Voting With Your Feet

CBN News posted a story today about the relationship between tax rates in different states and where people choose to live.

The article reports:

Brown (author Travis H. Brown) discovered that the nine states with no personal income tax gained $146.2 billion in AGI. Those states include Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.

Conversely, the states with the highest personal income tax rates lost a total of $107.4 billion. They are California, Hawaii, Oregon, Iowa, New Jersey, Vermont, New York, and Maine. Washington, D.C., was also included.

Another measurement delivers similar results. Brown looked at the 10 states with the lowest per capita state and local tax burdens and found they netted $69.9 billion in AGI. Those states include Alaska, South Dakota, Tennessee, Louisiana, Wyoming, Texas, New Hampshire, Alabama, Nevada, and South Carolina.

The 10 states with the highest state and local tax burden lost $139 billion in AGI. They are New York, New Jersey, Connecticut, California, Wisconsin, Rhode Island, Minnesota, Massachusetts, Maine, and Pennsylvania.

This story has personal relevance to me. My husband will be retiring at the end of the year, and we are about to put our house on the market. (If anyone wants a five-bedroom house in Southeastern Massachusetts, please leave a comment). We are moving for many reasons–one of those reasons is the cost of living in Massachusetts. We will be headed to North Carolina where we have family and the cost of living is lower.

Recently, Massachusetts raised the taxes on cigarettes. I don’t smoke, so that doesn’t impact me, but I was in a store yesterday in Rhode Island near the Massachusetts state line. The person ahead of me in line was commenting that she would no longer be buying cigarettes in Massachusetts because they were cheaper in Rhode Island. Right now, gasoline is more expensive in Rhode Island than in Massachusetts, but since the gasoline tax in Massachusetts is now indexed to inflation, I wonder how long that will be the case.

When people have an option, they give less money to the government, whether it is state or federal government. The Laffer Curve explains one aspect of that.

At some point, government needs to realize that at some point it has all of the money we have earned that it is entitled to. The question is exactly where the point of enough taxes is reached.

 

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