As Supreme Court Justice Louis Brandeis observed in New State Ice Co. v. Liebmann, a “state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”
The states’ freedom to serve as independent sovereign entities has diminished in recent years, but in the matter of how and to what degree they tax and regulate those who live and do business within their borders, they retain enough freedom to compete for taxpayers, entrepreneurs and investment.
That’s why people in California, Maryland and New York, for example, see Texas Gov. Rick Perry in television ads urging them to pack up and move to Texas for a better life, greater freedom and lower taxes. It’s why so many are doing just that.
Travis Brown studied Internal Revenue Service data from 1995 to 2010 (the last year for which such data was available) to determine just what impact higher state tax rates and, especially, state income-tax rates have on people deciding where to move or locate their businesses.
Mr. Brown, in his book “How Money Walks,” readily acknowledges that people move for other reasons as well, but notes that in the years he studied, people earning some $2 trillion in combined adjusted gross income moved from the 10 highest-taxed states such as California, New York, New Jersey and Maryland to the 10 states that impose the lowest tax burden on their citizens — states such as Florida, Tennessee and, yes, Texas.
The evidence is pretty clear, but governors like Illinois’ Pat Quinn or Maryland’s Mr. O’Malley are no more perceptive than the current rulers of Argentina or France.
New York’s very liberal governor, Andrew Cuomo, does seem to see some connection between his state’s taxes, regulation and the fact that taxpayers are leaving in droves. The same cannot be said for New York City’s new leftist mayor, Bill de Blasio, who, if he has his way, will drive those capable of paying to run his city to flee somewhere — anywhere — else.
David A. Keene is opinion editor of The Washington Times and former president of the National Rifle Association, where he continues to serve on the board.