Tax Flight Is a Myth, Report Finds

We’ve heard it before. If you increase state taxes, people will up and leave for lower tax states — especially the most affluent residents. You often hear the same argument used to support tax cuts.

A compelling new report from the Center on Budget and Policy Priorities busts this common myth advanced by those who oppose a balanced approach to budgeting and tax policy. Turns out Americans move from state to state for a variety of reasons, but tax levels rarely factor in.

Not surprisingly, cheaper housing and job opportunities are much more likely to drive people to move to another state than tax levels.

As the report finds, the effects of tax increases on migration are, at most, small — so small that states raising income taxes on the most affluent households can be assured of a substantial net gain in revenue.

The report cites numerous examples of research debunking the migration myth and, through case studies, shows how misinformation about the impact of taxes on migration can influence policymakers and the media. Those who support the migration myth often wrongly assume a cause-and-effect relationship, promote irrelevant findings, and inaccurately measure migration, the report found.

On the flip side, low taxes can prevent states from maintaining the kinds of public services that create jobs and build a strong economy — the very things that potential residents value.

As we’ve long said, it’s more important than ever that we invest in Pennsylvania's future, and that’s why it’s so dangerous to rely on flawed information about the effect of taxes on residents’ decisions about where to live. Failing to raise the resources we need to maintain strong schools and universities, safe communities, and quality roads and bridges will hurt us both now and in the long run.

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