Thursday, October 22, 2015

Americans Vote with Their Feet:Low Tax States Preferred (Except by ConAgra)

Each year based on a questionable set of criteria, scores of publications rank the top places to live in the U.S. It is argued here that states should instead be ranked according to the actual votes of U.S. residents -- where are they moving to and where are they moving from. This method is not subject to the arbitrary selection of factors by the analyst, but is instead based on domestic migration rates from the 50 U.S. states, in this case from 2010 to 2014.

According to American's moving patterns, the five states with the highest net exit rates were New York, Illinois, New Jersey, Connecticut, and Alaska. Among these five states, only Alaska was ranked in the bottom half of states in terms of tax burdens.

Among states with the highest net entrance rates were North Dakota, Colorado, South Carolina, Florida and Texas. Two of these states have no individual income tax, Florida and Texas, and the five states collectively had median tax rates significantly lower than the bottom five.

As American individuals, families and businesses become more geographically mobile, migration voting patterns show Americans are repelled by states with high tax burdens and attracted to states with lower tax loads.

Corporations, however, do not always act so rationally. Take for example, ConAgra moving from high tax Omaha/Nebraska moving to ultra-high tax Chicago/Illinois. It appears ConAgra was drawn to Chicago by either a "boat load" of Chicago tax incentives, and/or the ConAgra CEO just wanted to move the company headquarters within a short limousine ride of his current Chicago home. ConAgra shareholders and employees may ultimately pay for this move that maximizes CEO utility, rather than shareholder value. Ernie Goss.

No comments: