Travis H. Brown answers your questions

By How Money Walks | March 22, 2013

Travis H. Brown answers the question: What is AGI? 

AGI refers to “adjusted gross income.” This is a broad measure of income and includes wages, business income, pensions, dividends, interest, capital gains and other forms of income. Adjusted gross income is the starting point to calculating taxable income for most Americans. AGI lets us compare the income migration between the states, and these objective numbers allow us to track net gain or net loss over a substantial period of time.

Do state income taxes affect where people decide to live?

In a word: yes. Numerous empirical, peer-reviewed studies (from groups including the Cato Institute, the Tax Foundation, and the Heritage Foundation) show a clear correlation between lower marginal tax rates and higher rates of economic growth. When we look further, we see that the mode of taxation also matters. Corporate income tax, at the national and international levels, is the most damaging. Personal income tax is the second most harmful. This makes sense, because these taxes directly impact businesses’ and families’ spending power.

Where did all this taxpayer mobility data in How Money Walks come from?

The data is the summation of more than 134 million taxpayer records from the Internal Revenue Service and combined with geographic data from the U.S. Census Bureau, collected over the period of time between 1995 and 2010. To see how taxpayer mobility changes over time, you can use the How Money Walks app to view net gains and net losses through a time series.

Where are Californians moving?

Californians are moving a number of places, nearly all of which feature a low- or no-tax environment. They are going to Texas, to Arizona, to Nevada, and to Washington State, among other places.

It’s also important to point out that our data also shows the patterns within a region. So, we see suburbanization happening (for example, people who move from Los Angeles into San Bernardino or Riverside). This is for a variety of reasons, including housing prices and school options. We’re not saying taxes are the only factor – but what we are saying is that it would be foolish to act as if tax issues can be ignored, as they play a very significant role.

Travis H. Brown discusses the plight of Maryland 

Maryland has always felt fairly comfortable raising taxes on higher income earners. Many counties even impose a tax of 2 or 3 percent at the local level. You see a lot of push outward from a state like Maryland, as people move to places like Virginia, North and South Carolina, and certainly Florida. What you won’t see much of is people moving back – once former Marylanders reside in states with low or no income tax, they tend to stay and continue to enjoy those economic advantages. We need to make sure we’re all competing with what works and changing our policies based on what has not worked.

The How Money Walks app puts all the data from the book in the palm of your hand.

The How Money Walks app is available from Google Play (for your Android) and the Apple store (for your iPhone). Right from the palm of your hand, you can look up city, county, or state results. You can see, graphically, how taxpayers move – in both a wealth mode and a population mode.

How you can use the How Money Walks app to disarm opponents

With this free app, an ordinary citizen at a town-hall forum can become an extraordinary taxpayer advocate. Anyone in the fight for economic growth, anyone making compelling tax-policy arguments will be helped by this data-driven app.

How do you track people who move, but make less income in the new state?

This can be evaluated in several ways, including with data from the Bureau of Labor Statistics. What we are tracking, however, is the data – the data that exists regarding your adjusted gross income (AGI). If you earn less in your new state, you report less; that will be represented as a decline on a net basis. How Money Walks just tracks the data in order to make past performance clear and available for the past fifteen years – it’s up to individuals to make the judgment call as to what that means for their county, their industry, and their career.

How much taxable income has California lost over the last 15 years?

Cumulatively over the last 15 years, California has lost nearly $32 billion. Together, the nine highest tax states lost $107.4 billion, while the nine no-income tax states gained $146.2 billion.

How Travis H. Brown responds to critics of his book, How Money Walks

Opponents often come right out and say there’s no correlation between tax rates and economic growth. Not only is that patently false, it’s also very irresponsible. Sometimes opponents try to minimize the percentage of people actually involved with taxpayer mobility – but as you can see from the data in How Money Walks, the numbers are substantial. Plus, for every person who has moved for tax reasons and speaks about it, there are numerous others who have done the same in a quieter fashion.

In any given year there is a lot of variation in the data because tax rates are only one of the factors driving migration. However, when looking at the data over the last 15 years and looking across all 50 states, the nine highest tax states lost collectively $107.4 billion in AGI, while the nine no-income tax states gained $146.2 billion. This represents a difference of over $250 billion dollars and is strong evidence of taxpayers leaving high tax states and moving into low tax states.