“Ladies and gentlemen, if you tax them, they will leave,” New Jersey Governor Chris Christie told state lawmakers last year in support of his proposed tax cuts. Many elected officials, journalists, and commentators state as a truism that residents — especially wealthy ones — regularly flee from higher-tax states to lower-tax ones. Only it’s not true, as our major new report explains.
This means that states struggling in a weak economy can raise taxes on the most affluent households to invest in education, health care, transportation and other job-creating tools and not worry about it backfiring.
Here are the basic facts:
We’re not saying that no one ever moves to a new state in order to pay less in taxes, but the evidence clearly shows that taxes aren’t a primary motivation for migrants and that whatever tax-related migration does occur has only a minimal impact on the amount of revenue a tax increase raises. When taxes go up, the vast majority of people stay, and the state gains significant revenue for public needs.
State policymakers shouldn’t allow false claims to push them into unaffordable tax cuts or frighten them away from needed tax increases.