Base Connecticut tax policy on scientific evidence, not anecdotes
A dominant narrative regarding the continuing state budget crises is that an increase in income taxes would cause the wealthy to leave the state. There is no scientific evidence that this is true.
For example, recently published research by two Stanford University professors in the National Tax Journal concluded that the recent increase in income taxes on New Jersey from 2.6 percent to 9.0 percent among top-earners had almost no effect on the migration of millionaires. Indeed, the consensus in the academic literature across multiple disciplines is that both the level of state taxes and state tax increases have little to no effect on migration.
Hence, I am concerned that our governor and legislature are ignoring the scientific evidence in this regard.
However, I am even more concerned that tax policy is now being justified on the basis of an anecdote; apparently there is one Greenwich billionaire who is leaving the state because of taxes.
But even anecdotal evidence about this issue suggests that there is not a strong link between taxes and migration. For example, the recent rumor that Peyton Manning was looking for a house in West Hartford appears to be true. But he’s worth $228 million!
That doesn’t quite jive with the “income flight” narrative, does it? And if there were a link between taxes and migration, then why do two states with no income tax (Alaska and Wyoming) have net out-migration? And why are people fleeing Puerto Rico which has no federal income tax? Obviously, there is is much more than just taxes involved in the migration decision.
Of course, this is the problem with anecdotes — they can be used and manipulated for rhetorical purposes and once they take hold and become a dominant narrative it takes a lot of effort to rewrite that narrative. But the bigger point is that our state government should be making public policy decisions — like this one— on scientific facts. Not anecdotes. And the scientific facts are that there is not a strong link between both the level of state taxes and state tax increases on migration.
Thomas J. Cooke of West Hartford is a professor in the Department of Geography at the University of Connecticut.
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