They Are Crying Wolf, But The Wolf Is Us

A number of you reached out to me and told me that you liked my recent post on maps.

I came across another interesting map last week that the Tax Foundation put together.  It shows the interstate movement of income over the past decade (2000 to 2010) caused by people moving from state to state.  When a person moves to a new state, they also move their income producing abilities.  That results in a net gain in income that can be taxed in the new state and a net loss in income that could have been taxed in the state he or she left.

This map shows the net gains (green) and net losses (red) in aggregate adjusted gross income from people moving between 2000 and 2010.

The five states that gained the most net income from people moving into the state.

Florida              +$67 billion
Arizona               +$18 billion
Texas                    +$18 billion
North Carolina        +$16 billion
Nevada                      +$11 billion


The five states that lost the most net income from people moving out of the state.


New York             -$46 billion
California                -$29 billion
Illinois                      - $20 billion
New Jersey                -$16 billion
Ohio                            -$15 billion


There are many reasons that people move.  Job opportunities, family connections, climate and the like.  I don't think you can ever point to any one thing.  However, it is interesting that if you look at the individual income tax rates in these states, it is hard to not conclude that taxes are not an important factor in these relocation decisions.

Top Marginal Tax Rate of Gainers

Florida                0%
Arizona             4.54%
Texas                  0%
North Carolina  7.75%
Nevada               0%


Top Marginal Tax Rate of Losers

New York          8.82%
California           13.3%
Illinois                 5.0%
New Jersey         8.97%
Ohio                    5.93%

In looking at the lists above it is also hard not to notice that the states that are gainers are also generally considered to be much better for business.  They are all right to work states.  The states that are losers are all forced-union states and are considered less business-friendly.  More regulations.  Higher taxes.

The result of too much government is too much regulation, too many taxes and fewer jobs.  People eventually follow the jobs.  This is a tremendous problem for those states that are controlled by liberals and the big unions.  Eventually, you can't raise taxes any more on the people who are left and the money dries up.

This is exactly what the French Socialist government has discovered.  This is the headline that I noticed in The Telegraph last week.

France cannot take any more taxes, government admits

France's Socialist government has admitted that the country cannot cope with any further tax rises and promised no more hikes just days ahead of the country's largest ever tax bill.

Remember that President Francois Hollande was elected last year by promising to lower the annual deficit to below 3% of GDP in 2013 by raising taxes on the wealthy while also promising to improve France's economy and create more jobs.

He did raise taxes on the wealthy but he also has seen some of the rich flee. The net result of his tax increases on the rich appears to have raised less than $10 billion in new revenue.  Of course, a variety of tax increases have also been implemented on all French households. In the meantime, employment has risen to over 10% since Hollande took office.

“The government thought that by continually raising taxes, they could raise returns but they are now realising, rather belatedly, the error of their ways,” said Marc Touati, economist at ACDEFI consultancy. “Today in France, we are approaching 47 per cent of total tax pressure compared to GDP.

That is the observation of an outside observer.  What is more interesting are the quotes from some of the leaders of the Socialist French government.

Pierre Mosovici, the finance minister, told France Inter radio: “I’m very sensitive to the French getting fed up with taxes We are listening to them.” Laurent Fabius, the foreign minister followed suit, warning Mr Hollande to be “very, very careful” as “there’s a level above which we shouldn’t climb”.

One Socialist told Les Echos newspaper that the hand-wringing was totally hypocritical as “they are crying wolf, but the wolf is us.”

I hope we are listening to sounds of the wolf.  It is getting closer to our door every day.  In some states more than others.  Yes, you can move to another state.  I've done it before, I could do it again.

However, I don't want to even think about leaving the United States of America.  That is why I keep crying wolf.  Is anybody paying attention?