Rich Won't Move Even If State Raises Income Taxes: Report

Maybe states need not rush quite so fast in the ever-famous race to the bottom.

Being forced to pay higher state taxes doesn't appear enough of an incentive to get the rich to up and leave town, according to a new paper by Jeffrey Thompson, an economist at the University of Massachusetts at Amherst's Political Economy Research Institute. That's because moving is expensive, wealthy people usually have roots in their communities and they often value the public services that they get by paying higher taxes. Thompson cites several recent research studies, including his own, to make his case.

The report will likely come as a relief to states that are coping with budget shortfalls in an anemic economic recovery. State tax revenue has dropped with so many Americans having lost their jobs or taken pay cuts. As a result, even after slashing their budgets, states will face budget gaps totaling $49 billion next year, according to the Center on Budget and Policy Priorities.

How to tax the rich at the federal level has become a hotly contested issue since President Obama recently proposed raising taxes on millionaires, who sometimes pay taxes at a significantly lower rate than middle class earners. The initiative, if enacted, would raise $47 billion in revenue for the federal government, according to a congressional report.

Thompson cited a slew of studies showing that tax changes don't make rich people leave their states. New Jersey's 2004 "millionaire tax" did not make wealthy households more likely to leave the state, according to a 2011 paper by Cristobal Young, a Stanford sociology professor, and Charles Varner, a doctoral sociology student at Princeton.

State tax increases also have very little impact on workers' decision to move, and the highest-income workers are among the least likely to move because of tax increases, according to a 2011 paper by Thompson.

But even those who aren't attached to a state due to a job are still unlikely to move. More than half of Americans have never lived in a state different from the one they now call home, according to a Pew Research Center study cited by Thompson.

Comments

[Rooster Coburn]

10:42 PM on 03/27/2012

Come to Florida! No state income tax. No state capital gains tax. No state death tax. No state intangible property tax. No motor vehicle inspection. Police cannot ticket you for speeding unless you are more than  5 MPH over the posted speed limit (except in a school zone). No gun registration. You  may buy and sell guns privately within the state without paperwork. A great place to live, work, retire or whatever. We are pro-God, pro-gun , pro-life and pro-American! Come and join us!

[Atwill]

08:08 AM on 04/03/2012

Those are all perfect reasons to NOT go to FL. On top you are a right to work state and very homophobic.

[Carla van der Meer]

02:58 PM on 03/27/2012

To all of those on the right who say that the left hate the middle class, I suggest they read this and other articles like it. It is generally the right who oppose taxing the rich, thereby further straining the resources of those in the middle.

[onionboy]

11:49 AM on 03/27/2012

Duh.

[bryanzth]

11:35 AM on 03/27/2012

Oh, golly. Let them move to the Libertarian Paradise of East Somalia in one of those time-shares they have there. They could save billions in taxes, fees and levies over just a couple of weekends. And the Pan Am tickets there are cheap as rice and beans!

BZ.

[Josh Navarrete]

10:14 AM on 03/27/2012

No, where are they going to move? Everywhere as nice and safe as the US has even higher taxes. If they move to a place with lower tax rates they will have to pay for a bunch of very expensive personal body guards, so that people in these poor countries don't rob or kidnap them.

[SallyMaclennane]

08:00 AM on 03/27/2012

George Harrison, Ringo Starr, and John Lennon all fled England (although Lennon not for tax reasons).

[Josh Navarrete]

10:15 AM on 03/27/2012

Yes, they moved here. However, rich people are not going to move their (i.e. higher taxes). If they move to a country with lowers taxes (poorer countries) be ready to pay for a bunch of expensive body guards.

Nice try though.

[SallyMaclennane]

10:35 AM on 03/27/2012

Monaco is a good choice....such as Ringo did.

[Silverado Lady]

03:44 AM on 03/27/2012

Let them move (not very patriotic huh), they are not carrying their fair share of the load, so the ONLY ones that would notice, would be OTHER 1%er's

[Berettasskeeter]

09:39 AM on 03/27/2012

What is their share of the load? What is the share of the load of those who pay zero income tax??
Semper fi

[Josh Navarrete]

10:19 AM on 03/27/2012

There fair share would be paying a lot more than the 13% that Mitt Romney paid or the 14% that Mr. Buffet paid. I'm middle class and pay around 25%, seems very unfair to me.

I know Fox News told you this but NO ONE pays zero taxes. They pay payroll, Medicare, Medicaid, and Social Security taxes to the Fed. This also doesn't include state income taxes and sales taxes.

Sorry, if I just messed up your Fox News talking points but next time get your information from something other than a entertainment channel.

[bryanzth]

11:38 AM on 03/27/2012

Let's see you quote that figure.

www.foxnews.com

Be my guest!

BZ.

[ocgame9]

12:15 AM on 03/27/2012

Rich people are here to stay but the businesses they own will leave our country. Like they have been doing these last 10 years. Look at Detroit Michigan for your answers. They had a population of 1.7 million 5 years ago and they rose taxes now its a dump with a population of 600k.

[Carla van der Meer]

03:03 PM on 03/27/2012

The fall of Detroit began with NAFTA. All those jobs went to Mexico, leaving thousands of unemployed auto workers.

[rightorwrongihaveavoice]

10:46 PM on 03/26/2012

Move I say, China has open arms waiting for them.

I know revoke their citizenships, business licenses and ability to make a profit in North America too. That way they can no longer sell their overpriced junk and make exorbitant profits to pay their CEO's.

Maybe the poor people of China have a need for the crap they produce.

Oh wait their companies build everything and employ everyone in China already and they can't afford what they produce because the wages they pay leaves them in poverty.

The poor, working poor, working and middle class have lousy lobbyists, unlike the wealthy who have the best that money can buy.

Get active, get out and vote. Take back the government from the hands of the ultra-wealthy.

[Berettasskeeter]

09:40 AM on 03/27/2012

You may NOT revoke their citizenship!
Semper fi

[Josh Navarrete]

10:21 AM on 03/27/2012

Typical Regressive you didn't read the post or respond to it beyond the second sentence.

[DismayedRepub]

10:12 PM on 03/26/2012

My state has an income tax and many retirees move out of the state upon retirement to avoid having to pay it on their retirement funds. I’m trying to decide whether to move across the river where they have just a sales tax or maybe to Costa Rica. I could live pretty good down there.

[Labor Party]

10:31 PM on 03/26/2012

Take Rush with you.

[DismayedRepub]

12:42 AM on 03/27/2012

No thank you, don't want anything to do with teh wacko.

[dragonladywaltham]

09:41 PM on 03/26/2012

That question is TOO funny. Only the Faux watchers believe it.

[Labor Party]

10:38 PM on 03/26/2012

No one is going to leave this countries lucrative government contracts and rigged tax code.

[T Trump]

09:29 PM on 03/26/2012

Lets raise taxes on the wealthy and find out if they move, I'll bet they don't.

[Josh Navarrete]

10:22 AM on 03/27/2012

Truth!

[Ponderus]

08:54 PM on 03/26/2012

"Will The Rich Really Move If You Raise Their Taxes?"

I'm not sure, but if they do it will certainly lower the rate of ve'ner'eal disease, d'rug add'iction, crime, pr'os'titution, violence and sin in the country.

[ta8ersalid]

03:03 PM on 03/26/2012

Michigan"s New Republican governor and Congress just reduced business taxes to 0%. Costing the state $1.8 BILLION a year. Now, they plan to make it up on the backs of our schools, seniors and the middle class on different fronts.

Do the math, how much money does a business need to make to save that kind of money? If you make $100,000 a year, you saved $6,000. So, who is saving the $1.8 BILLION?

[leorangerie]

01:41 PM on 03/26/2012

At least in Ca there is a perfect storm brewing...with the Guv honing in on the wealthy, and Obama coming at them with a double barreled blast of raising tax rates, and dealing in the stealth taxes embedded in Obamacare (particularly the surtax on dividends and hoped for tax on 'tax free' munis). One friend just purchased a home in Nevada, and said that avoiding the looming CA taxes increases will pay for the house within three years. He's still keeping a second home in CA...but main residence in Nevada. In the past, I heard people TALK about such moves...now I'm seeing it happen. I know it's anecdotal, but it's also real.

[DavidMG80]

01:58 PM on 03/26/2012

Don't worry Nevada will be raising their taxes soon too. They can't continue to fleece the tourists (through the casinos) to pay the entire state's tax base.

[MrStat1]

06:05 PM on 03/26/2012

You lack education. Nevada does not have a state income tax.

[Dosadi]

10:06 PM on 03/26/2012

"One friend just purchased a home in Nevada, and said that avoiding the looming CA taxes increases will pay for the house within three years"

Seriously? You fell for that? You could take out a pencil and prove your friend to be lying in 2 minutes.

Why spread obvious lies. It makes you look and sound foolish.


"second home in CA...but main residence in Nevada"

Is this one of the typical elitist rich folks whining again?