Debate Magazine

Americans Vote with Their Feet out of High-tax States

By Eowyn @DrEowyn

Timely information now that Tax Day is just two days away.

The evidence is in: Empirical data from “blue” states show that Democrats’ high-tax, class-warfare welfare policies don’t work. Not only do those states stagnate economically, they also have the starkest wealth gaps.

Heritage Foundation economist Stephen Moore writes for The Washington Times, April 12, 2015, that in recent years, blue states such as California, Illinois, Delaware, Connecticut, Hawaii, Maryland and Minnesota adopted the very strategy advocated by Obama (“Spread the wealth!”), fauxcahontas Sen. Elizabeth Warren (D-Mass) and other Democrats — that of high taxes, high welfare benefits, high minimum wages and other “social justice” policies.

The same strategy is also the position of the liberal economic think tank Institute on Taxation and Economic Policy (ITEP). The Institute’s conclusion was that states should raise their income taxes on the rich to be more “fair.”

 

So how is that strategy working out? —

  1. Almost all of the “blue” states lag behind the national average in growth of jobs and incomes.
  2. The blue states also tend to be the places where the rich end up the richest and the poor the poorest.

As an example, California has the highest tax rates of any state, very generous welfare benefits, and a high minimum wage in many of its cities. But the Golden State has become the inequality state. Whereas wealthy areas such as San Francisco and the Silicon Valley boom, the state has nearly the highest poverty rate in the nation.

Residents of the “blue” states are also bailing out.

In a new report, “Rich States, Poor States,” authored by Stephen Moore, Arthur Laffer and Jonathan Williams for the American Legislative Exchange Council, five of the highest-tax blue states in the nation — California, New York, New Jersey, Connecticut and Illinois — lost some 4 million more U.S. residents than entered these states over the last decade (see chart below). Meanwhile, the big low-tax red states — Texas, Florida, North Carolina, Arizona and Georgia — gained about this many new residents.

 

out-migration from high-tax states

In other words, people are leaving the states that liberals think as “fair,” and they are moving to the states liberals rank as politically “backward” and unjust.

The least “regressive” tax states had average population growth from 2003 to 2013 that lagged below the national trend. The 10 most highly “regressive” tax states, including nine with no state income tax, had population growth on average 4 percent above the U.S. average. Why was that? Because states without income taxes have twice the job growth of states with high tax rates.

Furthermore, there is no evidence that states with these liberal policies had helped the poor much. Stephen Moore and Ohio University economist Richard Vedder compared the income gap in states with higher tax rates, higher minimum wages and more welfare benefits with states on the other side of the policy spectrum. In many cases, the “social justice” states recorded more income inequality than other states as measured by the left’s favorite statistic called the Gini Coefficient.

The 19 states with minimum wages above the $7.25 per hour federal minimum do not have lower income inequality. States with a super minimum wage — such as Connecticut ($9.15), California ($9.00), New York ($8.75), and Vermont ($9.15) — have significantly wider gaps between rich and poor than states without a super minimum wage.

Moore concludes that the concrete evidence is that “social justice” policies don’t help make the poor richer, they make most people poorer. In other words, the blue states have tried the Elizabeth Warren “progressive” agenda and people are voting with their feet by fleeing in droves. The kinds of income redistribution policies that Warren and others endorse can only work by building a Berlin Wall so no one can leave.

Of course, the empirical evidence won’t dissuade the “Progressives” from their relentless drive for “social justice.” To quote my erstwhile faux-socialist friend Stephanie, “I’ve made up my mind! Don’t confuse me with facts!”

All of which should tell you that the Left’s class warfare rhetoric and policies are really not about helping “the poor.”

It’s about POWER, their power, stupid.

~Éowyn


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