Thursday, May 9, 2013

Live Free or Move

Live Free or Move:
Forty-three million Americans moved from one state to another
between 1995 and 2010 -- about one-seventh of Americans.
It's good that we can move! Moving provides one of the few
limits on the megalomania of state bureaucrats.
Americans have moved away from
high-taxed, heavily regulated states to lower-taxed, less-regulated
states. Most don't think of it as a political decision. They just
go where opportunities are, and that usually means where there's
less government.
They're leaving my state, New York, in droves. California,
despite its great weather, also lost people, and wealth. Other
biggest losers were Illinois, New Jersey and Ohio.
Travis Brown, author of "Money Walks," tracked the movements
using IRS data. On my TV show, he revealed that Florida was the
state that gained the most: "You're seeing a massive amount of
people and their income coming in: $86 billion."
Arizona and Texas also gained, which made me wonder if Americans
just move to states where it's warm. "No," said Darcy Olsen,
president of Arizona's Goldwater Institute. "Weather explains just
5 percent of the migration ... the Census Bureau asks, and they
say, 'to find a job.'"
People move where jobs are, and the states gaining the most --
which also include North Carolina and Nevada -- follow what she
calls "the magic formula. Lower taxes and good labor policy, which
means, to a business, being free to hire and fire the people you
want. (In) the most successful states you see both -- no income tax
or low taxes coupled with right-to-work laws."
The states that lost the most people and money were New York,
California, Illinois, New Jersey and Ohio.
This competition between states makes it possible for states to
learn from each other's successes.
T.W. Shannon, speaker of the Oklahoma House of Representatives,
told me that he's learned. His state, where the economy had long
been sluggish, finally figured out they could spur growth with tax
cuts.
"We are moving to reduce our state income tax rate....Every time
we have done it in the past, we have seen increased revenues and
growth." Shannon adds, "Capital won't flow to a hostile
environment."
No, it won't. You'd think politicians would figure that out. But
they rarely do. Brown's income data shows that capital flows to
friendly environments: "States like (Texas, without a
state income tax) gained $146 billion, whereas the reverse, the
states with the highest among personal income-tax rates, lost over
$120 billion."
The owners of the basketball team the Houston Rockets give
prospective players pamphlets that detail how many Rolex watches
and Bentleys they could buy just from tax money they'd save if they
move to Texas.
This data doesn't stop a prominent pundit in my state, The
New York Times
' Paul Krugman, from writing that the Texas
economic miracle is "a myth" because Texas still has high poverty
rates, a high high-school dropout rate, and a low percentage of
people with health insurance.
Behind this clash is the larger disagreement about how to handle
the economy--promote growth by shrinking government or boost public
services for the poor. The state-by-state contrast keeps getting
sharper. Crudely put, blue states keep getting bluer, and red
states keep getting redder. Krugman looks at Texas and sees
policies--and Republican politicians--he doesn't like.
But people don't just vote at the ballot box or by their choice
of newspaper subscriptions. They vote with their feet. And by that
measure, the state that publishes Krugman's columns--New York--and
the state where he's a college professor--New Jersey--are losing
big-time.
Ironically, one reason Texas continues to have problems with
poverty, despite its population growth, is that people don't just
move between states. They also move from other countries in search
of opportunity. For about a million people, that meant moving
across the border from Mexico to Texas. They start low on the
economic ladder but do tend to move upward over time.
For some reason, politicians most sympathetic to those
immigrants are clueless about why U.S. citizens move from state to
state.
Let people live where they can be free, and get rich.