Taxpayers Flee Democrat Controlled States

There have been a number of news stories about wealthy residents fleeing high tax Democrat Party controlled states. Many liberals say good, let them go; however, this means a massive loss of state revenue if wealth people migrant elsewhere. The Sacramento Bee newspaper reported “Democratic state lawmakers are worried because California relies so heavily on the income taxes it collects from high earners to fund government services. The state’s wealthiest 1 percent, for instance, pay 48 percent of its income tax, and the departure of just a few families could lead to a noticeable hit to state general fund revenue.”

The reason for this supposed migration is that the new federal tax law limits the deductions that have been used in the past to cut their federal taxes like their mortgage interest along with state and local taxes. As stated in a previous blog, high state and local taxes are coming under scrutiny. Liberal California, Illinois, Connecticut, New Jersey, etc. have high taxes.

Next 10, a company hired to investigate why people were leaving California, reported in 2016 that more people were leaving the state to live in other states than people who were moving into California. It is not just the wealthy fleeing the state. There is an exodus of middle class people, many of them retirees, who are seeking refuge in low tax states. Basically, lower state taxes allow retirees to spend more money on medicine and housing making for a more comfortable retirement.

A few years ago I traveled to Durham, North Carolina to visit a relative. There is an area called CARY in the Raleigh/Durham metropolitan area. I was told the locals nicknamed CARY the “Concentrated Area of Relocated Yankees”.  To my surprise, the description was an accurate one. Most of the people I met in the CARY community were either from New Jersey, Connecticut or Pennsylvania. The residents typically cited the reason they moved to the area was low taxes, more housing for the buck and lower cost for goods and services. These were not the wealthy but middle class retirees.

My college classmate who lived in Illinois told me people were moving out of his neighborhood and moving to southern low tax states like Texas and Tennessee to escape on the onerous high state and local taxes. The Chicago Tribune reported on this mass migration. The state’s population has diminished so much that Illinois state population ranking has shrunk from fifth to sixth place.

Connecticut and New Jersey are two other Democratic controlled states seeing a population decline of wealthy people and retirees. My relative in North Carolina pays a third of what I pay in local taxes and about a quarter of what I pay in state taxes. Will I move to a lower tax state? Probably!  My wife and I have been seriously discussing migrating south.

So what does this all mean in the long term? There will be a population shift. Lower tax states will receive more revenue because more people will become residents. Higher tax liberal states will continue to accumulate debt as tax revenue declines. This will probably impact pensions because many Democrat states have dipped into pension funds to use for other purposes creating a deficit.

Over the next decade experts predict certain states like California, Illinois, etc. will lose representation in the House of Representatives. Southern Republican states will gain seats in the House. The population losses and gains will impact the Electoral College votes for Presidential elections. The law states that electoral votes are determined by the number of Senators per state which is two plus the number of House of Representative members (this varies from state to state and is based on population).

There is also a business shift. Again many southern states with low taxes are the beneficiary. Andrew Carnegie was once asked what was the secret to the success of his successful businesses? His reply was, “Cut expenses!”  This is what businesses do today. What people don’t understand is that there is an ebb and flow, lean and fat years in business. So as my business wife would say, “You need to always have money in the pipeline.”

The problem of the Democrats is that they keep spending and taxing with increased debt. California got a 5 billion dollar bail out years ago from the federal government yet never changed its spending and taxing. The next decade may see not only California but other liberal Democrat states doing the same thing. Only the future will show if this happens and if taxpayers from other better managed states may have to foot the bill. Only time will tell!

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About camden41

Retired public school administrator Retired history professor: Taught Western Civilization, American Civil War, United States History, Economic History, Ancient & Medieval Foundations, American History Since 1945
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