The Competitive Economic Environment: Lessons From the States
Abstract
If one thinks of the United States as one large economy in the global economy, the parallels also apply. Increases in the tax rates will elicit a capital outflow and an outmigration. The mobile factors will move to arbitrage the differences in tax rates. Worse yet, given the progressivity of the tax code, the people who will leave the state will be the very successful with very high income. Add to this an expansion of the social safety net and other programs, and as it was with the states’ data, the social programs will be a magnet for lower income people who qualify for these programs. The overall migration away from the high tax states to the other states documented ...
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