Florida’s low state tax burden boosts labor force and growth

By Nicholas Spaunburgh in The Tallahassee Democrat. Excerpt:

"Academic evidence supports these claims. For example, Florida’s decision to not levy a state income tax helps attract scientists and other high-income earners. Economists Enrico Moretti and Daniel Wilson found that each additional 1 percent increase in personal income tax led to a 1.6 percent out-migration of high-level scientists.

They also found slightly higher effects for state corporate income taxes, with a negative mobility response of 2.3 percent. Moretti and Wilson concluded that other highly-skilled workers likely have similar sensitivity to state taxes. Not surprisingly, FSU economist Randall G. Holcombe and Donald Lacombe found that states that raised their income tax rates more than neighboring states experienced a 3.4 percent reduction in per capita income from 1960 to 1990.

The effects are not just on population migration. A meta-analysis of 84 econometric studies by Timothy Bartik at the W.E. Upjohn Institute found taxes have a significant and sizeable effect on business activity. J. William Harden and William Hoyt, writing in the National Tax Journal, believe a consensus has emerged within the economics profession that state and local taxes negatively affect state employment levels, which in turn reduces a state’s attractiveness."