Tuesday, February 12, 2008

High Taxes Redistribute People, NOT Income

From UHaul.com:

One-way truck rental from Newark to Charlotte : $2,116

One-way truck rental from Charlotte to Newark: $311

Reason: New Jersey is one of the top five departure states, and North Carolina is one of the top five destination states (see chart above), and the almost 7:1 ratio in prices suggests that 7 times as many trucks are going from NJ-NC as are going from NC-NJ.

From today's WSJ (no subscription required):

A record eight million Americans -- some 20,000 people every day -- relocated to another state last year. So where are these families headed and why? The general picture is this: Americans are continuing to flee the Northeast and Midwest, while the leading destinations continue to be Southern and Western states.

The United Van Lines study finds that the biggest population loser last year was Michigan, where two families moved out of the state for every new family that moved in. Americans are also fleeing New York, New Jersey, Ohio, Pennsylvania and Illinois. Without interviewing the departed, it's impossible to know the reasons for this outward migration. No doubt overall economic prospects, climate, quality of life and housing prices play a role. But one reason to conclude that taxes are also a motivator is because the eight states without an income tax are stealing talent from other states.

Our friends on the left say Americans are willing to pay more taxes to get better government services, but their migration patterns reveal the opposite. Governors would be wise to heed these interstate migration trends as they try to cope with what may be one of the worst years in recent memory for state finances. The people who tend to be the most mobile in American society are the educated and motivated -- in other words, the taxpaying class. Tax them too much, and you'll soon find they aren't there to tax at all.

11 Comments:

At 2/12/2008 11:48 AM, Blogger WesB said...

I though NC had relatively high taxes...? And where is Florida and Texas (no state income tax)?

I think it is about more than taxes.

 
At 2/12/2008 12:03 PM, Blogger Thomas Blair said...

WesB,

>>I think it is about more than taxes.

I don't recall the OP claiming as much. I do, however, remember this little nugget: "No doubt overall economic prospects, climate, quality of life and housing prices play a role."

 
At 2/12/2008 12:58 PM, Anonymous sarlevin@umflint.edu said...

I believe lack of jobs for the rust belt winners is playing the biggest role. Not only are there not many blue collar jobs available but there aren't many white collar ones either. I know for Michigan that VW recently decided to move their corporate operations to Virginia and there was a Pfizer defection as well. There are many more where those came from. Unfortuntaely, I will likely be adding to that defection sooner than later.

 
At 2/12/2008 2:09 PM, Anonymous Anonymous said...

Here in FL, while we have no state income tax, some areas have high property taxes. Add in intangibles tax, sales tax (Mine is 6.5%, which I guess is pretty low. I remember when it was 4%, though), and high insurance rates, and I can see why FL isn't in the top 5 or so states.

skh.pcola

 
At 2/12/2008 3:33 PM, Anonymous Machiavelli999 said...

Its taxes and general attitude towards business by the state and local governments. If their attitude is "Those greedy corporations...they have unlimited money. God, we need some of that. Lets tax them and put regulations on them and require them to do a bunch of things we think are good" then the businesses will leave. See Michigan.

If their attitude on the other hand is, "Businesses are the ones that create jobs and we need to make it as easy as possible to start and run a business in our state/city." then they will come. See Sun Belt and increasingly many of the Southeastern states.

Sometimes, however the benefits of being in the technological (Silicon Valley) and financial (New York) centers of the country override the hostility of the state governments. (California and New York).

 
At 2/12/2008 3:54 PM, Anonymous Anonymous said...

People don't move so they can make more money.

In general.

They move so they can have the chance of having the life they want for themselves and their families.

 
At 2/12/2008 4:33 PM, Anonymous Fred said...

"They move so they can have the chance of having the life they want for themselves and their families."

That's easier to do with money.

 
At 2/12/2008 5:05 PM, Anonymous Anonymous said...

Fred said...

"That's easier to do with money."

It sure is Fred and that is one reason why families stay in crappy situations is lack of money to move to a better place.

Like that old Grateful Dead song goes, "...make good money five dollars a day, made anymore and I'd move away.."

The biggest reason that families don't move more often is because the kids are settled in an area with their friends and school so the parents tough it out.

 
At 2/12/2008 5:21 PM, Anonymous Anonymous said...

"lack of money to move to a better place"

I guess you better re-read The Grapes of Wrath. From the previous post regarding material wealth, over 90% of the population has a vehicle and the higher incomes are associated with greater persons per per household (ie. a family rather than a single person going to college).

"tough it out"

You forgot to blame the grandparents for being a burden. Our choices are our own responsibility.

Doubt that you would know tough if it hit you in the wazoo.

 
At 2/13/2008 1:31 AM, Anonymous Anonymous said...

Anon 5:21 said...

"Doubt that you would know tough if it hit you in the wazoo."

Can't you find something original to say? You sound like Rush Limbaugh's parrot.

 
At 2/13/2008 6:30 PM, Blogger John Thacker said...

I though NC had relatively high taxes...? And where is Florida and Texas (no state income tax)?

I think it is about more than taxes.


NC is, however, a very low union state. One of the bigger factors may well be in housing prices, which are considerably lower in developer-friendly NC than in many rich areas that constrain development, or push for expansive minimum lot sizes, etc.

Of course, housing prices are also a large part of why poor people stay in Detroit, Cleveland, et al. The decline of those cities combined with the durable nature of housing stock means that there are a lot of houses whose value is less than what it would cost to build them.

The number one way to improve life for the poor and middle class, especially in overall wealthy areas and cities, would be to reduce the power of zoning and allow more housing (especially apartments, townhouses, condos, things that grow up vertically) to be built. But in so many rich areas, especially in the Northeast, homeowners would rather restrict the supply of housing to make their own house prices go up, even if that means shutting the poor and first-time homebuyer out. It's worst in overall liberal areas (which makes the hypocrisy brutal), though certainly those kinds of laws are favored by conservative exurban types once they've bought their dream home and don't want the neighborhood "ruined."

 

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