Report Says Tax Flight Is A Myth

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STATE – While Republicans continue to claim that higher taxes will cause high-income residents to move to escape them, a new report by the Center on Budget and Policy Priorities suggests that such tax flight is a myth.

According to the report, just 1.7 percent of U.S. residents moved from one state to another per year between 2001 and 2010, and only 30 percent of those born in the United States move from one state to another over the course of their lifetime. A significant amount of evidence indicates that people who do move do so primarily for new jobs, cheaper housing or a better climate.

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Florida – a state often thought to attract households because it has no state income tax – began to lose population in the second half of the last decade. The report notes that while the state made no chance in tax policy, the reversal could be explained by the rise in Florida home prices in the middle of the decade.

A study by Stanford University sociologists noted after New Jersey increased taxes for filers making more than $500,000 per year, more wealthy residents did leave the state. However, people in lower income groups also left the state at nearly the same rate.

Mary E. Forsberg of New Jersey Policy Perspective points out that data compiled by the Internal Revenue Service over more than 20 years shows that the average household income of those who move to New Jersey from other states is higher than those that leave New Jersey for other states.

The report warns that low taxes can prevent a state from maintaining high-quality services that residents and potential residents value.


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