A compelling case against high taxes

Richard Eckstrom
Posted 1/24/19

our readers write

It’s the dividing line in our politics – the age-old debate between those who favor higher spending and taxes and those who believe it’s beneficial to …

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A compelling case against high taxes

Posted

our readers write

It’s the dividing line in our politics – the age-old debate between those who favor higher spending and taxes and those who believe it’s beneficial to let taxpayers keep more of their own money. The case favoring the taxpayers is stronger after recent research comparing each states’ taxes and population trends. A Cato Institute analysis found Americans are moving in substantial numbers from states with higher taxes to states with lower taxes. The nonprofit research organization’s researchers ranked states by measuring household taxes – state, local, individual income, property and sales taxes – as a percentage of personal income. They compared growth of the 25 highest taxed states to the 25 lowest taxed states based on 2016 data from the IRS.

The pattern is hard to ignore. All but one of the 25 high tax states had more people moving out than moving in. Maine was the lone exception. In contrast, in 17 of the 25 low tax states more people moved in than moved out. Nationwide, 600,000 more people in 2016 moved from high tax states to low tax states than vice versa. The people who relocate tend to be well-educated with higher disposable income and senior citizens. They bring $33 billion in annual taxable income. This isn’t a coincidence. People flee high tax states due to costly government. Low taxes spur higher economic growth and attract business and industry. People go where jobs are.

South Carolina is a low tax state although it may not feel like it to many of us. Our average state and local taxes are 7.9% of our average personal income. Only 10 states had lower taxes. Ours is among the most desirable states to relocate. We welcome 3 newcomers for every 2 who leave, ranking 4th nationally. In net gain we rank 8th with 18,519 more people moving here than leaving in 2016. This shows an unmistakable tie between taxes and US migration. Americans see low tax states as greener pastures. Certain politicians downplay such conclusions. New York has the nation’s highest taxes but the governor blamed his state’s shrinking population on cold weather. Chilly New Hampshire has a steady flow of new residents due to no income tax.

In nearly every state, the 2016 population loss or gain reflects a longer trend. Of 24 high tax states losing people, 23 lost people over 5 years, the study found. Earlier research found this, too. Another study based on US Census data showed that of the 25 low tax states, we had the 4th-highest increase, 361,117 people. This is a cautionary tale for public officials with sights set on their constituents’ wallets. Their power over spending isn’t to be taken lightly. Every dollar we pull from someone’s pocket comes at a cost. One day that cost could be a high one – our people. Tax-happy politicians should take note.

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