December 12, 2012

Wealthy French, Average Americans, Continue to Flee High Taxes

Texas, Florida gain as states like New York and California lose

While France’s most famous actor, Gerard Depardieu, is now the latest in a wave of tax refugees to flee the country before a new wealth tax kicks in in 2013, new data from the U.S. Census Bureau suggests that ordinary Americans with average incomes continue to flee high-tax states like California for low-tax states like Texas.

Reports say that Depardieu was likely motivated by tax avoidance considerations in moving to a small town in Belgium adjacent the French border city of Lille. The move comes after French luxury magnate Bernard Arnault made a similar cross-border  move.

Depardieu was famous for representing the French “everyman” so it is no surprise his moving has set off both introspection and fury among your average Jacques.

Meanwhile, your average American Joe, with far less in earnings than French millionaires and billionaires, continues his migration from places like New York and California.

The Census Bureau reports that the most common state to state moves in 2011 were New York to Florida (59,288), California to Texas (58,992) and California to Arizona (49,635).

Notably, the Census Bureau data shows that job-related factors such as a new job or transfer were most commonly cited reason for moving among the top two income categories ($85,000 to $99,999 and $100,000 and above).

A comprehensive recent study of a two-decades long exodus from California conducted by the Manhattan Institute made the link between migration and the tax and jobs climate of California explicit, saying:

“The data … reveal the motives that drive individuals and businesses to leave California. One of these, of course, is work. States with low unemployment rates, such as Texas, are drawing people from California, whose rate is above the national average. Taxation also appears to be a factor, especially as it contributes to the business climate and, in turn, jobs. Most of the destination states favored by Californians have lower taxes. States that have gained the most at California’s expense are rated as having better business climates. The data suggest that many cost drivers–taxes, regulations, the high price of housing and commercial real estate, costly electricity, union power, and high labor costs–are prompting businesses to locate outside California, thus helping to drive the exodus.”

Mark Perry’s U-Haul Index, tracking the number of one-way truck rentals, has also confirmed a pattern of ordinary people moving in the direction of lower taxes, the American Enterprise Institute economist maintains.

Perry’s U-Haul Index may become increasingly important to economists, demographers and other researchers if the IRS and Census Bureau go forward with a reported plan to discontinue monitoring tax migration data. National Review reported Tuesday that the Obama administration is “quietly killing” continued studies of this metric, for which the government has compiled data since 1991.

The politically conservative publication opines that “blue states with high state and local tax burdens have come out looking bad in recent years. California and New York have been embarrassed publicly, as a steady exodus is underway from both.”

The IRS has not officially explained the move, but “unofficially it is suggesting that the problem lies in coordinating with the Census Bureau,” National Review continues. “It is asking for comments on how people use the data and how important it is, presumably so that higher-ups at the agencies can reverse their decision if necessary.”

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