Tuesday, December 28, 2010

More on the "Blue State Exodus"

It's still the jobs stupid!!!!!!!!!

High taxes kill states. There can be no better evidence than the 2010 Census. The states that lost House seats -- because they're shrinking, relative to the nation -- had taxes 27 percent higher than the ones that gained seats.

Of the seven states that don't have a personal income tax, four (Texas, Florida, Nevada and Washington) account for eight of the 12 seats apportioned to the fastest-growing states.

New York and Ohio lost two more seats. Other losers -- down one each -- are Massachusetts, Missouri, Michigan, New Jersey, Pennsylvania, Illinois, Louisiana and Iowa. What do they all have in common? High taxes.

Texas, with the second lowest taxes in the nation, gained four seats, Florida picked up two and Arizona, Georgia, Nevada, South Carolina, Utah, and Washington state each gained one. All have low taxes.

The states that lost seats ranked an average of 24th in taxes and had an average tax burden of $2,267 per capita (weighted more toward the states that lost more than one seat).

The states that gained seats ranked an average of 39th in taxes and had an average tax burden (weighted) of $1,788 -- 27 percent lower than the losing states.

People vote with their feet and flee to low-tax states. It's not the climate; it's the taxes.

Without question people are moving from high tax states to lower tax states but I think many analysts are missing the boat as to why.

I don't believe that it's the high taxes by themselves that drives people away. The high taxes are symptomatic of a government culture that makes it more difficult for businesses to thrive. For instance, most of the high tax states are also very union friendly, have higher regulatory burdens, have more incompetent governance and a general attitude (displayed when Governor Patterson said good riddance to Rush Limbaugh and his millions in taxes) hostile to business development.

As a result, businesses with good jobs are relocating to places where they are appreciated. While the taxes are part of that appreciation, it's not the only thing.

People moving to these states is simply the last chapter in the story of the Blue State Exodus and when people arrive in the Red State Promised Land the lower taxes are like milk and honey.


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