As America inches closer to tax season and the nation’s most prosperous take account of their holdings, accountants have the unenviable task of delivering the bad news: despite the 2017 federal tax cuts, individual states are still draining accounts and hampering businesses through extreme taxation.
It’s no coincidence that the most liberal U.S. states have the most radical “forced wealth-redistribution programs,” which is what I like to call taxes. After all the redistribution of wealth is taxation’s purpose, along with the funding of entitlement programs that some career politicians have used to bribe voters (or threaten them since many citizens feel they can’t live without handouts).
What concerned citizens need to know is that high taxation comes with an equally high price, though it’s not often reported in the corporate-controlled media. When states place heavy tax burdens on wealthy business owners, sooner or later they leave and take their businesses and jobs elsewhere.
An exasperated Andrew Cuomo summed it up thus: “Tax the rich. Tax the rich. Tax the rich. The rich leave… And now what do you do?” Liberal-leaning states like New York and California are notorious tax schedules that prevent big businesses from thriving and squeeze out wealthy homeowners and vacationers – including President Trump, who famously left New York for the much less tax-heavy Florida.
Courtesy: CNBC
It’s easy to see why wealthy people are packing up and relocating to Florida, Washington, Nevada, Texas, Alaska, South Dakota, and Wyoming: these states have no individual income taxes. It’s a powerful incentive that not only brings the nation’s prosperous families to those states but gets them to stay and spend their money there.
If you’re wealthy and living in the Northeast or California, on the other hand, you’ll have to relinquish a sizable chunk of your earnings to the state government in addition to whatever you’re already paying in federal income taxes, local property taxes, and so on. Personally, I have yet to be convinced that the heavier taxation in these states actually benefits the population.
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In 2018, the most recent year for which this particular data was reported, New York had a massive outflow of 452,580 people, with 63,772 of them relocating to Florida. Liberals would probably claim that it’s all about the sunny weather, but the data doesn’t support that as California had the greatest outflow of residents that year.
Chris Edwards, a tax policy director with the Cato Institute, connects the dots between burdensome taxation and intrastate migration: “It is having a big impact… There was migration before, but there have always been disputes about the causes with the data. Now I suspect a lot of people are just getting fed up.”
Courtesy: Bloomberg
Given these factors, it’s not difficult to guess which major metropolitan areas have the greatest numbers of residents leaving on a daily basis. As you can see, the graph above shows that every day on average, 277 residents are leaving New York while 201 are leaving Los Angeles.
Liberal haven Los Angeles lost nearly 120,000 residents in 2018 while San Francisco and San Jose also experienced considerable population declines. In similar fashion, left-leaning Connecticut cities Hartford, Bridgeport, and New Haven each lost around 20,000 residents during that year.
What we’re seeing is a domino effect as high tax rates induce prosperous residents and large businesses to leave; as they take jobs with them, this forces middle-class workers to leave too. The irony here is that these states are actually losing tax revenue – even though their plan was to increase tax revenues by taking more from the wealthy.
Heavily taxing the rich might feel good on an emotional level – like some sort of “justice” is being served – but that doesn’t make it a sound economic policy. It’s yet another nail in the coffin for the liberal wealth-redistribution scheme that might have sounded plausible to some voters but never had a basis in reality.
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