Taxes go up, people move out

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I’ve written extensively that Wisconsin’s high level of taxation is forcing too many residents to pack up and leave. New data indicates the disturbing trend continues, having a damaging effect on our ability to compete.

During November 2005, the Wisconsin Taxpayer Alliance issued a very troubling report entitled, "Moving In, Moving on: Migration in Wisconsin."  During the five years prior to the 2000 census, almost 669,000 people either moved to or out of Wisconsin. However, the net in-migration into Wisconsin was a meager 7,282.
Individuals with college or advanced degrees were more likely to leave, while those with less education tended to come. Individuals with household incomes above $75,000 left Wisconsin. Those with incomes of $200,000 or more had the highest rates of leaving.

The huge exodus of wealthy Wisconsinites leaving the state caused a loss of an estimated $4.72 billion in net worth and a loss of $455 million in income over the five years of this study. That means far fewer in-state bank deposits, less stock in Wisconsin firms, less investment capital for in-state ventures, and less money given to local charities.

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We are losing our best and brightest at a very young age, and we’re experiencing retiree flight.

Last month, the USA Today reported that Americans are moving across state lines at the highest rate since the early 1990s. U.S, Census Bureau data shows lots of people are moving, but not to Wisconsin, which ranks at number 45 among the states, with 1.9 percent of the state’s population in 2006 having moved here from another state.

Now The Wall Street Journal reports, "Americans are uprooting themselves and moving to places where there is economic vitality, opportunity and a high quality of life. They are going, in short, to where the action is."

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Arthur Laffer, president of Laffer Associates, and Stephen Moore, senior economics writer for The Wall Street Journal editorial board, confirm that high taxing and spending have had a negative impact on Wisconsin’s ability to compete and cause many people to relocate elsewhere.

Laffer and Moore write in The Wall Street Journal,  "Five of the states near the bottom of our competitiveness ratings – Illinois, Maryland, Michigan, New Jersey and Wisconsin – have enacted major tax increases in the last two years. Maryland and Michigan just raised business and income taxes on upper-income earners, while arguing that raising the cost of doing business will attract more businesses. More likely it will induce companies to stay away, and people to move out."

Laffer and Moore say the record movement of citizens across America has little to do with the weather. They say the states with the most dynamic and desirable economies are generally the states with the lowest tax, spending and regulatory burdens. These states win the battle for the prized commodity of human capital. The big losers are high taxing and spending states in the Midwest and Northeast.

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The American Legislative Exchange Council has just released a study Laffer and Moore conducted that presents a 2007 Economic Competitiveness Rating of the 50 states. During the past decade, Laffer and Moore discovered that, "the 10 states with the highest taxes and spending, and the most intrusive regulations, have half the population and job growth, and one-third slower growth in incomes, than the 10 most economically free states. In 2006 alone 1,500 people each day moved to the states with the highest economic competitiveness from the states with the lowest competitiveness."

Wisconsin ranks at No. 30 on the Economic Competitiveness rating. Hurting Wisconsin is its ranking at No. 45 for property tax burden, the fifth-worst in the country, a ranking of No. 30 for the top marginal personal income tax rate and a ranking of No. 32 for the top marginal corporate income tax rate.

Laffer and Moore contend that policy decisions made by state legislators matter. They write, "State officials can influence these factors – the economic, fiscal and social policy legislation that contribute to, or in all too many cases against, the livability of a state. If you don’t believe that economic policies matter, then why is it that thousands upon thousands of people in East Germany risked their lives and fortunes every year to get through the Berlin Wall to move to West Germany? Why is it that Mexicans line up at the U.S. border to get into this nation to live and work here by whatever means they can, but not too many Americans sneak over the border to get into Mexico?”

The prescription is clear. The remedy to stop people from voting with their feet in Wisconsin is to stop the hemorrhaging of taxing and spending.


State Sen. Mary Lazich (R-New Berlin) represents the 28th Senate District.

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