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Actually, Money Stays Put

Posted October 23, 2014 in Press Releases

Report finds  that claims of income migrating from states with strong taxes, causing economic damage in Ohio and elsewhere, simply don’t compute. 

Study shows claims of state “income migration” are deeply flawed

Proponents of state income-tax cuts have inaccurately tried to tie state migration trends to tax rates.^[1]  Governor John Kasich has proselytized for income-tax cuts with repeated statements that $12 billion in income left Ohio between 1995 and 2010 for states with lower income taxes.^[2] But as Michael Mazerov of the Center on Budget and Policy Priorities shows in a timely new report, the idea that most income “moves” when someone migrates to another state is nonsensical. As he notes, “The vast majority of people can’t take their income with them to a new state because they work for someone else.  When people leave a state, they usually also leave their job.”

As Mazerov explains, there are numerous reasons why using Internal Revenue Service data to suggest that money is “walking” to lower-tax states is wrong. If someone leaves their Ohio job to take one in another state, that previous job likely is filled by someone else in Ohio. If a doctor leaves Ohio for Texas, her patients don’t suddenly stop seeing an Ohio physician. If someone retires from a job and moves to another state, income from their pre-retirement job doesn’t move with them