may seem ridiculously simple: Americans are leaving high-tax states in record numbers and moving to lower-tax states.

But do people really use taxes as a determining factor in where they're going to live? The Tax Foundation crunched the numbers and came up with some very revealing, if not very surprising, data.

 "Every year, millions of Americans pack up and move from one state to another, providing unique insights into what people value when deciding where to live, work, and raise a family," Andrey Yushkov and Katherine Loughead, senior policy analysts for the Tax Foundation, wrote last week. "The latest IRS and Census data show that people and businesses favor states with low and structurally sound tax systems, which can impact the state's economic growth and governmental coffers."

What is actually simple common sense has a basis in analytics. And while you and I might instinctively know the truth of the notion that people vote with their feet when moving to a low-tax location, government officials pretend there's no such correlation.

Reason.Com:

But we're not talking about normal people; we're talking about government officials who use their long-suffering subjects like milking cows and prefer to do so without consequences. There's even a cottage industry of pundits—like Stanford sociologist Cristobal Young, author of The Myth of Millionaire Tax Flight—who tell politicians what they want to hear.That politicians aren't as fooled as they pretend is obvious from the efforts of high-tax jurisdictions to penalize those who flee. In 2018, Illinois legislators passed a law to claw back tax breaks from "any recipient business that chooses to move all or part of its business operations and the jobs created by its business out-of-State."

"What we really could do is erect a border fence and then have gates where we tax people that left the state just because they didn't decide to stay here and do business," Rep. Jeanne Ives joked at the time. "I mean, this bill is ridiculous."

States are so determined to keep you from moving that they refuse to recognize your move.

"If you're thinking of moving from your high-tax locale, chances are your state's income tax auditor won't let you leave without a fight," CNBC noted in 2019.

"Our study shows that higher taxes negatively affect inventive activity and that inventors are geographically mobile in response to changes in tax incentives. As such, tax policy can exert a powerful effect on both the level and location of innovation," Ufuk Akcigit (University of Chicago), and three other academics wrote last year in Microeconomic Insights of a study of inventors' response to tax rates over the last century.

"Because the impact of taxes on innovation happens over time rather than all at once, our results suggest taxes can influence cumulative technological progress, which is a central feature of economic growth," they added.

High-tax states are so eager to give their voters all kinds of goodies that they don't need means that high-tax states will continue to be high-tax states and low-tax states will continue to clean their clocks with regard to economic growth and a growing population.