Movin' on Out

Conservatives have long argued that liberal policies, however well-intended they may be, are often counterproductive and/or destructive. One bit of evidence that can be adduced in this regard is the out-migration of residents from three states - New York, Illinois, and California - that have been dominated by liberal Democrats for decades.

For many residents, apparently, the tax and spend policies of their liberal state governments have made their states just too burdensome to live in:

The exodus of residents was most pronounced in New York, which saw about 190,000 people leave the state between July 1, 2016 and July 1, 2017, according to U.S. Census Bureau data released last week.

New York’s domestic out-migration during that time period was about the same as it was in the same time 2015 and 2016. Since 2010, the state’s outflow of just over 1 million residents has exceeded that of every other state, both in absolute terms and as a share of population, according to the free-market think tank Empire Center.

Long-beset by twin budget and pension crises and the erosion of its tax base, Illinois lost so many residents that it dropped from the fifth to the sixth-most populous state in 2017, losing its previous spot to Pennsylvania.

Just under 115,000 Illinois residents decamped for other states between July 2016 and July 2017. Since 2010, the Land of Lincoln has lost about 650,000 residents to other states on net, equal to the combined population of the state’s four largest cities other than Chicago, according to the Illinois Policy Institute.

Illinois’ domestic out-migration problem has become a nightmare for lawmakers, who must find a way to solve the worst pension crisis in the nation as the state’s tax base shrinks year after year. Illinois’ Democratic-dominated legislature has tried to ameliorate the situation with tax hikes, causing even more people to leave and throwing the state into a demographic spiral.

“As people leave the state, they take their pocketbooks with them. That means there are fewer Illinoisans to pay the bills,” Orphe Divounguy, chief economist with the Illinois Policy Institute, told the Chicago Tribune. “It’s worrying because if you have a declining population and a declining labor force, you will for sure have a further slowdown of economic activity going into 2018.”

California was the third deep blue state to experience significant domestic out-migration between July 2016 and July 2017, and it couldn’t blame the outflow on retirees searching for a more agreeable climate. About 138,000 residents left the state during that time period, second only to New York.

In the past the high tax regimens in these states were tolerable because state and local taxes (SALT) could be deducted on one's federal income tax returns, but the newly-enacted tax reform bill caps SALT deductions at $10,000, a limit which will hit taxpayers in those states harder than just about any other state:

According to the Tax Foundation, New York, Illinois and California had three of the five highest tax rates expressed as a percentage of per capita income, with residents paying 12.7 percent, 11 percent and 11 percent, respectively.

An irony in this is that these states (Illinois being an exception) are on balance slightly increasing their population, but the increase is coming from births and international migrants. In other words, the people who are leaving are generally taxpayers who are being replaced by people who will contribute less in taxes and require more in benefits.

These states are about to pay a steep price for their fiscal irresponsibility. As Margaret Thatcher once said about socialism, pretty soon you run out of other people's money. When that happens the state's leaders will probably raise taxes again triggering another round of taxpayer flight, or they'll go to the federal government - i.e. the rest of us - demanding a bail-out to rescue them from their profligacy and the economic death spiral they'll find themselves in.