Robert W. Glover University of Maine
In the past two weeks, we’ve heard a lot about Governor Paul LePage and author Stephen King. The Governor incorrectly implied that King doesn’t pay state taxes as part of his justification for a plan to gradually eliminate the Maine income tax. King shot back accusing LePage of being full of…”fertilizer.” King demanded an apology. The Governor refused and made a counter-offer. Even former Governor Ken Curtis, who oversaw the creation of the Maine state income tax weighed in from Sarasota, Florida.
Here’s the thing. I don’t really care about all of this. This is theatre. It pulls us away from the important policy questions we face as a state and, frankly, we don’t have time for it.
In all of this back and forth, as has too often been the case over the past several years, an important policy question got lost in the fracas: Is the income tax something which figures into people’s decisions to move?
We have lots of data with which to answer this question. Thus, it’s surprising that so much of this conversation has been taking place in a vacuum, as if we must simply speculate about why someone might move based on anecdotal evidence. So let’s look at the data.
The U.S. Census Bureau collects lots of national data in its “Annual Social and Economic Supplement” on why people move. What do they find? Well, from 2012-2013, the most popular reasons for moving were related to housing, jobs, and family. Just over 45% of respondents moved to find cheaper or better housing. About 30% moved for reasons like to be closer to family or due to a change in marital status. Around 20% moved due to a job or career opportunity.
Other reasons rounded out the remaining respondents, but in relatively insignificant numbers. Yes, people do move due to climate, but it’s a relatively small percentage of the national sample and concentrated among older populations. Maine (especially after the punishing winter we’ve just had) might see a few more people moving south for white sand beaches and orange groves, but nothing earth-shattering.
The nonpartisan Pew Research Center has done some analysis on this too. It’s a little dated, using numbers from 2008, but these trends tend to be pretty stable over time. Their big finding? Overwhelmingly, migration is something that happens among younger populations. The older we get, the more likely we are to stay put. And a “long-term decline in migration has occurred because the U.S. population is getting older and most moves are made when people are young.”
So it’s overwhelmingly young people that are on the move. Well then…surely, a state that has low or zero income taxes might be a draw then, right? Wrong.
A study done just last year by the nonpartisan Center for Budget and Policy Priorities found that state taxes have a negligible impact on interstate moves. Factors like housing, jobs, and the suitability of the area to raise a family are likely to have a far more significant impact on whether one stays in a state, and whether they relocate to that state.
The report says explicitly, “states…that have already cut or are considering cutting their income taxes should harbor no illusions that such a move will stem — let alone reverse — their states’ longstanding net out-migration trends. To the contrary; if deep tax cuts result in significant deterioration in education, public safety, parks, roads, and other critical services and infrastructure, these states will render themselves less — not more — desirable places to live and raise a family.”
Read that again and let it sink in.
The bottom line is that proposing to lower or get rid of the income tax as a way of somehow magically reversing our economic and demographic trends flies in the face of much of the available evidence and analysis. Furthermore, the very public confrontation between Governor Paul LePage and Stephen King has drawn attention away from this important public policy issue.
What the data tells us is that if we want to fix our state’s economy, and reverse our demographic decline, cutting or eliminating the income tax simply isn’t going to get us there. In fact, if it results in higher property taxes and declining public schools and infrastructure, it will likely drive us deeper into stagnation and decline.