The Internal Revenue Service created a bit of a kerfuffle last week when it announced that it would no longer publish data on interstate taxpayer migration and the income they take with them. This would be a huge disservice not just to economists and policy analysts but to all Americans.
This IRS migration data provides the best evidence that low-tax, limited-government states attract employers, families and individuals, while states pursuing the same policies as the White House – higher taxes, bigger government and more onerous regulations – drive businesses and taxpayers away. It’s not hard to fathom why the Obama administration, despite its promise to be the most transparent in history, would want the IRS to stop publishing this damning evidence.
California, Illinois and Maryland, which have some of the highest tax burdens and biggest state governments in the country, may have finally realized the deleterious economic effects that come with following President Barack Obama’s approach to governance.
From 1995 to 2010, California had a net loss of 1.7 million tax filers, who took with them $37.2 billion in income. Governor Jerry Brown’s recently approved $50 billion income-tax and sales-tax hike, coupled with the state legislature’s new Democratic supermajority, has opened the tax floodgates in Sacramento and is expected to exacerbate this outflow.
Over this same period almost a million people have left Illinois, a state that last year passed the largest tax increase in its history. These erstwhile Illinois citizens took $32 billion in income with them to friendlier tax climates. The state’s Democratic governor, Pat Quinn, had to grant special carve-outs from his massive 2011 tax hikes to some of the biggest corporations in the state, such as Sears Holding Corp. and the Chicago Mercantile Exchange, just to prevent them from leaving the state.