Higher taxes might push companies to leave but not necessarily wealthy residents?

Many municipalities and states are looking for ways to raise additional tax revenue and this has led to conflict with companies that either have had or want tax breaks to stay where they are (a prominent Illinois example here). But we could also consider whether higher tax rates prompt wealthier residents to move elsewhere. Some evidence from New York City suggests this did not happen:

According to the Census Bureau’s latest American Community Survey, the average household income of those who left the state in 2010 was $44,739. The average for those who came was $55,419 — the largest differential in at least five years…

A separate analysis of census data found that the number of households making more than $250,000 who lived in New York a year earlier but left peaked in 2004 and has generally declined since 2007. About 14,000 households in 2009 and the about the same number in 2010 reported having left New York within the past year, the lowest numbers in that category since 2003.

That analysis did not take into account inflation, and could reflect lower migration rates in general across the country.

As this short piece suggests, we may not want to run and apply this to all wealthy residents in the United States. Additionally, if this can be done with American Community Survey data for New York City, why not do it with other areas of the country in order to make comparisons? Then we could find out whether this data is more reflective of New York City and its relative wealth and importance as a finance and cultural center than of larger trends about wealthy people.

I do wonder about the value of using short-term migration data to prove points about new legislation and revised taxes. People could move for a lot of reasons beyond just one change and I don’t think the ACS data tells us why people move. This could be a clever way to examine a “natural experiment” but there needs to be care taken in interpreting the results.

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