People really do move because of tax rates


We keep trying to tell the lefties this, that people really will move out of a tax area to escape high tax rates. The usual response rarely rises above "Yah, Boo, Sucks, so what?". And of course it's quite difficult to prove, absolutely, that the 180,000 odd Brits a year who are leaving the country are doing so over the taxes alone. There will obviously be some, like myself, who simply could not stand the weather any more.

However, a nice little natural experiment has been spotted. In the NBA (the American basketball league) there's a salary cap: not just how much the team can spend as a whole, but on how high individual salaries can be. Thus the long term, experienced, players end up on pretty much the same money whichever team they play for. Local and state income taxes are thus the biggest variable determinants of their take home pay.

There is a clear pattern of talented players migrating to, or staying with, teams in states with little or no personal income tax. Since they can more easily attract and keep better players, teams in states with lower taxes have consistently performed better on the court than teams in highly taxed states in recent seasons.

The effect carries through to team performances as well: teams from low tax states reach the playoffs more often than teams from high tax states. The win/loss ratio is also much better for the teams from low tax states.

It's also worth noting that basketball is a team sport: yet that migration of the star players due to tax rates does lower the performance of teams in high tax states and raise it of those in low tax ones. The analogy to people working in the general economy, also a collaborative, team, activity should be obvious.

Yes, people do move beause of tax rates and this does affect not just those individuals who move, but those they stop working with and also those they go to work with. Which is why we'd really rather have tax rates that don't encourage people to leave.