Democrat governors in blue states from New York to California continue to embrace higher tax burdens that threaten their economic futures. A new opinion piece in today’s Wall Street Journal notes that “in the years to come, millions of people, thousands of businesses, and tens of billions of dollars of net income will flee high-tax blue states for low-tax red states” and that the ongoing middle class exodus from New York, California and other blue states “could puncture large and unexpected holes in blue-state budgets.” As Democrat governors continue to push anti-jobs, high-tax policies, residents are voting with their feet.
Arthur B. Laffer and Stephen Moore write in the Wall Street Journal:
“As the Trump tax cut was being debated in December, California’s Gov. Jerry Brown called the bill ‘evil in the extreme’ and fumed that it would ‘divide the hell out of us.’ He’s right—but in the end, this change could be good for all the states.
In the years to come, millions of people, thousands of businesses, and tens of billions of dollars of net income will flee high-tax blue states for low-tax red states.
For years blue states have exported a third or more of their tax burden to residents of other states. In places like California, where the top income-tax rate exceeds 13%, that tax could be deducted on a federal return. Now that deduction for state and local taxes will be capped at $10,000 per family.
As far as we can see, the only way for blue states to prevent this coming fiscal bloodbath is to start taking tax competitiveness seriously—and to cut their tax rates in response. Progressives should do the math: A 13% tax rate generates zero revenue from someone who leaves the state for friendlier climates.
Blue states ought to be able to lower their taxes and spending dramatically without jeopardizing vital services. Despite its shrinking tax base, New York spends nearly twice as much on state and local government per person ($16,000) as does economically booming Tennessee ($9,000).
Alas, delusional liberal interest groups want blue states to respond to the Trump tax cuts by soaking their rich residents even more. If that happens, our best advice to blue-state residents is simple: Git while the gittin’s good.”