Money is why people from there come here
“You don’t want to be there, so you’ve come here. Please don’t try to make here like there. If that’s your intention, why not leave here and go back there? If we wanted to live there, we wouldn’t live here. So, if you’d rather be there, go back there. We like it here.”
The sentiment, in various forms, is popular on social media and is probably more appreciated here than it is there. But where’s there? It depends on a person’s point of view. From a business perspective, the data show that “there” are high-tax, high-cost, high-regulation states. And because they’re seeing businesses and individuals voting with their feet to get out of there, it’s affecting the population and economies of the hereand-there states.
Taxes take precedence
Taxes top the list. In its 2023 “Best and Worst States for Business Survey, Chief Executive, a publication directed at CEOS, ranked Texas, Florida and Tennessee at the top for business climates.
The bottom three: Illinois, New York and California. A look at the combined statelocal tax burden, as developed by the Tax Foundation, of the top three states in each Chief Executive category gives a snapshot of a prime motivator for business relocation:
“There” states: h California: 13.5% h New York: 15.9% h · Illinois: 12.9%
“Here” states: h Texas: 8.6% h Florida: 9.1% h Tennessee: 7.6%
California’s problems are not new. The editorial board of the Orange County Register zeroed in on the Golden State’s tarnish almost five years ago. The headline: “The crippling cost of doing business in California.” Among its points: Almost all of California’s business-climate problems are self-inflicted, as lawmakers try to balance conflicting interests. They’ve … imposed the nation’s highest state sales tax, highest income tax, and yet remarkably never seem satisfied with current levels of taxation.”
Another example, from 2021, was a much-publicized recommendation from New Jersey accountants to their clients to depart the Garden State and head to lower-cost destinations, as CNBC reported: “The reason CPAS prod their clients to move comes down to their fiduciary obligation to give good advice, said Ralph Thomas, CEO and executive director at NJCPA. There’s another reason they’re having those conversations: taxes. ‘The tax structure here is one of the highest in the country, if not the highest, and that certainly is a negative issue for individuals and for businesses,’ Thomas said.”
Business departures and population relocations
State-level policy decisions have real-dollar ramifications in both business departures and population relocations. From the Tax Foundation: “The IRS data show that between 2020 and 2021, 26 states experienced a net gain in income tax filers from interstate migration — led by Florida (+128,228), Texas (+82,842), North Carolina (+40,828), Arizona (+32,636) and Tennessee (+30,292) — while 24 states and the District of Columbia experienced a net loss — led by California (-158,220), New York (-142,109) and Illinois (-53,910).” Population loss has caused California, New York and Illinois to lose seats in Congress in recent years.
The attraction for a business to relocate becomes obvious: costly for the losers, financially beneficial for the winners. Eventually, however, higher populations result in more infrastructure, schools and other necessities. This means higher costs, making here, costwise, eventually a little more like there.
The concern for people who live here, wherever that might be, at present is that people coming from there, wherever that is, will bring with them a willingness to see taxes raised and regulations increased, even if not to the degree they existed there. And politics. There’s always politics to consider (the subject of a future column). That’s why people here will often look sideways, with brows slightly furrowed, at people arriving from there and ask, either directly or obliquely, where they stand on hereand-there issues. Often the answer they get is that the newcomers left there to come here to get away from what was happening there, which makes people here feel better.
The trends are clear. More people are coming here from there, and they’re doing it because they’re confident they’ll like here better than there, and it’s unlikely they’ll want to replicate what they fled.
You can bet money on it. They are. George Korda is a political analyst and is president of Korda Communications, a public relations and communications consulting firm.