Network News

X My Profile
View More Activity

Why does high-tax N.Y. have so many rich people?

Here's my question for folks who think slight changes in marginal tax rates will drive rich people to move to another country: How do you explain New York? According to the Tax Foundation, it's got the second-highest tax rates in the nation. And moving from one state to another isn't very hard. But there are plenty of rich people over there. And more seem to arrive every day!

Rich people actually have a lot of money, so you'd expect tax-rate determinism to be much more prevalent among people with middle-class incomes. But I've certainly never met anyone who's moved from one state to another to change their tax burden. Taxes just don't seem to be a huge driver of behavior, which given the importance of friends and family and culture and climate and commerce and employment and inertia and kids in school and everything else that binds us to where we live, is rather as you'd expect.

By Ezra Klein  |  April 15, 2010; 3:00 PM ET
Categories:  Taxes  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Sen. Mark Warner: 'We're creating death panels'
Next: Blanche Lincoln's derivatives proposal 'sent shudders through Wall Street'

Comments

Because living in Kentucky sucks.

Posted by: PorkBelly | April 15, 2010 3:09 PM | Report abuse

Or, alternately, wealthy people derive relatively little value from purchasing additional private goods, but they continue to derive significant value from better public goods -- things like having traffic lights which are timed well, clean streets, good police enforcement, excellent public schools, not waiting in line too long at the DMV, clean water, etc.

Since these things are all covered using tax dollars, then perhaps wealthy people *prefer* to live in places with high taxes for the simple reason that wealthy people prefer living in places with excellent government services.

Posted by: jeffwacker | April 15, 2010 3:09 PM | Report abuse

Uh, you've been here right? It's amazing!

And even though this seems to be the time of year when rich folks whining about taxes is all the media likes to talk about, I guarantee you tonight when the top earners of Wall Street return to their Upper West or Upper East side apartments overlooking Central Park, the last thing on their minds is taxes. It's more like "pass the caviar."

People love New York and living in New York because it's the best place on earth. "Despite the taxes" may be what many say, but I think the glory is certainly more of a consequence of our governance.

Posted by: cbaratta | April 15, 2010 3:10 PM | Report abuse

admittedly its the services. That being said I know plenty of people that have moved from NJ to Northeastern PA and will NEVER move back. To them its worth the trip to save what they do in costs and taxes. Again remember its not just the taxes but the comparison in what things cost. You also see many people do what I've done and move to different parts of different states depending on the costs in those areas. I used to be in Northern NJ and couldn't imagine paying the property tax burden that they do up there. Its worth it to me to drive an hour North and save all I do.

Posted by: visionbrkr | April 15, 2010 3:14 PM | Report abuse

"But I've certainly never met anyone who's moved from one state to another to change their tax burden."

I dont want to spend too much time making fun of Ezra, at the ripe old age of 25 for never "having met anyone" being proof of anything, so I'd just start off by saying lots of people live in places called New Jersey or Connecticut for precisely the reason of NY state taxes, though I'll readily grant there's more to a life decision like where one lives than income taxes.

Posted by: zeppelin003 | April 15, 2010 3:15 PM | Report abuse

I've met people who have made their DC vs MD vs VA residence decision in part based on taxes. Stick around DC until you're middle aged or older and you will too.

Posted by: ostap666 | April 15, 2010 3:16 PM | Report abuse

"Here's my question for folks who think slight changes in marginal tax rates will drive rich people to move to another country: How do you explain New York?"

Slight changes in marginal tax rates won't drive rich people to move to another country, because people tend to live where they want to live, and if they aren't living in Paris already, another tax is just a nuisance cost.

Similarly, highly attractive places to live can be more expensive places to live. It's the market at work, in that respect. New York can charge New York taxes because it's New York. Try applying New York's tax rates to Wisconsin and it probably wouldn't work out so well.

For evidence, take a look at New Jersey, where--if I'm not mistaken--there's been an erosion of their top earners. There is a balance there (Laffer curve, cough-cough) where eventually expense outstrips benefits ("friends and family and culture and climate and commerce and employment and inertia and kids in school") and inertia. That is, punitive taxes will make people move eventually, if they just cannot afford it, but are unlikely to make them move if it's just another damn bill and maybe they can cancel their gym membership or stop shopping at the more expensive health food store.

In regards to leaving the country, where would America's top earners go? Russia?

Markets also mitigate tax burdens. Companies have to pay what it takes to get good people, and that means pay scales might take into account tax burdens.

Posted by: Kevin_Willis | April 15, 2010 3:22 PM | Report abuse

An easy example is people who move from NJ,NY to avoid state specific estate taxes.

You don't think there has been migration out of the state of California to more low tax neighbors like Nevada?

New York is helped by the fact that it is bordered by mostly low tax states.

"Taxes just don't seem to be a huge driver of behavior"... so a carbon tax would be pointless to combat global warming? Come on.

Elasticities change over time, Ezra. You jack up taxes today, you think there might be an effect ten years from now in where businesses choose to relocate/expand? Think rent control laws might effect apartment investment and long run housing supply?

Your entire argument also shows no understanding of ceteris paribus.

Posted by: cdosquared5 | April 15, 2010 3:26 PM | Report abuse

It's simple, a lot of high-paying jobs are in NY. There is only one Wall Street where people can gamble unlimited amounts of money knowing that the rest of the country will bail them out if they flub up. A lot of those folks move elsewhere when they retire. NY state has a net outflow of people if you subtract immigrants. Moving somewhere else to escape taxes, especially upon retirement, is a big topic of conversation. Ezra, have you ever visited the east coast of Florida? I think half the people there have moved from NY and other Northeastern states, and one reason they cite is taxes.

Posted by: AuthorEditor | April 15, 2010 3:26 PM | Report abuse

If the rich don't move their residences they sure seem to move their businesses if they can find a better tax rate.

Posted by: Texican1 | April 15, 2010 3:27 PM | Report abuse

I'd like to point Mr. Klein to the case of Maryland, where a "Millionaire's tax" was implemented last year. Is it a coincidence that of the 3,000 millionaires in the state in 2008, only 2,000 of them remained one year later? I think not.

Posted by: octopi213 | April 15, 2010 3:30 PM | Report abuse

A similar meme is that low taxes will lead to greater economic growth for a state. I like to remind people here in Missouri that, with the 4th lowest local/state tax burden in the country (according to those wise people at the Tax Foundation), by this logic we should have the 4th best economic performance.

Hmmm. Maybe taxes aren't the only things that attract people or businesses.

Posted by: MOmark | April 15, 2010 3:39 PM | Report abuse

Ammenities exist that can offset the taxes. New York is a fun place to live. That and it has lots of great jobs. This isn't to say taxes have no effect - it's just that its still an attractive place to live despite the cost of living there for many people.

Try instituting New York City levels of taxation in, say, Toledo OH, and see what happens.

Or for another thought experiment, consider what would happen to NYC if you either

a) Replaced taxes at all levels with a flat 15% tax, with a deduction of $15,000 for each adult and $5,000 per child.

b) Levied that same flat 15% income tax on top of all other existing taxes at all levels.

Posted by: justin84 | April 15, 2010 3:50 PM | Report abuse

"Is it a coincidence that of the 3,000 millionaires in the state in 2008, only 2,000 of them remained one year later? I think not."

Or maybe all those millionaires still live in Maryland, except they aren't millionaires anymore.

Posted by: boboman978 | April 15, 2010 3:54 PM | Report abuse

"Uh, you've been here right? It's amazing!"

New York is all right. If I was going to live somewhere urban and expensive, I'd pick London, myself. Now, that's a city.

But I'd rather live somewhere suburban and/or (if I had my druthers) rural. The cost of living and relative tax burden would figure in to that decision, but, given the nature of reality, I have to consider employment opportunities, savings, income, schools, hospitals, etc., as well.

But I've met New Yorkers. For most of them, the taxes could crush them and grind them into powder before they'd consider moving. If NYC was a white powder they'd roll up a $20 bill and snort it up their nose. ;)

Lots of things going into our decision making processes. We are rarely, possibly never, the rational economic actors we think we are.

Posted by: Kevin_Willis | April 15, 2010 3:55 PM | Report abuse

Ezra---- your post are usually very intellectual but you didn't base this post on any facts. You based it on what you have seen. However. I agree with many of the commenters people stay in NY because it is NY-you know you will pay higher taxes. I also agree with you when you say people move for more reasons than taxes.

Posted by: Ja4879 | April 15, 2010 3:56 PM | Report abuse

The US is the best place in the world to be rich. When that changes they will leave in droves. Everywhere else you can be rich but you must also be on guard and ready to do murder to keep it. Here they are safe just being rich and acquiescing to the system which protects them for the price of their tax payments.

Posted by: BertEisenstein | April 15, 2010 3:56 PM | Report abuse

octopi213, the millionaires aren't gone, they just are poorer thanks to the financial crisis.

I know a lot of people who live in VA rather than DC because they think the taxes are lower (are they actually? a good question for another day...). And I know people who have moved a long way because the cost of living as a whole is lower.

But I don't actually know anyone who has moved a substantial distance, rather than just to a different state more or less within the same metro area, for tax reasons alone.

Posted by: dal20402 | April 15, 2010 3:58 PM | Report abuse

Funny you should mention this, I was just discussing this very point with my wife yesterday. Living in Northern New Jersey, we know quite a few people who have moved to places like South Carolina to reduce their taxes after their kids graduate from high school and they no longer need quality schools. I couldn't imagine turning my life upside down simply to reduce my taxes, but we definitely see people doing it.

I even know people who are planning to move across the border INTO New York State (Rockland, Orange, Dutchess counties) to reduce their property taxes.

Posted by: bcamarda2 | April 15, 2010 4:05 PM | Report abuse

Really top-of-the-line hookers?

Posted by: JJenkins2 | April 15, 2010 4:05 PM | Report abuse

You're going to blame a 1/3 drop in the numbers of that group to the economy? Fat chance, especially with a low-tax state right across the river. That's too big of a decline to attribute to the poor economy.

Posted by: octopi213 | April 15, 2010 4:05 PM | Report abuse

Don't forget us NY'ers tax themselves to pay for an adequate level of services i.e. schools, Medicaid that coveres those up to 150% of the poverty level and includes home health care services for seniors, somewhat more generous benefits for kids- vision, hearing aids etc.,that other states skimp on. Infrastructure repair and keeping up a state of good repair to our massive water sewer systems so we do not have to deal with defered maintenance or outmoded well water and septic, maintaining mass transit, state parks etc.

Additionally we do not tax groceries like Mississippi and Alabama so consider that a plus.

Basically we have to make up for what we do not get back for what we send to Washington. As the late Sen. Moynahan used to report every year, we are a doner state. For every $1.00 NYers sent to D.C we get back .84. Compare to TX or AK who get back roughly $1.74 for every $1.00 they send to D.C.

Posted by: MerrillFrank | April 15, 2010 4:15 PM | Report abuse

Property taxes in NYC are relatively low.

Posted by: harold3 | April 15, 2010 4:16 PM | Report abuse

@octopi213: "That's too big of a decline to attribute to the poor economy."

It's very unlikely it's all movement. Certainly, it's unlikely to be legitimate movement. What millionaire taxes almost always create is much more creative accounting. New tax shelters. Under reported or deferred income. The net result is that (ala the "discredited" Laffer curve) tax revenues stagnate or go down, rather than go up, as predicted by the folks rubbing their hands together with chortling about all the new money they'll have to spend, once those millionaires get theirs.

Posted by: Kevin_Willis | April 15, 2010 4:17 PM | Report abuse

Why does high-tax N.Y. have so many rich people? Because only rich people can afford to live there?

Posted by: obrier2 | April 15, 2010 4:18 PM | Report abuse

Seriously - how many of the really rich actually pay any taxes? The could rent in NY, but own in Wyoming (no state income tax) and class that as their residence. Just the fact that there are a lot of "rich" people in NY doesn't mean they pay taxes there.

I earn a good living ($120K family income) but that's not sufficient to dodge taxes, set up trusts, own shell companies etc..., and my final tax bill is probably around 18%, Buffet's tax bill is around 9% of his income, and Hedge fund managers were making Billions (literally Billions) and they were classing it as capital gains (15% before any paper losses).

Posted by: ChicagoIndependant | April 15, 2010 4:20 PM | Report abuse

DC/MD/VA is a bad comparison because that ignores that besides the District itself, a high percentage of the high-paying jobs are in Tysons Corner and with the horrifying lack of transit options to Tysons (for now), there's a distinct benefit to living near that pit that has zero to do with taxes. There's not really comparable Tysons in Maryland...

Posted by: thecandidcastaway | April 15, 2010 4:28 PM | Report abuse

My wife and I recently moved from NYC to Tennessee. While we did not leave NY to get away from the taxes, the relative tax burden of the various states was a factor we considered in deciding to which state to move.

The chart Ezra linked to actually seriously understates the differences in tax burdens in the various states for high-income people. We had a 11+% marginal income tax rate in NYC. In Tennessee, there is no income tax. We all pay 9% sales tax on everything including groceries here (not that sales tax was low in NYC). For low income folks, that adds up to a noticable burden. For high-income folks, it is a tiny percentage of income.

I think that the Tennessee method is dumb economically and socio-economically, but it sure does benefit us, and we thought about that when we moved.

That said, I am a lawyer, and after tax salaries are considerably lower for lawyers here than they are for lawyers in NYC, so the case for moving because of taxes does not fly for lawyers.

My wife is a doctor, and it is the opposite case for her. Doctors get paid considerably more, even pre-tax, in TN than in NYC, and the post-tax difference is very substantial (like 40-50%). And most everything here is cheaper to buy with that money. I think that doctors are nuts to live and work in NYC. [But that is because I am sick of living in NYC after two different stints adding up to 8 years. I assume that those folks all love it.]

Posted by: JDNash | April 15, 2010 4:36 PM | Report abuse

I generally agree, but MA/NH is an exception. NH has no (state) income tax and no sales tax, MA has both. I've spoken to people who have claimed to move to NH for this, but commute into MA. I don't know if its true or not but the main highway from NH to Boston is clogged up inbound in the morning and outbound in the evening.

Posted by: kevinamaley | April 15, 2010 4:42 PM | Report abuse

Hey, does anybody know if Tom Golisano carried out his threat to move from NY to Florida because of the taxes? Last year around this time he said he was leaving the state.

Posted by: AuthorEditor | April 15, 2010 4:48 PM | Report abuse

I knew visionbrkr would beat me here with the NJ --> Penn example. While I think Ezra's generally right, there are a few instances where tax burden is a big factor for people deciding where to live, and PA/NJ is definitely one of them.

Posted by: MosBen | April 15, 2010 4:49 PM | Report abuse

Upstate NY, not-upper middle-class here. All I can say is: I'm paying NYS more than the Feds this year in income taxes. That's a bit screwed up.

Posted by: neversaylie | April 15, 2010 4:50 PM | Report abuse

JDNash is wroing on the sales tax rate on food in Tennessee. The sales tax on food is 5.5% He is right on the general sales tax rate but completelely missed the lower rate on food.

Posted by: lancediverson | April 15, 2010 4:56 PM | Report abuse

JDNash is wrong on the sales tax rate on food in Tennessee. The sales tax on food is 5.5% He is right on the general sales tax rate but completelely missed the lower rate on food.

Posted by: lancediverson | April 15, 2010 4:56 PM | Report abuse

The effect of marginal tax increases happens ... wait for it ... on the margin. Rich people with a settled life are not going to move, but retirees might decide to become snowbirds in Florida after all. Younger singles might decide to buy a house in a place with a lower cost of living and grow their wealth there. Empirically, there has been a net flow of jobs, capital, and labor from blue states to red. You can have a lot of interesting reading if you google migration to red states. It has slowed lately, but I suspect that is because people don't move during the recession.

Posted by: Justin_Martyr | April 15, 2010 5:05 PM | Report abuse

MosBen,

sorry ;-)

I will also add (as someone above mentioned) that many people that I know are moving from Northern NJ to North Carolina too. I'm not necessarily saying the tax rates affect it but definitely when they retire hence the term "snowbird". Snowbirds mainly eventually move to Florida or the South full time when the tax burden/weather outweighs the benefit of staying in the Northeast.

There's also the saying that nobody ever MOVES to NJ. They're either born here, they come here for work but its very difficult to retire here and keep up a "decent" retirement.

Posted by: visionbrkr | April 15, 2010 5:14 PM | Report abuse

People most surely move because of the taxes and cost of living, Ezra. I live in New York and when I visit family in CT it is astonishing to see how many people flood out of the city after 5.

Also, because of the nature of our transportation, more people are more open to moving where the money is as they can still remain connected to their families.

I certainly don't think the degree of people who move is as hyperbolic as Republicans make it out to be, but certainly the price people pay in taxes has a lot to do with it--which sucks because it is usually only people with money that can afford to move that do, which decreases the tax revenue for that local area and create a vicious cycle.

Side note, if we had a better rail system I think the degree to which this economic transmigration occurs would be greater and much more visible.

Posted by: clarenceflanders | April 15, 2010 5:16 PM | Report abuse

*New York is helped by the fact that it is bordered by mostly low tax states.*

No it isn't! New York and Connecticut are not low tax states at all. Pennsylvania, maybe, but the parts of New York that border Pennsylvania aren't hugely attractive.

*There's also the saying that nobody ever MOVES to NJ. They're either born here, they come here for work but its very difficult to retire here and keep up a "decent" retirement.*

Coming "here for work" is what we call "moving" to someplace. That is why most people move anywhere, except when they retire.

Posted by: constans | April 15, 2010 5:23 PM | Report abuse

Property taxes in NYC are relatively low.

They are especially if you own a "Archie Bunker" type house in the boroughs. Roughly taxes are $1500-2000 per year. Co-ops and condos especially in Manhattan pay proportionally more. This basically favors the outer borough working/middle class.

Posted by: MerrillFrank | April 15, 2010 5:35 PM | Report abuse

@visionbrkr: "that many people that I know are moving from Northern NJ to North Carolina too"

Yes, and they are bringing their high-tax, heavy-regulation, generous-public-service approach to the state. If they continue to remake NC at the same rate they have thus far, it won't be all that long (a few decades, maybe a little more) before the burdens on NC are similar to NJ. Because they may move away from the high taxes and lagging economies, but they like the abundance of government services and progressive regulatory structures.

Not that a high level of government services and taxation can't be done in ways that avoid the economies of Michigan and New Jersey.

Posted by: Kevin_Willis | April 15, 2010 5:39 PM | Report abuse

*Not that a high level of government services and taxation can't be done in ways that avoid the economies of Michigan and New Jersey.*

New Jersey's per capita income is more than $38,000/yr. Tennessee's is just under $27,000/yr. NJ's unemployment rate is 10%. Tennessee's is 11%.

What, exactly, would be wrong with New Jersey's economy?

Posted by: constans | April 15, 2010 5:55 PM | Report abuse

@constans: "New Jersey's per capita income is more than $38,000/yr. Tennessee's is just under $27,000/yr. NJ's unemployment rate is 10%. Tennessee's is 11%."

"What, exactly, would be wrong with New Jersey's economy?"

That's easy! It's in New Jersey.

Ba-dum-dum.

Economy does involve other things, but I'm not really holding up Tennessee as the ideal, nor is a direct comparison apples-to-apples. Just saying it is possible to have a high degree of public services without torpedoing the economy. Or do you disagree?

Posted by: Kevin_Willis | April 15, 2010 5:59 PM | Report abuse

*it is possible to have a high degree of public services without torpedoing the economy.*

It is possible. In fact, the economy improves with a high degree of public services. You appear to believe it is a given that a high degree of public services will tank the economy and point to NJ as an example, except for the fact that this has not actually happened. Rich states have ample, robust public services. Poor states don't. As the people in those states become wealthier, they start to demand public services commensurate with their expectations and lifestyle.

Posted by: constans | April 15, 2010 6:12 PM | Report abuse

alright i'll jump into this conversation about my state.

I don't know enough about NC to judge a comparison but NJ has one belligerent state employees union as well as the strongest teachers union in the country. Its not the services that cost us, its all the "extras" ;-) that come with those services. That's not even mentioning that NJ is LITTERED with municipalities about every 5 miles that each have representatives making ridiculous pay/benefits/etc that thankfully the govenor is just now getting into check (not without a major fight I might add). The thing is he's not sleeping with the head of the CCWA like the last govenor was.

I do agree that in time adjustments will come as Kevin says. I've also noted over the last 10-20 years people move further and further South in NJ to avoid higher prices/taxes etc.

I live about 70 miles from NYC and about 10 people from my development (of about 50 homes) commute to NYC. They leave at about 4:30 am.

Posted by: visionbrkr | April 15, 2010 6:55 PM | Report abuse

I know in the military you can pick any state you have lived in as your official residence, so many active duty personnel pick Fl or TX because they don't pay income tax. That is different because they are not actually living in those states for most of the time.
When we moved to the DC area we thought a lot about taxes, but the deciding factor was schools. Where we could afford to live that had good schools (usually due to higher taxes) was much digger factor and that is how we ended up in MC, not NOVA.

Posted by: cminmd1 | April 15, 2010 8:26 PM | Report abuse

"You appear to believe it is a given that a high degree of public services will tank the economy"

Nope. That is an existing viewpoint, but it's not mine. My argument would be that Carefully crafted public policy that takes into account revenue cycles can be a net benefit to the state economy. I just figured New Jersey was fair game, given their recent election of a Republican. If that isn't an unambiguous sign of impending NJ doom, I don't know what is.

Posted by: Kevin_Willis | April 15, 2010 8:28 PM | Report abuse

I do have a friend who moved for tax reasons (and to avoid Hispanic immigrants), but his experience has not been much of an advertisment for the idea. He has wound up painfully isolated, socially, and while his fortunes may have been helped by the lower taxes they have suffered because the collapse in housing prices in his new state has been especially severe, due in part to weaknesses in local governance.

Posted by: wdoneil | April 15, 2010 9:01 PM | Report abuse

Yeah...salaries are higher, and it's our biggest city, that's why people go to NYC. But NYC also benefits from Manhattan's geography. It puts a much stronger line between city and suburbs.

My parents have decided to live somewhere, specifically so that it won't tax their retirement income.

You just don't make enough money to care yet Ezra. Wait until your tax bill exceeds $100,000. It's a weird feeling.

Posted by: staticvars | April 16, 2010 12:41 AM | Report abuse


===== http://www.shoptrade.us ====

Air jordan(1-24)shoes $30

Handbags(Coach l v f e n d i d&g) $35

Tshirts (Polo ,ed hardy,lacoste) $15

Jean(True Religion,ed hardy,coogi) $30

Sunglasses(Oakey,coach,gucci,A r m a i n i) $15

New era cap $12

Bikini (Ed hardy,polo) $20

accept paypal and free shipping

====== http://www.shoptrade.us ====

Posted by: 898551828 | April 16, 2010 9:03 AM | Report abuse

Kevin, you're not making the least bit of sense, anymore. You're comparing the economy of NJ to Michigan's, then kind of denying it, then backtracking with a wisecrack about how things must be bad because an investment banker running for governor was defeated for re-election. Do you have an actual point?

Posted by: constans | April 16, 2010 9:15 AM | Report abuse

The issue here is that it's very easy for people to compare tax burdens across states, but they often fail to notice that the quality of the community is affected by government spending because government spending doesn't come prominently labeled as such.

For example, when you use the MBTA here in Boston, you are using a service which is subsidized by taxpayers. On net, access to good public transport helps young people live in Boston, which in particular contributes to the ability of Boston to retain the students who graduate from the top universities in the area, which helps explain why Boston is one of the wealthier communities in America.

For each person you know who has moved somewhere for tax reasons, it's also easy to think of someone who made choices about where they want to live based on the quality of education available or the safety level of a community. What that second group of people generally doesn't do, though, is to recognize that the education and public safety were strong or weak in large part due to government spending, and then from there conclude that it all came back to taxation. If people made that connection more often, you might see more people recognize why high-tax areas are so often the wealthiest. (New York is hardly the only example; compare the list of highest tax states with the list of wealthiest states and observe the striking correlation.)

Posted by: jeffwacker | April 16, 2010 11:18 AM | Report abuse

@ezra "taxes just don't seem to be a huge driver of behavior, which given the importance of friends and family and culture and climate and commerce and employment and inertia and kids in school and everything else that binds us to where we live, is rather as you'd expect"

as others have said, there is some truth here but it is badly really overstated.

Where I have seen the tax-flight most prominently is at the town level in MA and upstate NY. Town budgets are dominated by school spending and adjoining towns often have very different levels of expenditures. I know quite a few people that arbitrage that by living in the good-school town while raising kids and then move 8 miles away when the kids go to college. In that way they keep access to their climate, job and pay scale (which certainly has a regional component) and are close enough to at least partially maintain their social and community ties. The value of the arbitrage can be significant - on a comparable 3BR upper-middle-class home in boston's metrowest it can be the difference between a 5k and 10k tax bill for making a pretty modest change in your life.

Of course the fact that some people are doing this exacerbates the problem because a larger than normal ratio of homes have school age children. Funding schools on a less granular level (state or national) would reduce the opportunities for border hopping and create less of a "birth lottery" effect to boot.

It goes way beyond schools. I think we probably have all kinds of layers of government that just compete with each other in a bad way. Are state lines really all that useful?

Posted by: patrickinmaine | April 16, 2010 12:51 PM | Report abuse

Rich people can afford to pay for lawyers and accountants to help them avoid tehir taxes. And if that doesn't work, they often have so much money that a big tax bite doesn't hurt that much anyways.

Quite a bit different for the middle and upper-middle class. Come to California and I will show you a state that is rapidly becoming a Third World banana republic with a small, harassed middle class, a tiny overclass of the very rich, and a huge poverty-stricken imported underclass that depends on the tax dollars of the rapidly declining middle class.

We have lots of rich people here too, and we are a high tax state also. Stephen Spielberg doesn't really give a hoot about his tax burden -- he's still got billions left over after April 15. Not so much for the middle- and upper-middle-class Californians who are fleeing this state at the rate of 300K per year.

Posted by: MaryJessel | April 16, 2010 4:13 PM | Report abuse

After college I definitely moved from the SF Bay Area to Chicago because Chicago has lower taxes and a lower cost of living.

But of course some people will stay in California because if you program that's where the jobs are. And if you trade equities you're in NY. And some people value a short commute over making more money...But other states don't have these extranality effects and so can't get away with high taxes

Posted by: earlsofsandwich | April 18, 2010 10:47 AM | Report abuse

It's so bad here in NY I'm actually bouncing around the internet shamelessly plugging these t-shirts I made just to make enough money to pay my taxes.

http://www.cafepress.com/ITaxNY

Posted by: jbgrifter | April 20, 2010 10:20 AM | Report abuse

The comments to this entry are closed.

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company