High Tax / Low Opportunity States Losing People

States that voted for Hillary are going broke and losing the people and businesses they cannot afford to lose.

High-tax states are losing human capital and financial wealth to low-tax states with more personal and regulatory freedom. When people leave high-tax states, it tends to reduce business formation, job creation, and consumption in those states. This means a smaller tax base to support high government spending. High-tax states need to cut spending, lower taxes, and foster a friendly regulatory environment if they want to keep their residents. California and Illinois also need to address their unfunded state pension liabilities. AIER pointed out in a recent post that unfunded state pension liabilities mean even higher taxes on the horizon.

… Burdensome regulatory policy and a lack of personal freedom also push people out of states such as New York, California, and Illinois. Each year, the Cato Institute creates the Freedom in the 50 States Index. The index includes state regulatory policies, personal freedom, and fiscal policies. Included regulatory policies concern such issue areas as health insurance, occupational restrictions, and land use. Personal freedom concerns marriage, education, and the criminal justice system. Last year, New York State was ranked 50th, or dead last, on the Freedom in the 50 States Index. California was right behind New York State at 49th. Illinois fared slightly better at 44th. __ Fiscal Times


States and countries with the best long-term prospects are those that maximise opportunity and minimise parasitic rent-seeking. A map of the US states by “levels of freedom” replicates closely a map of the US by November 2016 voting patterns. States that went strongly to Trump tend to be much “higher opportunity and high freedom states” while the states that went strongly to Clinton tend to be “lower opportunity and low freedom states.” Clinton states are also more likely to be crushed by the pension tsunami.

International Migration Is Also Attracted to Higher Opportunity

High freedom and high opportunity nations are also the most popular destinations for international immigration. Of nations sufficiently large to accommodate significant immigration, nations of Europe and the Anglosphere rank at the top.

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