Avid competition among the states is constantly in progress to attract individuals and companies to move to their cities and towns. The enticements offered include low income, estate, and business taxes and right to work laws. I was reminded of this competition recently by three couples who are friends of ours. They are currently making preparations to return to Florida from Connecticut, where they are now considered full time residents.
The men and women lived and worked in Connecticut and New York and sent their children to schools here, but retired to Florida two years ago because of the tax benefits, with the weather an added incentive. But instead of spending three months in the sunshine state each year, they now live there a few days over six months annually. To avoid Connecticut taxes they must reside in Florida (or outside Connecticut) at least half the year. So they decamp to Florida when the leaves begin turning colors. I have nothing against them for doing the smart thing to avoid higher taxes. But I believe it is a shame that states do not have a more uniform tax code and compete against each other by low-balling the money they collect from affluent citizens.
That politicians want to recruit new businesses to their states is obvious as it improves the states’ economies and lowers unemployment rates, bolstering the officials’ chances at re-election. Attracting people to their states has significant benefits as well, particularly retirees. Retirees are sources of jobs for the state residents and help the economy because of the money they spend on living expenses, entertainment, and meals. They also do not have children who require education which means reduced costs for the states and localities where the retirees live. The retirement homes and complexes also increase employment, and there is a need for caregivers and health care workers as well to service the older population.
Basically, when they are younger, affluent individuals live in states that have business opportunities for them and good school systems to educate their children, then retire to the low tax states when their children are grown. Most of the low tax states are in the South and the West, usually the same states with “right to work” laws to attract businesses. To compete, states in the North and on the coasts tout their educated work forces and good school systems to recruit businesses and young people. In general, the low-tax states perform poorly in terms of education parameters and other services, as the funding is not there.
While the ability to recruit retirees and businesses to particular states may help the economies and employment in these states, it does nothing for the nation’s economy and employment levels overall. It is just moving pieces around the board instead of adding new pieces. A more uniform
system of state taxation makes sense, but is merely another dream.
Resurrecting Democracy
www.robertlevinebooks.com
Political junkie, Vietnam vet, neurologist- three books on aging and dementia. Book on health care reform in 2009- Shock Therapy for the American Health Care System. Book on the need for a centrist third party- Resurrecting Democracy- A Citizen’s Call for a Centrist Third Party published in 2011. Aging Wisely, published in August 2014 by Rowman and Littlefield. Latest book- The Uninformed Voter published May 2020