CBPP Admits Tax Flight Occurs in Study Titled “Tax Flight is a Myth”

August 5th, 2011 · No Comments

The Center On Budget and Policy Priorities (CBPP) has, once again, contorted itself to make the case for increased taxes.

In a report titled Tax Flight is a Myth the CBPP claims that,

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.

This, of course, is not an argument that tax flight doesn’t exist, but rather, that states shouldn’t care about tax flight.

The title of the study notwithstanding, what the CBPP is doing here (in the guise of a scientific study) is making the case for tax increases on the grounds that if states raise taxes high enough the increased revenues collected from those who remain in the state will exceed the revenues lost by those who flee.

Sure enough, later in “Tax Flight is a Myth,” the CBPP admits that tax flight is not a myth (emphasis is mine):

Thus, while a few affluent households might leave a state because their income taxes are increased, the vast majority stay, and states gain a significant net increase in revenue to help support important services.

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.

The CBPP wants its readers to believe that the entire tax flight argument is bogus merely because most rich people don’t flee their states when taxes are increased. But this is a classic strawman argument. No rational opponent of increased state taxes has suggested that higher taxes would cause most rich people to leave the state.

The CBPP made that up because it’s an easier argument to refute than the one that says when taxes and government regulation become too great, small businesses leave the state and take their jobs with them.

The CBPP report is, from crown to toe, chock full of pro-tax, big-government propaganda. Its authors cynically trust that most people will merely read the title and dig no deeper. Not only is this propaganda, it is shameless propaganda.

Equally shameless is the CBPP’s false contention that opponents of state tax increases are concerned about the flight of affluent households. The authors of the study know very well that the opponents of burdensome state taxes are concerned about the flight of small businesses and the loss of jobs that will inevitably result because of that flight.

Incidentally, if only the super-rich are fleeing the state because of tax increases, as the CBPP suggests, doesn’t that make state tax increases regressive?

Here is the entire oeuvre of my posts about wealth flight. Read them at your leisure and then compare them to the CBPP’s ridiculously one-sided propaganda piece. If you read these posts and the studies and articles mentioned in them and still think that tax flight is a myth, you are pre-qualified to work at the CBPP: