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Money walks — sometimes runs — from one state to another

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THESE (TAX) BOOTS ARE MADE FOR WALKING: After looking at 18 years of IRS data, Travis Brown says people flock to low-tax states and flee high-tax states.

THESE (TAX) BOOTS ARE MADE FOR WALKING: After looking at 18 years of IRS data, Travis Brown says people flock to low-tax states and flee high-tax states.

By Rob Nikolewski │ New Mexico Watchdog

ALBUQUERQUE, N.M. — Travis Brown says the future belongs to states that embrace lower taxes, and he points to statistics from the Internal Revenue Service to prove it.

“Money walks to the places where it’s most welcome,” Brown told New Mexico Watchdog. “People generally flee high-tax states and flock to low-tax states.”

Appearing in Albuquerque on Thursday before a crowd of about 100, Brown hawked his book, “How Money Walks,” which crunches numbers compiled by the IRS between 1992 and 2010, tracking population and wealth in all 50 states.

“States like yours have a choice: Do you want the Texas economy or the California economy?” Brown told the audience.

Texas is the country’s poster child in terms of economic policy; California is the nation’s problem child.

In the space of 18 years, the Texas economy has gained $24.94 billion, enticing people from other states. Brown attributes the influx to the lower taxes; Texas is one of seven states without a state income tax.

“Texas added five million people in the last decade, but its labor participation went up (despite the increase in population) and per capital incomes are still rising,” Brown said.

Click here to see Brown’s interactive website, which also breaks down economic changes by county.

Texas gained most from California, picking up $6.02 billion from the Golden State between 1992 and 2010. Texas received a net gain of 136,055 people who left California for Texas. Overall, Texas gained a population of 572,656 from the rest of the country.

Conversely, in those 18 years California lost  566,682 in net population, equaling a loss of $45.27 billion in wealth.

But didn’t California see a boon from the Silicon Valley?

True, Brown said, but California’s losses, particularly in Southern California, could not make up for the economic gains seen in the technology sectors of Northern California.

Referring to his website, Brown points to large numbers in out-migration from places such as Los Angeles County. “Thirty-six billion dollars of the $45 billion lost in California in the previous 18 years is in Southern California,” Brown said. “It’s a massive loss.”

Brown says his figures show that the nine states with the lowest rates of state income taxes gained $164 billion between 1992 and 2010. The nine states with the highest rates lost $150 billion.

As for New Mexico, Brown’s numbers show a net gain of $1.68 billion and a net population gain of 41,363.

“New Mexico is doing OK, but their neighboring states, like Arizona and Texas, in particular, are both gaining more within the region,” Brown said. Arizona has seen a net gain of $28.3 billion in wealth and 676,790 in net population during that 18-year stretch.

But don’t people move for a lot reasons, besides taxes?

“It would be a (mistake) to suggest that taxes are the only factor,” Brown conceded, but said, “It would be an equal mistake to deny the evidence that the IRS shows us over the previous 18 years, to act as if taxes are not a very important factor.”

States on the right track? Texas, Washington — a blue state with no state income tax — North Carolina and Florida.

States in trouble?

California, Illinois and New York.

“You want to talk about a New York minute,” Brown told the crowd in Albuquerque. “New York is losing $7,100 every minute, every day.”

Here’s our NM Watchdog interview with Brown:


YouTube

Contact Rob Nikolewski at [email protected] and follow him on Twitter @robnikolewski

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Rob formerly served as staff reporter for Watchdog.org.