This article was published by The McAlvany Intelligence Advisor on Friday, September 11, 2015:
Milton and Rose Friedman published their work Free to Choose – A Personal Statement 35 years ago when it became a best seller, topping best seller lists for five weeks. Ten years later PBS created a telecast with Dr. Friedman interviewing, and often debating, experts from across the political spectrum, including Walter Williams on the right and Frances Fox Piven on the left.
In the video chapter “The Power of the Market” Friedman makes the point that the free market’s greatest benefit is the power of options: where to live, where to work, whom to marry, how to worship, and on and on.
Walter Wriston, considered by many to be the single most influential commercial banker of his time, serving as chief executive of Citibank from 1967 to 1984, condensed Friedman’s chapter into one pithy quote that reverberates today: “Capital goes where it’s welcome and stays where it’s well treated.” If capital is defined to include labor, then that freedom remains alive and well in the United States.
That fact has just been validated by Americans for Tax Reform (ATR), which, after analyzing the latest data from the IRS, has concluded that states that treat their citizens exclusively as tax generators for the state are losing them to states that treat them more kindly and generously. In 2013, more than 200,000 people moved from New York, Illinois, California, Connecticut, and Massachusetts to Texas, Florida, South Carolina, North Carolina, and Arizona.
And they took with them more than $16 billion in adjusted gross income. The single largest migration was 17,355 from New York to Florida. Those migrating left behind Democrat-dominated states in favor of Republican-run states. Altogether, said ATR:
[In 2013] Democrat-run states lost a net 226,763 taxpayers, bringing with them nearly $15.7 billion in adjusted gross income (AGI). That same year, states with Republican governors gained nearly 220,000 new taxpayers, who brought more than $14.1 billion in AGI with them.
And it’s not just taxpayers who are fleeing the fleecers, either. When Connecticut’s governor and legislature were considering another massive tax increase last spring on top of the previous increase in 2011, Travelers, Aetna, and General Electric protested mightily, along with Joe Scarborough, newly arrived in Connecticut from Florida. Scarborough brought with him an audience loyal to his Morning Joe radio show that reflected his libertarian leanings. When Governor Dan Malloy signed the tax increase into law, Scarborough said:
It’s hard to imagine how things could get any worse [here]. I pay nearly 55 percent of my income in state and federal taxes. In Florida I paid closer to 35 percent.
But Jeff Immelt, GE’s chief executive officer, went a huge step further: he threatened to leave the state. In an email to his people the day after the state enacted its new exaction, Immelt wrote:
Last night the Connecticut legislature passed a tax package which includes insignificant and retroactive tax increases for businesses in the state. The passing of this law, despite the concerns we raised, has serious implications for GE, other businesses, and for the business climate in Connecticut….
As a result of this law passing, I have assembled an exploratory team to look into the company’s options to relocate [our] corporate headquarters to another state with a more pro-business environment.
Attached to his email was a .pdf (noted below under Sources) outlining the reasons why his company was considering such a move. They included poor ratings by various services putting Connecticut at or near the bottom of every index: cost of living, taxes collected per citizen, economic outlook, ease of doing business, etc.
He also noted that if GE moves out of Connecticut it will take with it some 5,700 jobs and 4,500 volunteers who last year invested some 50,000 man-hours in local charity projects around the state. Not to mention the millions of dollars GE gave to charities around the state.
But none of that seems to matter to the Connecticut pols, who, by their behavior, appear to be void of any modicum of common sense and who evince not a single molecule of the wisdom dispersed by Wriston and Freidman. Carol Platt Liebau, president of the Yankee Institute, a free-market think tank, supports the potential move out of the state by GE:
I think it does make sense, because what you’ve seen [by politicians] is not only a willingness to raise taxes but a seeming lack of comprehension on the part of state leaders as to why that’s a problem.
Not every politician in the state has lost his mind, however. State Senator Joe Markley, a rare Republican in a heavily Democrat state, said that 25 years of tax increases and exploding government has destroyed “one of the country’s great manufacturing bases.” In a moment of candor Markley said Connecticut’s problem is simple: “The economy stinks and we spend too much,” adding “We are the example of what you get with big government.”
If one thinks Connecticut is being unfairly targeted here, the American Legislative Exchange Council (ALEC), in its recent Rich States, Poor States analysis provides abundant evidence that the states being vacated by those exercising their freedom to move are in the bottom quartile of its study while those states inviting, accepting, and welcoming them as much more than just tax revenue generators are in the top 15 percent of all states.
Big-spending politicians who think taxpayers can be endlessly mulcted for the benefit of the state are getting a lesson in reality. Thanks to the freedom to move as part of the freedom to choose, those taxpayers are now the teachers and not the targets.
Americans for Tax Reform: Taxpayers Fleeing Democrat-Run States for Republican Ones
DailySignal.com: Study: Taxpayers Are Leaving Democrat-Run States for States Controlled by Republicans
JoeforAmerica.com: TEXAS WINS 6 BILLION DOLLARS AS TAXPAYERS FLEE DEMOCRAT-RUN STATES
NationalReview.com: GE Is Considering Leaving Connecticut Over Democrats’ Tax Hikes
NationalReview.com: Joe Scarborough’s Anti-Tax Crusade
Jeff Immelt’s relocation letter
2015 Rich States Poor States study by ALEC
Background on Milton Freedman’s Free to Choose book and TV series