There is no such thing as a mere "tax day," or even a "tax
season" because our lives and livelihoods are impacted by taxes every day.
Travis H. Brown is the author of How
Money Walks: How $2 Trillion Moved Between the States, and Why It Matters.
With April 15 comes the familiar litany of mundane
exercises. Fill out the forms. Call the tax preparer, or pull up the
software. Figure out the best way to reduce your tax burden. Pop everything in
the mail. For many Americans, mid-April is the only time to think about
taxes. However, taxes should play an integral role in life's biggest decisions,
from where to start a business to where to retire. Taxes are a concern of
local, national and global proportions. Where we live determines how
much income we are able to keep, save and invest. From personal bank
accounts to massive corporate holdings, capital migrates to where it
is treated best.
In the United States, no- and low-income tax states
are experiencing booms, while high-income tax states are threatened
with busts. This is no mere hypothesis. Fifteen years' worth of data from
the Internal Revenue Service shows that net adjusted gross incomes (net
AGI) move from states that levy high income taxes to those with low or no
income tax. Our analysis of more than 134 million individual taxpayer
records revealed that, between 1995 and 2010, more than $2 trillion dollars moved
between the states. Using this unimpeachable data, we can see – down to
the county level – which areas are gaining wealth and residents, and which
are losing them. [See a collection of political cartoons on the economy.]
Why does this matter? There are myriad reasons.
Successful people and businesses flee from states with harsh tax
environments. They flock to states with benign, progrowth tax structures
that allow them to save and invest. This is why a state
like California, with its top income tax rate of 13.3 percent, saw a
loss of more than $31.7 billion over 15 years. Texas, which taxes
its residents at the very agreeable rate of zero, gained more than $22
billion over that same time period. (Recently, Texas Gov. Rick Perry took
advantage of this reality by running ad campaigns that
woo California businesses to move to Texas.)
Of course, taxes are not the only factor considered before a relocation – but they can (and should) play a major role in the decision. High-profile, real-life case studies have amplified the conversation, such as when golf legend Phil Mickelson said high taxes made him want to leave California. But the issue of economic mobility is certainly not restricted to the wealthy; moving from a high-tax state to a low-tax one makes a significant impact (equivalent to an immediate and permanent pay raise) for middle-class families, too. [Read the U.S. News Debate: Is Obama's Corporate Tax Plan A Good Idea?]
Of course, taxes are not the only factor considered before a relocation – but they can (and should) play a major role in the decision. High-profile, real-life case studies have amplified the conversation, such as when golf legend Phil Mickelson said high taxes made him want to leave California. But the issue of economic mobility is certainly not restricted to the wealthy; moving from a high-tax state to a low-tax one makes a significant impact (equivalent to an immediate and permanent pay raise) for middle-class families, too. [Read the U.S. News Debate: Is Obama's Corporate Tax Plan A Good Idea?]
All across the nation, leaders are taking notice of tax
migration. No one wants to be the next California ($22 billion
lost), New York ($58.6 billion lost)
or Illinois ($26.1 billion lost), with wealth and talent streaming
out of the state. Governors like Louisiana's Bobby Jindal have proposed
all-out repeals of the personal income tax, in order to keep more money in
residents' pockets, to boost consumer spending, and to compete with business-friendly
neighbors. This year alone, the governors
of Indiana, Wisconsin, Ohio, North
Carolina, Idaho, New Mexico, Kansas and Maine are all
backing serious tax reform. In other states, such as my home of Missouri,
state legislatures are proposing tax reform bills and carrying the torch for
real change.
Clearly, a number of people – from celebrities to legislators to working families – are grasping the difference that a low-tax environment can make, both in their lives and for the future of their communities. This April 15, it's time for this message to reach even more Americans. There is no such thing as a mere "tax day," or even a "tax season." Our lives and livelihoods are impacted by taxes every day. The decisions we make, based on this knowledge, can change our economy for the better.
Clearly, a number of people – from celebrities to legislators to working families – are grasping the difference that a low-tax environment can make, both in their lives and for the future of their communities. This April 15, it's time for this message to reach even more Americans. There is no such thing as a mere "tax day," or even a "tax season." Our lives and livelihoods are impacted by taxes every day. The decisions we make, based on this knowledge, can change our economy for the better.
http://www.usnews.com/opinion/articles/2013/04/15/high-tax-states-are-losing-taxpayers
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