Taxpayers Go Where Taxes Are Low
High state taxes only invite those who would pay them to move to low-tax states.

Golfer Phil Mickelson


Deroy Murdock

Unfortunately for the popular broadcaster, every day that he works in New York State (which he sometimes visits), the authorities tax his income proportionally. They do so despite Limbaugh’s protests and ongoing legal challenges. “My number is $20,000 a day, every day I work in New York, $20,000 a day,” Limbaugh noted. “Sometimes 18, sometimes 20. My income changes year to year, so I guess it averaged out $18,000 a day.”

One-way traffic from the Empire State to the Sunshine State is so steady that Harrington Moving and Storage, Inc., specializes in easing that exodus. “Our professionals work hard to ensure that you don’t have to during your move from New York to Florida,” boasts the Maplewood, N.J.–based company on its website. “You can rest assured knowing that your New York to Florida move will be smooth, relaxing, and seamless throughout.”

Contiguous with the Empire State, Connecticut still is smarting over the relocation of hedge-fund manager Edward Lampert. With an estimated net worth of $3 billion, according to Forbes, Lampert was considered the fifth-wealthiest man in the Nutmeg State. In August 2011, Connecticut increased taxes by $875 million, retroactively to that January. It cut the maximum property-tax credit from $500 to $300 and lifted its top state income-tax rate from 6.5 percent to 6.7 percent. Then, on June 1, 2012, Lampert moved his company, ESL Investments, to Florida. Lampert also took with him the $10.6 billion that ESL reportedly controlled at that time.

“We are all aware that the changes to the tax structure in Connecticut last year have given many people pause as to whether this is the best place to do business and reside,” Greenwich first selectman Peter Tesei told the Hartford Courant. “I am concerned about the departure of Mr. Lampert and his firm, and would ask the state of Connecticut to take another look at its policies.”

Supply-side economists Arthur Laffer and Stephen Moore found similar unintended consequences just across the Hudson from New York. In 2004, New Jersey boosted its top tax rate from 6.35 percent to 8.97 percent. As they wrote in the Wall Street Journal, “Examining data from a 2008 Princeton study on the New Jersey tax hike on the wealthy, we found that there were 4,000 missing half-millionaires in New Jersey after that tax took effect.” State deficits soon erupted like Jersey barriers beside a ditch.

“Since many rich people also tend to be successful business owners, jobs leave with them or they never arrive in the first place,” Laffer and Moore also pointed out. By definition, there is no way to measure, for instance, the positions that a retail chain does not create when it never opens stores in New York State because its owners prefer not to lose their shirts by crossing the George Washington Bridge into Manhattan.

For now, put aside the talent that New York State’s high taxes repel, the jobs and careers that they strangle in the crib, and the goods and services that New Yorkers cannot enjoy when the entrepreneurs who generate them vanish in disgust or simply stay out. Gotham’s and the Empire State’s punitive taxes are most pathetic for their counterproductivity. New York’s sadistic tax code almost certainly chases away more revenues than government would collect if it lacked America’s gold medal among per capita state-tax burdens.

Referring to local liberal Democrats who hope to succeed him at City Hall and then jack up taxes on wealthy New Yorkers, Mayor Michael Bloomberg said last October that this idea “is about as dumb a policy as I can think of.” Just before the Columbus Day Parade, Bloomberg elaborated: “If you want to drive out the 1 percent of the people who pay roughly 50 percent of the taxes, or the 10 percent of the people who pay 70-odd percent of the taxes, that’s as good a strategy as I know.” Bloomberg added: “That’s exactly the [way] to do it, and then our revenue would go away, and we wouldn’t be able to have cops to keep us safe, firefighters to rescue us, or teachers to educate our kids.”

From class-warrior-in-chief Barack Obama to sticky-fingered city councilmen, politicians always should remember that taxpayers are not oak trees. Shake them too hard, and they and their money soon will be gone with the wind.

— Deroy Murdock is a Manhattan-based Fox News contributor, a nationally syndicated columnist with the Scripps Howard News Service, and a media fellow with the Hoover Institution on War, Revolution, and Peace at Stanford University. Neal K. Carter of New York City furnished research for this piece.