Posted on 03/21/2002 7:10:03 PM PST by Tumbleweed_Connection
Pete Naylor, owner of Connecticut Auto Transport Inc., followed the path often taken by his own customers and relocated his small car-hauling business from the Nutmeg State to Palm City, Fla., three years ago.
"We started up in Connecticut, but decided to get out. Florida is a nice place to be. The weather is good and the finances are very good," said Naylor, 48. "My customers talk about taxes all the time and how there is no personal property tax in Florida."
He kept the firm's original title because most of his clients live in the Hartford, Conn., area. They frequently purchase and register their cars in Florida and pay Naylor to transport the vehicles back to Connecticut at the end of their winter vacations.
State and local taxes vary dramatically in America, a fact that appears to have a major impact on patterns of migration. Connecticut, with the highest taxes in the nation, suffered one of the worst rates of population growth during the 1990s. Florida, meanwhile, enjoyed explosive growth with very low relative taxes.
Scripps Howard News Service compared recent trends in state population growth and taxation and found that, generally, the more a state taxes, the less likely its population is to grow.
A state might theoretically expect to grow an additional 1 percent in population during the 1990s for every $211 less per person it collected in taxes, the study found. Scholars cautiously accept the finding.
"I've conducted similar regression studies over the years and have found similar trends," said Richard Vedder, professor of economics at Ohio University and an expert in the economics of population growth. "Of course, taxes are not the only issue in growth. But the preponderance of evidence suggests that taxes do make a difference."
The kinds of taxes levied may also make a difference, he said. One of the most visible is an income tax that is deducted from a worker's paycheck.
Nine states do not have a general income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. The combined population in these states grew from 43.7 million in 1990 to 53.5 million in 2000, or a 22 percent increase. The other 41 states grew by 11 percent in the same period.
Vedder carried the analysis one step further, looking at population migration of people who were born in the United States. He estimates that nearly 2.9 million people relocated from states with income levies to states without such taxes during the 1990s.
"I sometimes get a little melodramatic when I note that the migration of people to states without income taxes was even greater than the total number of people who ever moved from East Germany to West Germany before the Berlin Wall was built," Vedder said.
Bruce Bartlett, a senior fellow at the National Center for Policy Analysis and a top Treasury Department policy maker under former Presidents Ronald Reagan and George Bush, warns that there has been little study of the tax economics of population growth.
"Of course, Texas and Florida are big examples of people who seek to claim residency in those areas for tax purposes. And, I think, the people who are most likely to move because of tax reasons are the elderly," Bartlett said.
Texas has the second-lowest per-capita state and local tax collections of any state at $1,315 per person and had a population growth rate of almost 23 percent. Neighboring California had the nation's sixth-highest level of tax collections, averaging $2,474 per person, and a rate of growth nearly half that of Texas.
Connecticut collected an average of $2,987 in non-federal levies for every man, woman and child living in the state in 2000, almost double the $1,553 per person collected in Florida. Connecticut's population grew by less than 4 percent during the 1990s, only a third of the national average. Aware of these trends, Connecticut Gov. John Rowland, a Republican, is urging the legislature to consider a general reduction in taxes.
Florida, meanwhile, boomed by 24 percent.
"It really should be perfectly obvious to everyone that Florida's tax structure has had a profound effect on our population growth," said Dave Bruns, a spokesman for the Florida Department of Revenue. "Our state legislature made a decision after World War II to increase growth through our tax policy. It worked."
But the relationship between taxes and growth is hardly perfect. South Dakota collected an average of only $1,228 per person in 2000 and had only an 8 percent population increase.
Alabama had the nation's fifth-lowest tax collection rate, but increased in population by only 10 percent even though it neighbors Florida.
"There is a point at which low taxes do not encourage population growth," concluded Annette Watters, a director at the Center for Business and Economic Research at the University of Alabama. "When taxes are not high enough, we don't have adequate schools, good roads and bridges and the other necessary infrastructure. Law taxes are not always the end all and be all of growth."
Me too. They hate Godzilla too. ;)
Oh well, maybe the shock therapy of seeing Boeing pack up and leave will help promote a more "pro-business" atmosphere here. And maybe pigs will grow wings and fly.
Funny. Where exactly is California's common border with Texas?
Uh huh, and I know people in Washington who shop in Oregon because of Washington's high sales taxes...How do Washington's sales taxes compare with Idaho?
California's common border with Texas is called Mexico.
Funny. Where exactly is California's common border with Texas?
Most people in Texas will tell you that there is no common border with California. After all, how can there be a common border, when California is just a suburb of El Paso. (-:
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