Ron Hart: Soak The Rich and Watch Them Move to Another State

Columnist Ron Hart on states with high tax burdens:

If you wonder how "soak the rich" liberalism will play out with the New Left regime in D.C., just look at California. As Ronald Reagan said, "People vote with their feet." The reason Texas, Tennessee and Florida (all zero-income-tax-states) grow is because entrepreneurs flee high-tax states, and bring their businesses and jobs with them. I joke that my home state, Tennessee, is called "The Volunteer State" because they can't make you live there. Yet few leave.

Whole thing here.

Population growth stats here.

Comments

[Mike M.]

If you wonder how "soak the rich" liberalism will play out with the New Left regime in D.C., just look at California.

And the city of Detroit, once among the greatest cities in the entire world, but now tragically and utterly decimated by the New Left malefactors. The city where people now have trouble selling a home for less money than it costs to buy a used car.

[Ten Years After]

Everywhere is freaks and hairies
Dykes and fairies, tell me where is sanity
Tax the rich, feed the poor
Till there are no rich no more

Id love
to change the world
But I dont know what to do
So Ill leave it up to you

Population keeps on breeding
Nation bleeding, still more feeding economy
Life is funny, skies are sunny
Bees make honey, who needs money, monopoly

Id love to change the world
But I dont know what to do
So Ill leave it up to you

World pollution, theres no solution
Institution, electrocution
Just black and white, rich or poor
Them and us, stop the war

Id love to change the world
But I dont know what to do
So Ill leave it up to you

[Tricky Prickears]

How does this tie into high median income states like Connecticut, Maryland and New Jersey, which have very high tax burdens? Looks like Texas is 29 and Tennessee - 43.

[Mike Laursen]

How does this tie into high median income states like Connecticut, Maryland and New Jersey, which have very high tax burdens?

Some places are nice enough to live in that it offsets the pain of high taxes. Oh, wait, did you say, New Jersey? Then I have no clue why.

[Paul]

Always a tough call on this kind of stuff. Sometimes you live in a state because it's nice. I mean, the fact of the matter is, on average, more people would rather have this as their view, as opposed to this. Which is why a house in the first setting will always cost more than a house in the second.

[TaylorMae]

Great column, an an interesting insight from a Southerner on our state. He happens to be dead-on and damn funny. Especially the sex change operation piece.

[prolefeed]

For the most part, the growth is occurring in states with low overall tax rates, and/or states with high Mormon populations:

States Ranked by Rate of Population Growth, 1990-2000
Rank State Percent Growth
1. Nevada 66.27%
2. Arizona 39.98%
3. Colorado 30.56%
4. Utah 29.62%
5. Idaho 28.53%
6. Georgia 26.37%
7. Florida 23.53%
8. Texas 22.76%
9. North Carolina 21.43%
10. Washington 21.11%

State Percent of state population
Utah 71.76%
Idaho 26.63
Wyoming 10.10
Nevada 7.41
Arizona 5.45

[Shannon Love]

The other reason that low tax states attract entrepreneurs is that high taxes pay for intensive regulation. A low tax state not only doesn't actively take money away from people but also does not interfere as much in an entrepreneur's creativity and experimentation.

Most true entrepreneurs are as or more driven by a passion to create than they are driven by a desire for wealth. We've all had the experience of being miserable working a boring, stifling job for high pay versus the experience of working a fun, stimulating job for less. Entrepreneurs are no different. They seek out environments that let them find fulfillment by following their dreams.

[Episiarch]

How does this tie into high median income states like Connecticut, Maryland and New Jersey, which have very high tax burdens?

CT and NJ have a lot of old-school industry like Sikorsky, Pratt & Whitney, Electric Boat, etc. and they are close to NYC. It's cheaper to work in NYC and live in even a high-tax locale outside the city rather than inside.

[TrickyVic]

""""Some places are nice enough to live in that it offsets the pain of high taxes. Oh, wait, did you say, New Jersey? Then I have no clue why."""

He doesn't have a sense of smell. 😉

[John]

If Joe were still posting here he would explain to everyone how states like California, New York, Connnecticut and Mass were the future and states like Texas and Utah were things of the past. That all the dynamism in the country comes from the high tax high spend states. No kidding. He really believed that.

[TrickyVic]

"""It's cheaper to work in NYC and live in even a high-tax locale outside the city rather than inside."""

Including the cost in time for the commute. I know people who commute 2 hours each way.

[24AheadDotCom]

It shouldn't surprise anyon that Reason continues to be completely intellectually dishonest.

Reason supports MassiveImmigration, and that's played a major role - perhaps the preeminent role - in CA's problems. It played a part in millions of Americans moving out of CA, it led to higher costs for those who remained, and it gave even more power to the far-left. The far-left, of course, responded by pushing for even more spending, leading to even more Americans leaving.

Reason makes HomerSimpson look like StephenHawking.

P.S. In case anyone replies to this, their responses will almost assuredly be ad homs delivered through sockpuppets, thereby conceding my points and showing the cowardly, childish, anti-intellectual nature of libertarians.

[Paul]

Including the cost in time for the commute. I know people who commute 2 hours each way.

And convince themselves and other how much money they saved on their house because it was 'out there'. No mention of cost of driving, gas, wear-and-tear, tires, lost productivity and personal time (personal and professional).

[Paul]

P.S. In case anyone replies to this, their responses will almost assuredly be ad homs delivered through sockpuppets, thereby conceding my points and showing the cowardly, childish, anti-intellectual nature of libertarians.

Sure, accuse us of acting like sockpuppets when responding to the pre-eminent fucking sockpuppet.

[John]

Some places are so nice that they attract people for whom money is no object. Those places can get buy charging high taxes.

[Peter]

he is just one more bad decision away from signing up to be the next spokesman for Viagra.

The Bonernator. I'll be back, I have to go call my doctor it's been more than 4 hours.

[R C Dean]

Some places are so nice that they attract people for whom money is no object.

The error that the joes fall into is believing that they are nice because they have MassiveStates. Quite the contrary, they have MassiveStates because people are willing to put up with them to live there.

[Tricky Prickears]

Hey, not all of New Jersey is what you see in the opening credits of the Sopranos. I live in South Jersey.

Yeah, there's a lot of regulation. It's a pain in the ass. And I still have to compete with people who work under the table; don't pay their taxes, don't carry insurance... But the real estate didn't take a nose dive like some other states that aren't as regulated. We didn't get the boom either. All pretty steady. Very boring. I guess if you're [planning to retire with a nice pension... But Florida's cost of living isn't as low as it once was. And as population builds in other states, so do taxes and regulation. If you can find a nice spot, take it. But I have a nice little business here.

All in all, I think salaries adjust to tax burden. if you own a service oriented business you can charge more. It all balances out. If you're running a dotcom, then maybe a low tax state is good. If you have a localized business, high population is best.

[Alan Vanneman]

If you actually look at the map, most of California is growing. More of Texas is declining than is the case in Sunny Cal. Most of all, I see people getting the hell out of North Dakota.

[R C Dean]

If you actually look at the map, most of California is growing. More of Texas is declining than is the case in Sunny Cal.

Clicking through on the map shows that the populations of both states basically doubled from 1960 - 2000. I'd be interested to see the population changes since 2000.

[John]

The more of Texas declining is pur sophistry. Yes, as a matter of land area, large areas of Texas are losing population. That is because large areas of Texas are rural and like all rural areas are losing population. What matters is those small areas known as Dallas/Fort Worth, Houston, Austin and San Antonio that are gaining a lot more population than places like Junction City are losing.

[Mike M.]

If you actually look at the map, most of California is growing.

What has been happening in California over the years is exactly what happened to New York City. It is turning into a Banana Republic where you have a small class of the extremely rich, massive amounts of poor, and a disappearing middle class.

California is still a great place to live if you're a fabulously wealthy movie star, or if you're an illegal immigrant welfare case of the sort that has flooded into the state in such staggering numbers.

But if you're in the median household earner class of around fifty to a hundred thousand bucks a year, Calfornia is a nightmare, and those are precisely the families that are leaving in droves to go to places like Oregon, Nevada, and Arizona. It doesn't bode well at all for the state's long term tax base.

[TrickyVic]

"""And convince themselves and other how much money they saved on their house because it was 'out there'. No mention of cost of driving, gas, wear-and-tear, tires, lost productivity and personal time (personal and professional)."""

Look at the median cost for a house or apartment between Eastern PA, say Allentown, and NYC. A few hundred thousand dollars is a lot of gas, tires, wear and tear. Assuming you are driving your car. Admitingly, if you are in the middle of no where you may need to, but some people take a bus and do productive things.

[Shannon Love]

There is a great deal of more recent data on internal migration. I don't have it at my finger tips but the trends noted in the 2000 census have only intensified in the intervening years.

One very reliable indicator from last month:

When comparing California with Texas, U-Haul says it all. To rent a 26-foot truck oneway from San Francisco to Austin, the charge is $3,236, and yet the one-way charge for that same truck from Austin to San Francisco is just $399. Clearly what is happening is that far more people want to move from San Francisco to Austin than vice versa, so U-Haul has to pay its own employees to drive the empty trucks back from Texas."

[Bethany]

Hart is one of the best columnists writing today for us. His audience in the south is growing. Not sure what Calfornia will think of this, but what a funny and thoughtful work!

[MNG]

"For the most part, the growth is occurring in states with low overall tax rates"

That's called "the race to the bottom!

[Chad]

Hmmm...I read both the links and neither of them had any real data that backed up the hyperbolic claims that significant numbers of people move from one state to another because of taxes.

As it happens to be, a few years ago, I was offered a job in California. I calculated how much of a "premium" in pay I would need to live there relative to the midwest, which I eventually chose. I included all taxes I could find, and even calculated mock tax returns for each state, so I could figure in things like mortgage deductions. I found the premium to be 23%. However, of this premium, only 3% was taxes. The vast majority was the general cost of goods and services, and most significantly, housing. CA may have higher income and sales taxes than most, but it also has real estate taxes well below most. The overall burden is higher, but nothing that is going to cause massive numbers of people to move anywhere.

Though this does bring up another point. Tax synchronization, both interstate and international, is the wave of the future and the great enemy of the race to the bottom.

[ChurchLady]

Good job! Ron, keep up the good work!

A Fan,
Gladys
ChurchLady

[Bob Smith]

Chad, your analysis didn't go far enough. California has very expensive goods and services because both land use controls and general regulation make it so. These hidden taxes are as harmful to you as any cash transfer. California also has an out-of-control tort climate, which further ramps up the costs for business.

[avery]

Ron Hart is 'dead on' target here.

[joshua corning]

Expect a State leaving tax within the next 5 years

[Gilbert Martin]

Looks like some realization of the folly of high taxes is creeping into some states.

Maine just changed their income tax to eliminate almost all the "progressiveness" out of it and make it almost flat rate across the board.

[Bob Smith]

Maine just changed their income tax to eliminate almost all the "progressiveness" out of it and make it almost flat rate across the board.

They compensated by eliminating itemized deductions and large sales tax increases. That wasn't a tax reduction so much as a volatility-reducing measure.

[sockpuppets]

You're a fucking moron, Lonewacko.

[Gilbert Martin]

"They compensated by eliminating itemized deductions and large sales tax increases. That wasn't a tax reduction so much as a volatility-reducing measure."

I hand't heard that part of it, but that is interesting.

I live in Tennessee which doesn't have a state income tax (on wages that is - it does have one on investment income). We also have high sales taxes.

One of the rationalizations for the liberals here is that a "progressive" income tax would give government a more "stable" source of revenue than relying primarily on sales taxes.

Lookes like Maine came to the exact opposite conclusion.

[Bob Smith]

One of the rationalizations for the liberals here is that a "progressive" income tax would give government a more "stable" source of revenue than relying primarily on sales taxes.

That's rather amusing. Apparently Tennessee liberals can't see outside their state. Look at California, which has a very progressive income tax. During economic downturns they have huge downswings in tax revenue because of reductions in income tax receipts. This wouldn't be a problem but for the fact that California spends all of the windfall during economic booms. I'm sure Tennessee liberals wouldn't do that. NY and NJ are hurting too, for the same reason.

[zoltan]

That's called "the race to the bottom!

If the best employment situation in the country (Austin, TX) is the bottom, then it sure is nice to live here!

[TrickyVic]

States need to collect taxes because they spend. The joke is thinking they are actually reducing taxes, they may reduce one, but they will increase others.

Did Maine reduce it's state budget? If not, they have to makeup the money somewhere.