David Brunori, August 17, 2011: “Income Taxes do Not Lead to Out Migration”
Illinois Policy Institute report, August 19, 2011 (via Russ Fox):
I regularly deal with clients moving from Iowa to Florida, and the idea that taxes don’t affect where people choose to live strikes me as absurd. Of couse taxes aren’t the only reason people move to Florida; I understand that the weather is nicer there in February. But taxes are definitely part of the discussion. The weather is at least as nice in Southern California as in Florida, but clients with a choice (i.e., it’s not a job transfer) always end up in low-tax Florida.
People respond to incentives. Illinois has created an incentive to do business elsewhere. The only surprising thing about the tax increase hurting jobs is that some people are surprised.
Tags: David Brunori, iowa tax policy, Russ Fox, state tax policy
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I think your analysis is either underinclusive or perhaps intentionally leaving out other factors that affect where people chooses to live. On the one hand, it seems entirely rational to leave a “high tax” state fir a “low tax” state when one is in retirement as the extent to which you cab stretch your dollars takes on a singular importance, one that carries a weight vis a vis other considerations that may not be so at earlier stages of life. For example, for many people not responsible for rearing children, location my well be much more a matter if personal choice than if one is faced with the prospect of uprooting a family and departing what may be an established support network of friends and family upon which parents may rely for assistance in caring for their children. I suggest that you would be hard-pressed to honestly price the value of such a support network such that marginal tax rates would actually play a significant role in peoples’ determining where they live.