government

Study: People do not leave Rhode Island because of the taxes

IMAGE SOURCE PERI
ACCORDING TO research by University of Massachusetts Amherst, taxes do not play a notable role in causing people to leave Rhode Island.
Posted 4/13/11

PROVIDENCE – “Taxes do not play any notable role in causing people to leave Rhode Island,” said Jeffrey Thompson, assistant research professor at the University of Massachusetts Amherst’s Political Economy Research Institute.

Thompson said that the main factors influencing household migration are economic and family-related reasons. The results were published in study called “The Impact of Taxes on Migration in New England.”

“As New England states continue to struggle with serious budget shortfalls, policymakers face pressure to replenish the offers. Opponents raise the specter of families fleeing for lower-tax states. But new research finds the impact of taxes on cross-state migration is very weak,” he said.

Nevertheless, the brief finds that residents leave Rhode Island for other states at a slightly higher rate than the national average and the in-migration rate is slightly lower.

The brief also looked at the impact of some variables which affect migrations to and from Rhode Island.

  • When the unemployment rate increases by 0.9 percentage point, 1,590 more people leave and 4,089 fewer people arrive.

  • When the average marginal income tax rate on wage earnings increases by 2.3 percentage points, 752 fewer people leave and 1,410 fewer people arrive.

  • When own-source revenue as a share of the gross domestic product increases by 1.7 percent, there is no statistically significant impact on out-migration and 1,645 fewer people arrive.

  • When the housing affordability index increases by 5.2 percentage points, 987 fewer people leave and 1,222 more people arrive.

    Tax increases nearly always increase revenue, which can be spent in ways to make an area more attractive to current and potential residents, the study noted.

    For example, if Rhode Island were to raise the average marginal tax rate by 1 percentage point, it would generate about $170 million in revenue that could be used to hire 2,900 workers, which would reduce unemployment.

    “Even if half of the new jobs were filled with unemployed Rhode Island residents, out-migration from the state would fall by almost 700 and more than 1,700 new in-migrants would choose Rhode Island – far more than compensating for the smaller number of migrants who chose other states.”

    When looking at New England as a whole, the study finds that regional residents tend to stay put more than people in the rest of the country.

    In five of the six New England states, except for Vermont, the relationship between net migration and relative income is positive: more people enter and/or fewer people leave the state as relative taxes rise.

    “The opposite of what you would expect if people were fleeing taxes,” said Thompson.

  • 13 comments on this story | Add your comment
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    OrangesPoranges

    Really? Really???? Tell that to my parents, who sold their home in North Kingstown after 40 years and retired to South Carolina where the property taxes are $600 per year, not $6,000 per year. Their new home is nicer than the one they sold, in an affluent, gated golf community. The maximum sales tax on a new car in South Carolina is $300, not seven percent of the price. They tool all of their retirement investments and income with them. We're losing retirees to other states because lower taxes make the cost of living and enjoying retirement so much easier.

    Wednesday, April 13, 2011 | Report this
    ddurfee@baycomp.com

    Huh? you tax 1% and then use that money to hire people? Is this guy an idiot? how is taking money from the private sector to create public sector jobs helping the situation?

    The statements are so crazy that it makes his findings questionable.

    Wednesday, April 13, 2011 | Report this
    malinda@professorchef.com

    Ditto Brenda...my parents decided to leave when they received a car tax bill for a new car. So they are now in FL 6months plus one day per year...and in RI the rest of the time! Now no car tax, no car inspeaction, no state income tax no $11,000 property tax bill, no sewer usage fee...and that is just the tip of the iceburg!

    Wednesday, April 13, 2011 | Report this
    mairhart

    South Carolina also has consistently poor public schools, and consequently poor job choices, because of those low property taxes.

    South Carolina also suffers from serious smog and water pollution due to lax auto and industrial regulation, and the state has inferior transportation and social services for the majority of elderly who are not affluent.

    Wednesday, April 13, 2011 | Report this
    mairhart

    Likewise in Florida, which is suffering its own state fiscal emergency and serious problems with traffic congestion, smog, a water shortage, overdevelopment, a resulting foreclosure crisis, and rapid environmental decline across the Everglades.

    How long before those low taxes and drastic budget cuts hurt the state's respected public schools?

    Wednesday, April 13, 2011 | Report this
    Jim_Donahue

    A liberal professor from Taxachusetts thinks no one leaves due to taxes? Wow a revelation.

    Sure that's why MA has Prop 2 and a half.

    Wednesday, April 13, 2011 | Report this
    Richad5

    I have a grandson at Umass and I hope he's not listening to this "bozo"

    retirees are leaving my neighborhood for 6 months and a day to be residents of Florida of the Carolinas

    there are many many former state employees in that category---we should tax the pensions before we send the checks out --that way we could recoup some money

    Pensions must be taxed in the State where they are received

    I even recall that candidate Chaffee in a TV interview admitted that his mother - in- law was a resident of Florida to escape the high taxes here in Rhode island

    Even Mr Trainor(Chaffee's Staff) borrowed $250K from the EDC for a business venture that failed--he has yet to repay that loan---please verify--- it was reported on WPRO

    Maybe the PBN will research that to my assertion

    Richard5

    Wednesday, April 13, 2011 | Report this
    melliott@centurydrywallinc.com

    Every day I get closer to the for sale sign on the front lawn. Once my last child is out of HS I am leaving. I may not show up in a migration study, but the total lack of effort to control expenses over my 54 years has me exasperated, if there was a half hearted effort I would stick it out. Maybe I'll go to Wisconson or Arizona where elected officals are starting to get a clue.

    Wednesday, April 13, 2011 | Report this
    Anita

    OK - so maybe they don't leave for tax reasons. (I didn't.)

    But when they're thinking of buying a home, how does the tax position of RI impact potential buyers' decision to buy in the state or not? And what about those of us who'd like to move back - but doubt that we EVER will - because of RI's HUGE pension deficits and related tax position - which leaves working taxpayers in a very weak position?

    So much for "studies"!

    Wednesday, April 13, 2011 | Report this
    LD

    This study is so flawed it would be funny, except that someone surely paid money for it! Ask literally anyone above 55 who has somehow accumulated wealth why they are moving to Florida and the first thing out of their mouths is TAXES (income and estate).

    Wednesday, April 13, 2011 | Report this
    mtousignant

    This article has so many flaws that I cannot even begin to list them.

    Thursday, April 14, 2011 | Report this
    DNOKES@NETCENERGY.COM

    If this wasn't such a serious issue, this article would be laughable.

    Friday, April 15, 2011 | Report this
    tonypero

    Why would anyone want 2 leave Rhode Island ? Look @ the beautiful places to live here; Woonsocket, Central Falls,Pawtucket, South Providence and Onlyville. These cities alone should be driving people by the hoards 2 move here. Oh the RI benifits are astounding !! Taxes on telephne, house insurance, 7% sales tax & 1% meala beverage tax on take out. 3 taxes on your electric bills. home heating,sewer bills, even a tax on water !! Every living thnig requires water but in RI it's a luxury becase it has a tax. In business a tax 2 collect the states taxes, litter control tax, hazardous waste traing tax, employer trains , Ri taxes $42.00,RI 7% tax 1% meals beverage tax , 7% sales tax on insurance policies, video security system tax,tangible equipment tax paying a yearly tax on the same equipment untill eather you or the equipment dies. One of the highest ciggarett taxes and auto insurace in the country. oh and remember to add the 7 % sales tax on them . An even better benifit is the xtra sewer bills due quarterly on food est. plus there regular sewer bill and of coarse taxes. Well we would run out of life or time if I was 2 continue this list. They wonder why people r leaving. Business's continue to leave and NO NEW BUSINESS'S wil everl move here. Words Out do not move or open a bussiness in RI. Great state 2 move 2 if anyone is on public assistance though. The benifits are awesome !!

    Saturday, May 28, 2011 | Report this
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