Public Assets Institute > Policy Areas > Vermont Taxes > More dirt in the grave of the tax flight myth

More dirt in the grave of the tax flight myth

Public Assets Institute has said for years that there’s no economic evidence for the idea that the wealthy are leaving Vermont because of high taxes—or that higher taxes would send them off in droves, to the detriment of the state’s finances.

We’ve pointed—as has Vermont’s Blue Ribbon Tax Structure Commission—to IRS data showing that people moving into Vermont have higher incomes than those who leave.  This was true even in the 1990s when state income tax rates were higher than they are now.

And earlier this month, we released a 50-state study by University of Massachusetts economist Jeffrey Thompson that comes to an even stronger conclusion:  Taxes have no measureable impact on people’s decision to leave a state.

Today, National Public Radio’s Planet Money interviews Thompson and throws more dirt into what we hope will be the grave of the myth that taxes cause flight. NPR reports on yet another new study, by two sociologists at Princeton and Stanford, looking at migration patterns in New Jersey before and after passage of that state’s “millionaires tax” in 2004.  Guess what? Most millionaires stayed put.  And whatever revenue the state lost from those who did move was more than offset by the additional taxes.

Posted by Paul Cillo on April 29, 2011 at 5:19 pm

8 Responses to “More dirt in the grave of the tax flight myth”

  1. rose says:

    We can only hope that these research conclusions are spread as freely as the myth.

  2. John McClaughry says:

    I would conjecture that the people coming into Vermont to take those generously paid taxpayer-financed jobs have higher incomes than the unemployed who are leaving for want of jobs at their skill level.

  3. Peg Martin says:

    Ah yes, but some things just refuse to die – such as myths about places of birth and the armies of gigantic alligators in the sewers of the Big Apple. Alas! real facts are so mundane when compared to one’s fantasies, and much less useful for political purposes.

  4. Willem Post says:

    I think you should concentrate on making the state government more efficient so that services are maintained and taxes reduced.

    Taxes are the reverse of subsidies; both destroy about 2 jobs for the one that is created.

    I am not making this up. It came from a Spanish study related to job creation with renewables subsidies and simultaneous job destruction in other sectors.

  5. Annegret Pollard says:

    Good work, PAI. What many of us already know, the wealthy do not make dollars/cents decisions as the mc and impecunious among us to. It is an irresponsible scare technique
    former Gov. Douglass employed successfully among a populace he knew to cow, that would
    also not have the wherewithal to fact-check, nor the inclination to wade into that pool.
    I enjoy your work and keep my fingers crossed on today’s final vote on the heath care reform.

  6. Tom Gray says:

    I wouldn’t put much faith in the Spanish jobs study–see .

  7. Ann Manwaring says:

    The studies and myths seem to focus on income taxes. What about the property tax? What role might that tax have on the who leaves and who comes to Vermont? More importantly,how do we find out what is the impact?

  8. […] research that contradicts the claim that people move to other states when taxes are increased, stories of […]