Politicians understand the economic impact of taxation when it serves their interests. They often brag about raising tobacco taxes to discourage smoking. It’s not their business to dictate private behavior, of course, but they are right about higher taxes leading to less smoking (they also lead to more cigarette smuggling, but that’s a separate issue). Those same politicians, however, conveniently forget about the economic effect of taxes when they impose high tax rates on work, saving, investment, and entrepreneurship. Or maybe they simply don’t care. But as is explained in the Wall Street Journal, taxes on productive behavior matter a lot. More than one million people have escaped New York this decade, and punitive taxes clearly have played a role in this brain drain to other states:
Between 2000 and 2008, the Empire State had a net domestic outflow of more than 1.5 million, the biggest exodus of any state, with most hailing from New York City. The departures also have perilous budget consequences, since they tend to include residents who are better off than those arriving. Statewide, departing families have income levels 13% higher than those moving in, while in New York County (home of Manhattan) the differential was even more severe. Those moving elsewhere had an average income of $93,264, some 28% higher than the $72,726 earned by those coming in. In 2006 alone, that swap meant the state lost $4.3 billion in taxpayer income. Add that up from 2001 through 2008, and it translates into annual net income losses somewhere near $30 billion. …no single reason can be fingered for a million migrants seeking their fortunes across state lines, but one place to start is New York’s notorious state and local tax burden. According to the Tax Foundation, between 1977 and 2008, New York has ranked first or second in the country for its state-local tax burden compared to the U.S. average. In the years considered by the Empire Center study, New York’s state and local tax burden ranged between 11% and 12% of income. The peak year for taxes, 2004, was followed by the peak year for departures—as New York lost nearly 250,000 people to other states in 2005. And that’s before another big tax hike this year. That pattern is consistent with the annual migration patterns, showing that highly taxed and economically lackluster states were most likely to end up in residents’ rear view mirrors. According to the annual study by United Van Lines, states like New York, New Jersey, Michigan and Illinois have been big losers in recent years. …Liberals continue to insist that they can raise taxes ever higher without any effect on behavior, but the New York study is one more piece of evidence that this is a destructive illusion.
[…] all, people in government value taxes more than growth, jobs, competitiveness, and all sorts of other […]
[…] all, people in government value taxes more than growth, jobs, competitiveness, and all sorts of other […]
[…] California citizens, Greek shop owners, Facebook millionaires, Norwegian butter buyers, New York taxpayers, Bulgarian smokers, foreign cab drivers, New Jersey residents, Australian film stars, and […]
[…] condition actually has gotten better in recent years. And no rating of fiscal irresponsibility is complete without New York, which is in 45th […]
[…] Federalism is a very valuable way of protecting people from statism. We see it when people move from New York. We see it when they escape from California. We see it from a big-picture perspective in the Tax […]
[…] Federalism is a very valuable way of protecting people from statism. We see it when people move from New York. We see it when they escape from California. We see it from a big-picture perspective in the Tax […]
[…] There is a wealth of data on successful people leaving jurisdictions such as California and New York that have confiscatory tax […]
[…] left. There is a wealth of data on successful people leaving jurisdictions such as California and New York that have confiscatory tax […]
[…] left. There is a wealth of data on successful people leaving jurisdictions such as California and New York that have confiscatory tax […]
[…] home. There is a wealth of data on successful people leaving jurisdictions such as California and New York that have confiscatory tax […]
[…] left. There is a wealth of data on successful people leaving jurisdictions such as California and New York that have confiscatory tax […]
[…] left. There is a wealth of data on successful people leaving jurisdictions such as California and New York that have confiscatory tax […]
[…] left. There is a wealth of data on successful people leaving jurisdictions such as California and New York that have confiscatory tax […]
[…] our tax code probably treats saving and investment worse than it treats tobacco. As I noted in 2009, this doesn’t make […]
[…] our tax code probably treats saving and investment worse than it treats tobacco. As I noted in 2009, this doesn’t make sense. Politicians understand the economic impact of taxation when it […]
[…] It goes without saying, of course, that Illinois is not the only short-sighted state. New York politicians also have a fetish for driving taxpayers to other states. […]
[…] It goes without saying, of course, that Illinois is not the only short-sighted state. New York politicians also have a fetish for driving taxpayers to other states. […]