WASHINGTON – “The effects of tax increases on migration are, at most, small – so small that states that raise income taxes on the most affluent households can be assured of a substantial net gain in revenue,” said a report by the Center of Budget and Policy Priorities.
“It would not be credible to argue that no one ever moves to a new state because of the desire to live someplace where taxes are lower. But neither is it credible to say that taxes are a primary motivation, nor that migration has a large impact on the revenue impact of tax measures,” said the report, entitled “Tax Flight Is a Myth.”
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The report detailed the reasons behind its conclusion, including:
It found that, at most, 70 tax filers earning more than $500,000 might have left New Jersey between 2004 and 2007 because of the tax increase, costing the state $16.4 million in tax revenue.
The revenue gain from the tax increase over those years, however, was estimated at $3.77 billion, meaning that the out-migration reduced the estimate revenue gain from the tax increase by a “mere” 0.4 percent, it said.
The 22-page report criticizes “flawed” studies used to support the “tax flight myth” and explains the non-tax reasons why people move. To see the full report, click here.
The synopsis of this study seems to be focusing solely on whether tax increases will cause taxpayers to migrate away from a high tax environment. Perhaps a study should also focus on what we can do with our tax laws to attract high wealth and high income individuals and businesses to come to Rhode Island.