Monday, February 21, 2022

People moving from high tax states to low tax states

See States Get Serious About Tax Cuts: Eight states have no levies on income, and lawmakers in a dozen others are moving toward that goal by Grover Norquist. Excerpts:

"In 2021 the 10 states that gained the most residents from domestic in-migration had an average total state and local tax burden as a percentage of income of 7.7%, notably lower than the 9.9% of the 10 states that lost the most residents. Interstate migration and tax competition are increasing for four reasons: 

First, two years of working from home during Covid taught employees and employers that it isn’t necessary to live in high-tax states.

Second, thanks to the limits on the deductibility of state and local taxes in the 2017 tax reform, blue states with high income and property taxes no longer have the cost of their high-tax policies hidden and subsidized by reduced federal income taxes.

Third, Americans have noticed that high-tax states don’t provide better roads, education or other services. Florida (with 22 million residents) has no income tax and the state spends half as much as New York (20 million residents). New York has a top state income tax of 8.82% (soon rising to 10.9%) and was the only state to raise its personal income-tax rate during the pandemic.

Fourth, state leaders have discovered that they can reduce marginal income-tax rates by relying on triggers that permanently reduce the state income tax when revenue rises above a predetermined spending limit. Tax reduction is enabled by spending restraint. North Carolina provided the best example of this strategy over the past seven years."

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