RIVERSIDE, Calif. — Taxes are the one topic all Americans can probably find common ground — nobody likes them! However, some people have the ability to do something about it. Researchers from UC Riverside looked at how state income taxes have affected Americans for more than a century. The findings are simple: when states raise their taxes, Americans making good money leave.
You may have seen stories about the recent mass exodus of Americans from high-tax states like New York and California to “greener pastures” in Florida or Texas. According to the new study, published in the American Economic Journal: Economic Policy, this is not a modern trend. It turns out Americans have been moving to keep more of their wealth since the introduction of state income taxes.
Ironically, state governments started implementing income taxes in an effort to redistribute wealth. States would tax residents and then, in theory, use that revenue to benefit the poorest parts of the population — essentially leveling the income playing field. However, researchers found that the plan often backfires. Historically, raising income taxes doesn’t bring in the revenue states hope for because Americans with the means to move will leave for other parts of the country where they can maintain their standard of living.
Specifically, researchers examined state tax policies from 1900 to 2010. They found that states adopting income taxes increased revenue per capita by 12 to 17 percent. However, this increase did not match up with the increases in total revenues for the government.
“Personal income tax means a tax upon labor income, first introduced for the purpose of redistribution of wealth,” says Ugo Antonio Troiano, an economist and associate professor at UC Riverside, in a university release. “The idea was to provide services to poorer parts of the population and reduce inequality between low-income and high-income residents.”
When The Going Gets Tough, The Rich Get Going
The explanation is a simple one, Troiano says. People with higher incomes have the ability to be more mobile. This doesn’t just mean they can go to nice places on vacation. It means they can also move their families out of states they don’t like anymore.
The researchers add that this ability to move to places with little to no state income tax is a very American phenomenon. In Europe, people have less ability to move to avoid income-crushing taxes. This is mainly due to language barriers between the various countries in Europe, Troiano says. For example, someone in the United Kingdom has a harder time moving to Italy just for tax breaks if they don’t speak Italian.
In America, the study finds that the phenomenon of out-migration didn’t slow until the 1980s. However, things may be ramping up again, as Americans appear to be looking for an escape from high taxes and rising costs. While New York and California highlight the modern issues of state taxes and out-migration, the researchers note that taxes have been an issue in plenty of different places throughout American history.
“In New Mexico, the legislature repealed its first income tax law in 1920. In Iowa, the state assembly passed an income tax bill in 1932 that was subsequently defeated in the state senate. In Colorado, the governor vetoed an income tax bill passed by the legislature in 1935. With the exception of Washington, however, all of these states would eventually introduce an income tax,” the study authors state in their paper.
There are only 6 states that have never introduced individual income tax:
- Texas
- Florida
- Nevada
- South Dakota
- Washington
- Wyoming
So, what should state governments do about this? While reducing income inequality is a noble goal for any state, researchers say government officials should be more mindful of simply sending a tax bill to the rich in order to fix the problem.
“Raising taxes too much might backfire, as the state might lose too many relatively wealthy contributors,” Troiano concludes.
The liberal solution is to tax everyone… And that is the goal. It always starts out with taxing Rich and trickles its way down to the middle and lower class.
It doesn’t matter who you tax, whether only the rich or only corporations… at the end of the day the person or company getting hit with a tax bill will find a way to pass that bill along to everyone else… Companies just raise prices that hit the poor, and the rich people usually own businesses or rental property and they just raise prices or rent. The poor are the only ones that have no way to pass the tax bill on to anyone else.
The original, and only true, “Trickle Down Economics”
Amen.
return the tax code to the way it was before Reagan…..we want companies to make it rich, but rich people need to pay way more.
“but rich people need to pay way more”. So if someone took 90% of every product that you made, how hard would you work?
The Gods only wanted 10%, feudal lords and Kings took 20% but today’s swine steal approx 70% of everyone’s labour.
The real crime is that 35% of your production is taken and used to ensure that you pay the 70%, government workers, contractors and police/military, 35% is paid directly to the rulers, commonly called Bankers and financiers.
What have any of them done for you lately?
They don’t do it FOR you, they do it TO you.
Higher taxes produce higher standards of living in the European states.
That could never happen in America because Americans have no sense of cooperation or community.
So America dies.
Bye Bye… You won’t be missed.
Looks like you should move there.
Taxing the rich never works. Some corporations will just move their headquarters to another country. You don’t even have to move. A rich person can just change his mailing address and call his California or New York home a “vacation” home to avoid certain taxes. The rich always win in the money game.
Try that in CA. They will turn your life upside down. If you think you can claim residency in another state without actually moving there you better think again.
Reducing income inequality is not a “noble goal for any state.” That goal is anti-American. It comes directly from Karl Marx’s ideology, which inspired Hitler, Lenin, Stalin, Mao, Kim, and Castro.
Stealing from those who are more productive to give to those who are less productive is the essence of communism. It is evil and should be illegal, whether done by a common thief or by the elected representatives of common thieves.
Your argument is based on the premise that being more productive makes you more rich, and that rich people are richer than other people only because they are more productive than other people.
Assume instead for a moment that people are richer than other people not because they are more productive than other people, but because they steal some of the productivity of the other people.
If stealing a fellow American’s productivity is pro-American, then stealing a fellow American’s money to get it back is equally pro-American, isn’t it?
The untold taxes are the costs of property tax in Texas (super high) and Florida especially, as well as the latter state’s exorbitant costs to insure a property (if you can find a company willing to write a policy anymore)
California has it all high. Insurance, property tax because of high property values driven by the state, my sales tax is 10.75%, it goes on and on. Nevada has it all low. Property, income, sales, incredible place.
This is 100% true, and it applies to a lot of middle class people in America as well. Growing up in the 20th century, my father moved us 3 times. Each time, the deciding factor was taxation. And we were not what anybody would call “rich”.
The taxes should be federal. Then if they still want to move they can denounce their American citizenship and they can go anywhere they can get a green card.
Why would one denounce their U.S. citizenship? You’d lose your social security benefits AND Medicare. You’ve been believing the liberal media too much, my friend.
Well, thank you very much.
Now that we know that, we only need to create a law to seize all that ill-gotten unnecesarily excessive too much hoarded money, before they purchase the ticket.
And before any criticism, I remind you that Jesus said, “It is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God”.
Meaning that no rich person is sinless (honest).
Then, it’d be a good deed, demand to return that money to the land, from where it was picked.
America’s golden age, pre-Reagan, had a top tax rate that varied from around 70-90%. Corporate taxes were actually collected and the government created infrastructure and social customs that created pride in the nation and made us the leaders of the free world. The so-called rich did not flee to other nations, as they threaten to do with these paid articles. Back then journalists also had self respect and were a real profession, the press existed to expose corruption and prevent politicians, the wealthy, and corporations from acting against public interest, because the public took all of that seriously.
Things have changed. I am old, it barely matters for me anymore. I doubt I’ll see an educated population again in my life, it’s gone so far that heads do need to roll. I don’t think young people of today have it in them, and neither did my generation or the one previous. The Greatest Generation did but they’re all long passed. They built the structure that’s been destroyed since.
The golden age of taxation “70-90 percent” was less than today. Many more loopholes. And all very good. Civil government is about the bureaucratic elite not “We the people”. Modern civil government is parasitic.
State Income taxes are used more for taking care of the political Class than for reducing income inequity. In my state, the highest paid “jobs”, best benefits, most job security are in state government. Last survey same job in state government pays 30% more than the private sector. They tax the private sector business, who then pay lower wages, less benefits, so they can pay the taxes and remain in business. State employees (especially Union employees) never have to worry about a slowing or weak economy. If tax revenue drops they just raises taxes, no problem. Telling people state taxes are for their benefit is part of the “con”.
Let them leave. Less parasites around Is better.
It’s one thing to tax to provide charity, to make sure no one starves or dies of exposure or lack of basic medical care. It’s also good to ensure that everyone has educational opportunities. But fairness demands that these gifts come only at the cost of the poor improving their behavior, where their behavior needs improving.
Nor does it justify taxation for a general “reduction in inequality.”
If all you do is relieve the poor of responsibility, all you achieve is a deteriorating society.