April 16, 2013

Minnesota Budget Project: Tax Increases Don’t Prompt High-Income Households to Move Out of State

ITEP Work in Action

As Minnesotans debate an income tax increase on the highest-income households, they should do so knowing that a large and growing body of economic research makes it clear that such factors as job opportunities, housing costs, climate and being close to family are much more often behind moves from state to state – not changes in income taxes.

Targeted income tax increases under consideration include Governor Dayton’s proposal to add a fourth income tax bracket on high-income Minnesotans and a House of Representatives proposal for a temporary tax surcharge on incomes above $500,000 in order to reverse payment delays to Minnesota’s school districts.[1] These measures provide resources to invest in strong communities with good jobs, safe streets and quality schools. Opponents of such proposals raise concerns that tax increases will cause large numbers of high-income Minnesotans to leave the state and take their tax dollars with them.

Analyses of states that have raised income taxes on high-income residents find these actions did not result in anything close to a dramatic change in the number of high-income households.[2] What follows are some examples.

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