Voting with our feet
One of the functions of the decennial census is to determine how many seats each state gets in the House of Representatives. While this doesn’t enable us to determine in detail who is moving where and why, one can make a few broad generalizations with some confidence based on the likely apportionment.
And one of the chief among them is that people are fleeing high-tax, heavy government states like the plague:
Migration from high-tax states to states with lower taxes and less government spending will dramatically alter the composition of future Congresses, according to a study by Americans for Tax Reform
Eight states are projected to gain at least one congressional seat under reapportionment following the 2010 Census: Texas (four seats), Florida (two seats), Arizona, Georgia, Nevada, South Carolina, Utah and Washington (one seat each). Their average top state personal income tax rate: 2.8 percent.
By contrast, New York and Ohio are likely to lose two seats each, while Illinois, Iowa, Louisiana, Massachusetts, Michigan, Missouri, New Jersey, and Pennsylvania will be down one apiece. The average top state personal income tax rate in these loser states: 6.05 percent.
The state and local tax burden is nearly a third lower in states with growing populations, ATR found. As a result, per capita government spending is also lower: $4,008 for states gaining congressional seats, $5,117 for states losing them.
The article also draws a correlation between states that require the payment of union dues (losing seats) and right to work states (gaining seats).
There are some obvious lessons to be drawn here about tax competition and free labor: first, businesses and wage-earners will be attracted to states that let them keep more of their own money and not burden them with excessive regulation. The second and related point is that granting unions a monopoly over labor (or access to taxes disguised as “representation fees” for those who don’t join the union) drives up the cost of labor to such a point that businesses will look to relocate elsewhere. It’s no coincidence that businesses (and their jobs) are fleeing high-tax, big government California, while low-tax, light-regulation Texas accounts for half of all the jobs created in the nation over the last year.
Will job-killing states learn this lesson? Perhaps. But maybe, like so many addicts, not until they hit rock bottom.
UPDATE: A timely example, via Heliogenic Climate Change.
-ANAHEIM, R. Frautschy: (…)
A recent discussion with my accountant determined that in order to comply with AB32 it will cost me almost the same amount as my yearly payroll. Now add in all the new or raised business taxes, and I must more than double the company income to make ends meet.
I received an offer from the state of Nevada. If I move my company to Nevada, my taxes will be 83 percent lower, no AB32 complications. Lower health care costs and more. It’s a no-brainer. I am laying off my entire staff and moving to Nevada. So, as of Dec. 31, 2010, the state of California will have 32 highly skilled workers on their unemployment hands. The unemployment rate is high in Nevada, so I can hire all new employees for much less.
(Crossposted at Public Secrets)