Study Suggests $1.2 Billion has Moved Out of State Since 2003
Wednesday, July 18, 2012
Rhode Island lost $1.2 billion in annual income thanks to taxpayers leaving the state between 2003 and 2010, according to a report released Tuesday by the Rhode Island Center for Freedom and Prosperity.
The report suggests that 24,455 more income-tax-paying households left Rhode Island for other states than moved in and as a percentage of population, the Ocean State lost more taxpayers than any other state in the country during that period.
Roughly 35 percent of the 110,207 Rhode Island's net out-migration occurs to the bordering counties of Connecticut and Massachusetts, which is not surprising given the state’s tax burden, according to the report. In the 2009 fiscal year, Rhode Island's state and local tax burden, as a percentage of private sector personal income, was 16.1 percent, compared with 14.5 percent in Connecticut and 12.9 percent in Massachusetts.
"The inescapable fact is that people are looking to avoid the high state and local tax burden in Rhode Island while being able to remain close to their families and careers," Stenhouse said.
The report suggests that the “out-migration” trend, should be concerning to cities and towns still working to overcome unfunded pension liabilities and ongoing budget crises. Research director Justin Katz said all five Rhode Island counties saw a net loss of population to bordering counties in other states; which cost the state over $250 million.
"What makes these results especially relevant is that taxes aren't the only motivation for leaving,” Katz said. “Cities, towns, and the state as a whole have to improve services like education, even as they ease the burden on the people who live here.”
Still, others say too much of a emphasis is place on the tax burden when it comes to comes to the reasons people leave Rhode Island. In April 2011, the Political Economy Research Institute (PERI) at the University of Massachusetts, issued a report stating that employment opportunities have the strongest influence on migration.
Like Katz, the PERI report said public services, such as “increasing higher-education enrollment, decreasing property crime, or improving housing affordability,” can help retain people.
“Evidence from surveys of migrating households, the existing economic literature, and new analysis in this paper all suggest that taxes do not play any notable role in causing people to leave Rhode Island,” the report stated. “The most important factors in influencing household migration are economic and family-related reasons. If anything, higher state income taxes decrease the numbers of people leaving a state. Taxes do appear to influence the choice of which state to live in once a person has decided to move, but the impact is modest. If Rhode Island uses the revenues from higher taxes to create jobs, reduce unemployment, and reduce property crime, the small negative impacts from taxes can be easily overcome.”
Kate Brewster, who heads up the Economic Progress Institute, also disputed the Center for Freedom and Prosperity’s findings.
“This report is another ill-fated attempt to use migration data to draw far-reaching conclusions in support of a tax policy agenda, in this case, eliminating the sales tax, the state’s second largest source of revenue. Such a move would be financially devastating to the state and its ability to deliver public services like education, health care and recreation.”
Dan McGowan can be reached at dmcgowan@golocalprov.com.
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Comments:
David Beagle
8:19am on Wednesday, July 18, 2012
Lets all be honest, there probably isn't one specific reason tax payers leave the state but TOO MANY reasons they don't stay.
Todd B
8:36am on Wednesday, July 18, 2012
No surprise. But I love Kate Brewster's comment: "The most important factors in influencing household migration are economic and family-related reasons. If anything, higher state income taxes decrease the numbers of people leaving a state."
Ummm, yes taxes ARE economic reasons! Do she think all the retail stores located on Route 6 in Massachusetts just over the RI border chose to locate there simply out of coincidence? Or maybe, just maybe taxes play a role. The taxes generated by those stores all go to MA to provide for public services-IN MA.
Kate Brewster is in denial and the policies she supports only further erode the state's tax base. But hey, RI's governing class has long shared Brewster's mentality and the state has become some a financial success, why bother changing?
Patrick Boyd
8:49am on Wednesday, July 18, 2012
" If Rhode Island uses the revenues from higher taxes to create jobs, reduce unemployment, and reduce property crime, the small negative impacts from taxes can be easily overcome.”
I think we've got a better chance at seeing the Easter Bunny, as long as we have this pension monster to deal with and the existing GA members running this state.
Common Sense RI
9:31am on Wednesday, July 18, 2012
This is one of the dumbest things I think I have ever heard:
"If anything, higher state income taxes decrease the numbers of people leaving a state."
If you want to argue that taxes are not a big factor in re-location and other things are more important then, fine, have at it but when your claims are based on idiocy like this I cna't imgine why anyone would listen to a word you have to say.
Laura Faulkner
10:41am on Wednesday, July 18, 2012
Is anyone else sick of these studies that focus on ONE simple aspect of why families move out of states? If the taxes were the number one reason, don'y you think people would have stuck around after the top rate was LOWERED two years ago?!? Hmmm...I wonder if our school systems performing poorly, our crumbling roads, or our high unemployment rate has anything to do why the reason people are moving?
Maybe the fact that our population is SO uneducated and companies pay us less than they do in MA or CT is the reason why people are fleeing...I mean seriously, what has this state come to?
Wuggly Ump
11:05am on Wednesday, July 18, 2012
@ Laura Faulkner You are right there are other reasons, unfortunately most of the time it does boil down to taxes and regulations. The cost of energy, employees, health care, permits, and anything else you can think of is taxed and regulated in this state. This causes the cost of doing business to be more. Do you look for the best price on items you buy?
When a business leaves the politicians raise taxes and regulations on those that are left instead of cutting spending, causing more businesses to leave. Have you ever noticed how RI Government will offer tax breaks and other benefits to a company to move here? Why not just offer these benefits and breaks the the businesses still here?
Captain Blacksocks
11:10am on Wednesday, July 18, 2012
One of the main reasons for the exit of all this $$$ from RI is the oppressive estate tax. Just about any high-earning person in RI is told repeatedly by their accountants and lawyers to SURE THEY DO NOT DIE IN RI. The state takes a very big share of the estate if you die in RI. It's double taxation. The state taxes all your earnings while you live, and then they tax it at an even higher rate when you die. Most informed people of retirement age move out of RI many years before their death to establish residency in a tax friendly state like Florida. Why stay?...Florida is nice and you can pass your estate to your famility when you kick the bucket.
Stephen Gachowski
12:15pm on Wednesday, July 18, 2012
Just like Laffey said " productive people are leaving the state and we are replacing them with unproductive people". So you have a much weaker tax base and more parasites sucking off the sysytem!
Dave Barry
4:34pm on Wednesday, July 18, 2012
If Kate is right, why is the population of California moving in droves to Idaho, Texas, etc? I'm leaving to make sure I'm in a state that doesn't tax military pensions. A friend in Alabama has a mansion for just over 200,000.00 and he pays 1200.00 in property taxes as opposed to 5,000 here.
Gary Arnold
8:28am on Thursday, July 19, 2012
States that grow have jobs, period. RI is the least attractive to companies due to taxes and regulations. What is the problem of understanding and doing something to reverse this trend. There are only so many people that can leave before we are gone as a state.