Tuesday, November 24, 2020
Cato Institute, Will High‐Tax “Superstar Cities” Finally Need to Consider — Gasp! — Their Residents?:
As my Cato colleague Chris Edwards documented here a couple weeks ago, interstate migration data from the U.S. Census Bureau indicate that state tax policy affects where Americans, especially wealthy ones, are choosing to live and work. The following charts ... confirm Chris’ initial impressions: in 2018 there was a strong, statistically significant (p‐values < 0.01) relationship between (1) personal state tax burdens — as measured by either the Tax Policy Center or the Tax Foundation — and (2) net interstate migration (ratio of inflows to outflows):
The charts paint a pretty clear picture: as a state increases taxes on high earner residents, it tends to lose them to other, lower‐tax states. As Chris notes, moreover, high state tax levels don’t necessarily mean high quality government services. In other words, many Americans aren’t getting what they pay for.