NY Post Fearmongers About Tax Flight

Earlier this week, the New York Post published an article hyping an online application by the Tax Foundation that allows the user to see how many people entered or exited a state over a given time period and where they went.

The Post used the Tax Foundation's program to assert that New York's tax burden is the driving force behind the state's net decrease in migration last year (Fox News favorite Art Laffer also jumped on this information to push for lower taxes). But these interpretations of the Tax Foundation application are rebutted by evidence from the Center for Budget and Policy Priorities and the Tax Foundation itself.

From the Post's Erik Kriss and Nicole Danna:

New York state tops the nation in one key export -- people fleeing high taxes.

More than 3.4 million New Yorkers -- with combined annual earnings of $119 billion -- pulled up stakes and left for other states from 2000 through 2009, according to the Tax Foundation.

The top destination: Florida, where 600,000 New Yorkers landed after leaving the high-taxes of the Empire State in the last decade -- taking nearly $20 billion in income with them, new data shows.

New York was top of the heap for out-migration, outpacing California in second place, the conservative think-tank reported based on federal tax-return data.

This isn't the first time Kriss has written a story using data from the Tax Foundation to essentially advocate for lower taxes. Last year, Kriss wrote a nearly identical piece, at the time stating:

Taxed-out New Yorkers are voting with their feet, with a staggering 1.6 million residents fleeing the state over the last decade, a new report found.

[...]

For the second consecutive decade, New York led the nation in the percentage of residents leaving for other states, according to the report by the Empire Center for State Policy.

The population loss is “the ultimate barometer of New York's attractiveness as a place to work, live and do business,” said the report's co-author, E.J. McMahon. “It's the ultimate indication that we've been doing things wrong.”

Most analysts blamed New York's high taxes and skyrocketing cost of living for the mass exodus.

The Tax Foundation ranked New York highest in the nation in the combined state and local tax burden in 2008.

Danna, Kriss, and the Post ignore problems with this analysis. First, the Tax Foundation specifically explains that this type of interpretation of their data is insufficient to explain the migration. In the Tax Foundations FAQ about the Tax Foundation Migration Tool, they note they aren't trying to imply that taxes are why people move:

Since you are the Tax Foundation, aren't you trying to imply that taxes are why people move between states?

No. Taxes are one of hundreds of factors that go into a person's decision to move. Others include age, technology, job prospects and the quality/quantity of government services provided. If one looks anecdotally at the data, he/she will see that people move from high-tax states to low-tax states and vice versa. A true study that sought to quantify the importance of taxes for locational decisions would need to account for as many other factors as possible, in addition to possible serial correlation issues between variables, especially taxes.

As, Tax Foundation analyst Nick Kaspark points out in Danna and Kriss's own piece, one of the reasons people move to Florida is due to “Florida's popularity as a retirement destination noting 'lower density, sunny, beaches.”

Second, according to the Center for Budget and Policy Priorities (CBPP), while higher taxes may play some part in people's decision to move, “the effects of tax increases on migration are, at most, small.” From the CBPP:

Attacks on sorely-needed increases in state tax revenues often include the unproven claim that tax hikes will drive large numbers of households -- particularly the most affluent -- to other states. The same claim also is used to justify new tax cuts. Compelling evidence shows that this claim is false. The effects of tax increases on migration are, at most, small -- so small that states that raise income taxes on the most affluent households can be assured of a substantial net gain in revenue.

[...]

It would not be credible to argue that no one ever moves to a new state because of the desire to live someplace where taxes are lower. But neither is it credible to say that taxes are a primary motivation, nor that migration has a large impact on the revenue impact of tax measures.

As CBPP nicely sums up, “Finding a correlation -- two things happening at the same time -- is not the same as proving one of those things caused the other.”