NPR on the Rich and State Tax Rates

http://www.futureofcapitalism.com/2011/04/npr-on-the-rich-and-state-tax-rates

This NPR article headlined "Studies: Rich Don't Flee High-Tax States" is pretty terrible. One of the studies tracks "migration between states in New England." Fine, but what about all the people leaving New England for no-income-tax Florida? Or all of the New Yorkers leaving for lower-tax Connecticut? The claim in respect of Florida seems to be it's all about the weather. If that's so, why aren't all those New Englanders retiring to high-tax Southern California, which has Florida's warm temperatures without the hurricanes?

Another study is summarized by NPR as follows:

In 1994, New Jersey increased taxes on income over $500,000 by 2.6 percent. And what happened?

"The vast, vast majority just don't respond to the tax. They stay put," says sociologist Charles Varner of Princeton University. Varner compared people who were just under the line for the new tax — who made, say, $400,000 a year — with those who suddenly had to pay more taxes.

According to Varner's study, both groups moved away from New Jersey at the same rates.

"The effect on migration is minimal," he says.

First, NPR doesn't even get the date of the New Jersey tax increase correct; it was 2004, not 1994. Second, maybe the two groups moved at the same rates because the $400,000-a-year earners were optimists who expected to be making $500,000 a year pretty soon, so their decisions turned out pretty much the same as the $500,000-and-up crowd. Finally, NPR doesn't mention the sentences of the Varner study that say this: "New Jersey experienced net out-migration of millionaires in every year from 2000 to 2007, averaging a net outflow of 459 per year, or 1.2 percent of the state's millionaires....Migration, nonetheless, has certainly increased since the new tax was introduced in 2004. In the pre-tax period (2000–03), net out-migration averaged 9.3 per 1,000 millionaires. Since the new tax was imposed, net out-migration rate has risen to 14.5 per 1,000, an increase of 56 percent....there is an observable increase in migration associated with the introduction of the new millionaire tax bracket."

by Ira Stoll  |  Apr 29, 2011 at 8:52 am Related Topics:  Taxes receive the latest by email: subscribe to the free futureofcapitalism.com mailing list