Monday, December 27, 2010

Talent, Taxes, and Migration

Update: Ed Glaeser takes another look at the Rust Belt-to-Sun Belt migration. Low taxes? Right to work laws? Nope, lax construction regulations for new housing is the key variable for explaining the flow.
----End Update----

The Census results announced last week confirmed what we have known for at least a decade. The gravity of population is shifting from the Rust Belt to the Sun Belt. To the extent that migration explains this "new" landscape has set off another round of blaming taxes for brain drain.

The assault on high-tax states appears to be well-coordinated. I don't know if there is a smoking email blast that lists the libertarian talking points, but it sure seems that way. Policy is pushing out people:

And, with apologies to Charlie Rangel, it's not just the weather: "The states that gained seats ranked an average of 39th in taxes and had an average tax burden (weighted) of $1,788 -- 27 percent lower than the losing states. People vote with their feet and flee to low-tax states. It's not the climate; it's the taxes."

In the past decade, NY State has lost a million people-with the largest losses occurring upstate where job prospects are dim. John Faso underscores this bleak picture: "Many New Yorkers have no choice but to flee our confiscatory taxes and dismal job climate. Can our policymakers turn things around?..But the greater challenge will be crafting policies that fundamentally change our long-term economic prospects. The state needs to radically alter prevailing assumptions that have governed New York state for the last half century if it is emerge from this recession with brighter prospects."

Talent doesn't care about taxes. From high-priced homes in school districts with great reputations to expensive cities that continue to attract people in droves, taxes don't explain much migration. Smart cities get smarter, state policy be damned.

Places renown for developing people will always do well. It isn't fad or fetish driving prosperity. People will endure crime, high taxes, and a lousy built environment to better themselves. They will even tolerate a crappy climate and a long commute to work.

I'm amazed how something so obvious gets lost so easily in any policy debate. Like amenities, tax regime is a small residual migration. A few people care a lot about these issues. The squeaky wheel gets the grease. Much ado about nothing.

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