Taking to task the announcement that the IRS would no longer publish data on interstate taxpayer migration, Patrick Gleason noted that this would be a great disservice to everyone. Noting the importance of examining the effect of higher taxes and overregulation, this data allows us to understand some of the consequences of big state government regimes like California, Illinois, and Maryland.
From 1995 to 2010, California had a net loss of 1.7 million tax filers, who took with them $37.2 billion in income.
Over this same period almost a million people have left Illinois, a state that last year passed the largest tax increase in its history. These erstwhile Illinois citizens took $32 billion in income with them to friendlier tax climates. The state’s Democratic governor, Pat Quinn, had to grant special carve-outs from his massive 2011 tax hikes to some of the biggest corporations in the state, such as Sears Holding Corp. and the Chicago Mercantile Exchange, just to prevent them from leaving the state.
Then there is Maryland Governor Martin O’Malley, a 2016 presidential hopeful. He is such a huge proponent of Obama’s high-tax, high-spending agenda that he has already implemented many of the same policies in his state.
The results have been less than stellar. In O’Malley’s first term, more than 57,000 taxpayers fled Maryland, taking almost $3 billion in income with them.
Gleason goes on to explain that IRS data demonstrates that people fed up with these unfriendly states, unsurprisingly, move to states that have gone in the opposite direction of big government.
During the same 15-year period, from 1995 to 2010, Texas and Tennessee, states that do not tax wages and have relatively low per capita spending, have seen an influx of 345,000 and 989,000 people, respectively, bringing more than $30 billion in income with them to their new homes in the Lone Star and Volunteer states.
It’s not only having lower taxes that resulted in this great migration. Having energy resources and polices that fully utilize them in a business-friendly, low-tax environment are the main reason states like Texas have flourished. To the contrary, states like California have the resources but fail when it comes to utilizing them.
It is the third-largest oil-producing state – yet it is a fiscal basket case. It loses revenue and jobs by having policies that prevent the state from fully using its resources. There are 11 billion barrels of oil and 19 trillion cubic feet of natural gas now recoverable with current technology just waiting to be tapped in California.
At the end of the day, if you live in a state that might not necessarily have an overspending or taxing problem should you care? Absolutely.
Perhaps most disconcerting is that lawmakers in charge – including Brown, O’Malley and Quinn – appear to believe the federal government will continue to bail them out of their profligacy and irresponsibility.
Taxpayers from successful states should be wary of these failing states â€‘ including California, Illinois and Maryland â€‘ and the threat they pose to the fiscal health of the entire nation.
What do you think? Are you willing to bail out state governments like California or Illinois for ignoring simple economics?