When it comes to high state taxes, people vote with their feet. The Tax Foundation's Migration Calculator shows how people have moved state to state between 1993 and 2010, and the amount of adjusted gross income each state gained or lost over the same period. In general, states with higher taxes have lost residents and income to states with a lower tax bite. This is simple self-interest at work. It makes economic sense for those who want to preserve their estates for their posterity, or who simply want to keep more of their hard-earned money for themselves, to live in places that don't treat them like ATMs.
Florida gained $67 billion in adjusted growth income from net migration between 2000-2010. The Sunshine State has no income, estate or inheritance taxes, and most new Floridians came from states that for the most part do, including New York, New Jersey, Illinois, Pennsylvania, Massachusetts and Michigan. Even some pro-tax liberal politicians have made the move. "Between 2000 and 2010, some 208,784 Ohioans renounced their citizenship and became residents of Florida, taking more than $8 billion of Ohio's tax base with them," Scott A. Hodge points out at the Tax Foundation's website. "Ironically, one of these tax avoiders was former Ohio Sen. Howard Metzenbaum - a lifelong advocate of the estate tax." The senator apparently would prefer that people do as he says, rather than as he does.
Critics of the analysis point out that there are more reasons than tax structure that cause people to move around the country. This is true; the regulatory environment, the number of available jobs and the general business climate also play important roles. In most cases, growing states are those that have sound fiscal practices, pro-business policies and smaller per-capita government expenditures. The conclusion is the same. All things being equal, states that pursue a generally conservative, free-market growth agenda flourish while those that make it difficult to make money and tax the income at higher rates don't. The only major factor not tied to politics is the climate. Global warming was supposed to make the northern part of the country more temperate and reverse the southward migration trend. The data in the Migration Calculator may supply more evidence that warming just isn't happening.
Migration trends have significant political consequences. In redistricting based on the 2010 census, eight states gained seats in Congress, and 10 states lost representatives. Seats mostly flowed from high-tax jurisdictions to low-tax ones. This will have an impact on the 2012 presidential race. Eleven of the 12 lost congressional seats (thus lost electoral votes) are in states that went for Barack Obama in 2008. States that went Republican that year gained 10 additional electoral votes for 2012.
The more conservative its economic policies, the more people a state attracts, which means more representatives in Congress preaching the limited government gospel, and more Republican presidents seeking to put it into effect. This is the laboratory of democracy at work. Some states win, some states lose, but America as a whole benefits.
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