Taxes and migration myths
Jared Bernstein writes on the same points on why people move to other states and taxes as Steve Roth and Linda Beale address in their posts today and gives us this evidence (hat tip rjs):
- Migration is not common.
- The migration that’s occurring is much more likely to be driven by cheaper housing than by lower taxes.
- Recent research shows income tax increases cause little or no interstate migration.
- Low taxes can prevent a state from maintaining the kinds of high-quality public services that potential migrants value.
Also highlighted are the sources of several of the ‘sources’ of such claims demonstrated as bogus from media claims.
Rdan,
Whatever the reason, Taxes, business envirnment or cheaper housing, people are migrating in droves from California to Texas. They are voting with their feet leaving the blue states – especially the rust belt. Note which states are losing reprentative sand which are gaining. California didn’t gain for the first time in ages.
I can’t point to the reason, but the combination of the three seems to overcome the bloated/bankrupt public services you seem to like.
Islam will change
Yes, bloated/bankrupt public services are so satisfying. But the data suggests ‘bloated’ public services are partly in the eye of the beholder and the needs of citizens, without the perjorative. See Berstein’s analysis, which includes many other examples and actual data as well from a variety of states California to Texas would be part of this story of course.
Also, you might want to take a look at a book by Enrico Moretti, The New Geography of Jobs, which addresses business climate issues (and options for state government responses to encourage such magnets for opportunity) …he unfortunately does not spend much time in particular on Austin and Houston, but analysis of how accomplished would be valuable. ‘ ‘Business climate’ is not particularly descriptive for analysis.
The point was that taxes appeared to be a minor reason for moving, contra the definitions being proposed by people running for election.
Was talking to a retired college prog over 40 years ago. Seems he was at Cornell teaching english and a series of snowstorms came through and he was spending his free time shoveling snow off the walks. An offer of a position in Florida came at that time and he accepted it. He said it was the worst mistake he ever made.
I think there is migration, and it is occurring at an earlier age than before (60 – 70).
Perhaps the number of bodies moving is not as important as the money and the entrepreneurial drive that is going south.
Yes I agree there is migration Rusty. Does anyone have links to what age groups and other data,
We are having an election here in Wisconsin next week which really addresses the issue. While I hesitate to call Wisconsin blue–it has given birth to Fighting Bob LaFollette, the Republican Party, Joe McCarthy and its largest city was run by socialists–real socialists–for decades, the current battle is
dd,
I have anecdotal stories of people moving and then coming back as well. And people not being able to afford to move….trading a paid for house for a cheaper one elsewhere is not a universal option.
At this point in my life less snow would be great. But the Florida option is not remotely appealing for a variety of reasons.
I think the key data would be the number of 1) business owners, 2) retired business owners, 3) retired high dollar professionals, 4) entrepreneurs and fledgling entrepreneurs, etc.
I don’t know a solid source of data, other than a lot of anecdotal data from CPAs and lawyers, and my own experience.
There is a phenomena (according to those who monitor the elderly) of moving to Florida at age 60-70 and then returning to the family home area at 75 – 80, to be near family.
Whether that includes the monied class i am not certain.
Rdan,
Taxes are probably not all the reason. My point is the blue states, especailly ones with bad business climates, are losing people by the boatload. Business climate is shorthand for a plethora of issues. Tax rates, availability of skilled workers, is the state right-to-work, and probably the biggest is the regulatory environment. Even the weather for that matter.
Reguardless people are leaving, and have been leaving the big rust-belt states and California for southern Red states. Look at the census data. Something is pushing them away. And its not all retirerees.
As an aside, most military have their state of legal residence in one of the 0 income tax states (Florida, Nevada, Alaska, Texas, etc) regaurdless of were they actually reside. This makes the bulk of US military personnel not paying any state income taxes. And you avoid Federal income taxes if you are in a combat zone. Another neat little tax loophole…
Islam will change
Hard to believe Arizona picked up enough residents to justify another congressman. But then again the state government is famous for fraud and stupidity. Governor probably made sure that her cronies in the Census only hired Tea Party members to do the count. Recent DMV count of licenses surrendered/new is not as genorous in concluding that this state is growing. But then again, in a state where 5% of the state is LDS, they control all the leadership positions in the legislature. At least in Boston, 70% of the population was Catholic, so the the number of Catholic legislators was understandable.
“Migration is not common”
—Migration within the U.S. is high compared to other industrialized nations. On a year over year basis, the percentage of Americans that move to another state may not appear high, but we are a very mobile nation. 8.9% will move to another state within the next 5 years and almost a third will change states in their lifetime.
“The migration that’s occuring is much more likely to be driven by cheaper housing than by lower taxes.”
—The author uses anecdotal evidence provided by Florida in the 2000s without analyzing the true migration pattern. Many areas, especially retirement communities, in the Carolinas, Virginia, and Georgia have attracted Northeasterners via Florida. These populations, nicknamed “halfbackers”, found Florida to be too far away from family, too hot year round, and/or other reasons and moved half way back. Housing developers, advertisers, and sports casting all reflect this change. When you live in the South and an ad brags about how a bagel shop uses New York water, you realize they’re targeting a certain demographic (and I know what that term actually means).
“Recent research shows income tax increases cause … no interstate migration.”
—You find one person who moves due to an increase in taxes and the latter part of the statement is false, so the author included it to play up his point. Again, the year after a tax increase takes effect may show little outflow, but the subsequent years after show large migrations. Look at data over 10 year periods.
“Low taxes can prevent a state from maintaining the kinds of high-quality public services that potential migrants value.”
—It can and it cannot… it’s just a fluff statement by the author. Just because you increase taxes doesn’t mean you’ll get lower crime rates, a public service most of us desire. The fact is, if we live in a community that allows us to flourish, most of us, conservatives and liberals, are willing to pay high taxes. Where I live, I don’t have to worry about what part of town I’m in at what hour, I know and like my neighbors/citizens, and the culture here is amazing. If they raised taxes by 50%, I would stay. However, when those things don’t apply and taxes are high, you get what California, Illinois, and New York have realized lately. And that trend better not continue for them, or their service/budget issues are just beginning.
Hmmm…the statements I put up were headings from a research report and were quite general. The report indicates ambiguity, but at least attempts to quantify. In that you offer none your statements are opinion, and anecdotal. Hence not a refutation, but simply op ed.
Rdan,
His points stand up very well, since they are in reply to an Op Ed to start with. The bottom line is high tax states, especially ones with bad business climates (like California, New York, Illinois) ARE losing people. You can’t refute that since its the facts. the low tax states are growing and showed less problems during the downturn.
Kevin is correct – good government will keep residents. Bloated government/ high tax states like California will not and are losing people to places like Texas.
The Blue model only works until you run out of otehr peoples money…
Islam will change
One reason California’s govt is in such rough shape is that it illustrates what happens when you don’t collect enough taxes over a long period of time. Proposition 13 exempted a large percentage of commercial real estate from increases in property tax except at resale. Result–hell of a lot of long-term leases on commerical property in CA and local tax bases based mainly on residential property. Result–parts of the state with high or middle earners do alright in terms of govt services. Other parts like Northern California, don’t really have a lot to offer in terms of community amenities. Overall, the state is in the hole because R’s in the legislature refused to raise taxes to pay the bills for 30 years and still won’t pony up when it’s time to balance the budget.
But, California has the 9th largest economy in the world (IIRC.) So, they get along by abandoning public education, govt. services of all types, and cutting public employment. The people who can afford it still do ok. Those who can’t do without. Pretty much the model of where we’re going at the federal level. Moral–California isn’t for everyone and neither is the US. NancyO
I have another story from that same era, 1960’s. Foolish Machinery and Comical Corp was hiring engineers from Cat and John Deare as experienced farm machinery engineers were in short supply in California Bay Area. They would spend a year at FMC and then return home to the midwest. They would spend another year back home then come back to FMC. Seems it only takes one winter to Californicate a Midwesterner.
Twenty two pages is an op-ed? What parts didn’t you read buff.?
I am concerned you think California is the only example worth considering to contrast with Texas.
http://en.wikipedia.org/wiki/List_of_U.S._states_by_population_growth_rate
Buff except it is not “the facts”. Per this list DC (not a state) is no 1, Washington (a state) is no 6, California is no 13, Hawaii 18 and Oregon 19. High tax states all. Meanwhile Mississippi is 38 and Alabama 35. Now much of the bottom of the list is made up of upper mid-western and northeast states while a good part of the top is in sun-belt states but there are clear explanations due to heavy manufacturing decline and/or Hispanic immigration that much more adequately explain the pattern than any simple Red vs Blue State tax explanation.
That is not only isn’t correlation the same thing as causation, you don’t even have the freaking correlation. For example you might want to explain why Utah is no. 2 while equally or more so Wyoming is 27. Is there some secret regime of crippling taxes in Wyo to explain the divergence?
Sorry I am thinking your myth is still on the mything list. Though well in place on the right end of the meme index.
California was growing like gangbusters before Prop 13, as shown among other things by the opening of new UC, Cal State and especially Community Colleges around the State.
That is to the extent there is a correlation between certain types of “burdensome” taxes and population growth in California it would appear to be negative. And I have seen stories (no cite, so put it at anecdote level if you must) that much to most of Texas growth is in low wage jobs. That is we might want to look at GDP per capita growth rates rather than just first order raw population numbers.
Its true, the #1 point of origin for migration to Texas is California. Its also true that the # 1 point of orgin for migration to California is… Texas! Its almost like the two largest states are most likely to have people moving back and forth between them.
And that migration amounts to a rounding error. You’re talking about roughly 100K people per year total moving in either direction between states with populations of 37 and 27 million respectively.
The next states with the most emmigration from California? Nevada, Washington, Oregon and Arizona. Most immigration into California? Nevada, Washington, Oregon and Arizona. Some high tax states and low tax states, all swapping residents (again, all at rounds error levels). If I didn’t know better, I’d think that factors like proximity, interrconnectedness and variations in jobs oppourtunities and the cost of living might be at work here.
And Low tax states did better during the downturn? Someone ought to tell Nevada.
Rdan,
I think you guys keep missing the point – Bruce sure did. Did you miss the census and the re-distribution of House seats? People are moving. BUt if you want to say its for the weather – great. Go for it.
Islam will change
Missing the point? You’re cracking me up! We both know that the arguments by most commenters here (and the main posters) revolve around political dogma not facts. spencer, cactus , bruce (on SS), coberly (again on SS) can have the occasional post with evidence but most of the time it’s just tired-ass, so-called liberal dogma that these surrogates are regurgitating for their political masters. I am convinced that some of them are on the DNC payroll. Nonetheless it is amusing Could you imagine Bruce’s response to a commenter on a Webb post about SS if that commenter said, “I have heard stories (no cite, so put it at anecdote IF YOU MUST) that MUCH to MOST of…”?
People are indeed moving, but migration alone does not account for population changes. Texas has a high birth rate and a long international border. In the last year with data it added about 500K people, over half of which came from net births and international immigration (288k and 95K respectively). 65% of Texas’s growth from 2000 to 2010 was latino, do you really think that was all snowbirds and rust belt refugees?
And the adjustment of House seats is a result of relative size of the population, not simply adding or subtracting people. Its a fixed pie with 435 slices, and so it doesn’t matter if you add a million people if some other state adds 2. Your relative size has been diminished, and with a finite number of seats adjustments may be needed.
Hmmm…buff, you could probably make a point and example about Austin, Tx for instance as a center for innovation and the like as it is available, and remarkable, but then you don’t. I offered one source that touches on it. It also discussed the impacts state and local governments may have, or not, from government efforts.
But you haven’t referred to the linked material at all from the post, and even called it an op-ed, which means you probably did not bother to even click through.
little john trolls.
Thanks sjt.
Hey at least Little John threw me and some others a bone on the fact checking thing. Even as he slags more recent Bears.
I guess like the old saying has it “Sixteen times burned, once shy”
Personally my long term money is on Linda et al. But for all his many sins at least Little John tries. (Kind of like PRS in the long forgotten dawn of AB, rarely did Sullivan’s crap come out of NOWHERE).
LOL! Pot, meet kettle.
The businesses leave due to the teaxes; the employees follow the jobs and people erroneously point to employment being the rason.
Sorry, typed that last one with my feet.
Kevin:
Hmmm, did you bother to read the original pdf http://www.cbpp.org/files/8-4-11sfp.pdf and the footnotes designating other studies http://www.peri.umass.edu/fileadmin/pdf/published_study/Migration_PERI_April13.pdf or are we getting your “the experts say” and anecdotal opinion?
Employment and housing are the major reasons for relocating to other states unless one does not have children (employment) and they can maintain a home in one state while working in another in which case they would have to have a salary sufficient enough to maintain two households. Those with incomes at the median (or in the quintiles surrounding the median) would be hard pressed to do such with or without children leaving relocation as the viable option. I maintain two residences because of my home in Michigan which can not be sold, an apartment in upstate NY close to my place of employment, only because I make a descent salary, am an empty nester, and my spouse works.
Migration for families is not common unless they are hard pressed due to the costs of housing or employment. Parents are extremely reluctant to rip children (especially older ones) from their schools and friends. There is also the matter of spousal careers to be considered. Young singles and couples are more likely to move for careers and also that first home.
Your statement: “Recent research shows income tax increases cause … no interstate migration.” is not the same as the author’s statement: “Recent research shows income tax increases cause little or no interstate migration. ” You wordsmithed the original statement and changed the meaning.
While people making > $500,000 did migrate from NJ at a greater number than previous to 2004 so did those making < than $500,000 and at a similar percentage. The study estimates 70 taxpayers leaving NJ due to higher taxes with a loss of ~$16 million or 4 tenths of 1% in revenue. The end result was still an increased revenue of ~4 billion between 2004-2007. In clarity, 13% of all movements are out of statement and 3 % are abroad; http://www.peri.umass.edu/fileadmin/pdf/published_study/Migration_PERI_April13.pdf page 2
Much of the issue with NY (where I live) and Illinois where I have lived (Chicago) are public pensions which are underfunded and this exists in California also. Why are they underfunded? The same as private commercial enterprises, they played the game of overforecasting pension fund returns (Michigan [where I have a home] still forecasts an 8% return). The overlords of both the private and public sectors robbed the the pension funds for other purposes which we can discuss also if desired.
No one moves to Detroit from out of state because of the poor infrastructure, the higher crime, the lesser quality and underfunded schools, and low quality services. Transplants from out f state do move to Ann Arbor, Brighton, Rochester Hills, Farmington Hills, etc. because of the quality of the neighborhoods, the better schools funded at 50% to 100% greater than Detroit schools (another topic I can discuss also), lower crime, and far better services and infrastuture. Hell, the state redid Woodward Ave for the yearly Dream Cruise which meanders through some of the richest neighborhoods in Michigan. Companies can not attract the right talent if they can not provide a good environment for people. People moved to be employed . . .
Crime flourishes when people can not find work. Enough for now . . .
As hinted there are tijmes in ones lifecycle when migration is more likely that others, the first being when you finish your education, the second when one is an empty nester, and third when one no longer is working. Indeed today I wonder how many parents experience their childiren moving accross the country, so that upon retirement they may relocate closer to the children. Does anyone have statistics on what percentage of children stay close to their childhood home?
Lets posit someone from NJ whose kids moved to the sunbelt. If one wants to be in easy driving distance of the children but not in their hair 150 miles is sort of a minimum seperation. At that point then housing costs and taxes become a factor in where to relocate as a number of states become possibilities.
As an example I was working in Houston, my sister lived in Albuquerque,Nm, and my dad was retiring from teaching school in Michigan. It was an easy decision to move south, to Texas where it was 250 one way and 750 miles the other way to the children. (Of course the 750 are miles and miles of nothing but miles and miles)
The old meme of people staying where they grew up is likley a minority position for those with college degrees.
Lyle:
Mostly agree Lyle. I am sure stats are out there; but, you may wish to try one of the links I used to make my points.
It’s one of several inputs to the decision making process. When I moved out of NYC recently, tax was an important, although not sufficient by itself, reason for leaving. The ultimate question was “which place is cheaper relative to the quality of life,” and tax is obviously a part of that calculation.
Lyle,
You hit upon a problem for states trying to build up a university system to benefit state economy…the mobility of graduates is high…they do go to what are perceived as innovation centers and better chance of being highered. This is overall I think…there are always niche level expertise.