Limits of Taxation (Glaeser edition)

Edward Glaeser says that mobile labor constrains the effectiveness of tax rates. Since successful development relies on attracting skilled workers, it seems that raising state and local taxes deter those very workers from establishing roots.

Typically, every five years, 43 percent of Americans change houses, 18 percent of Americans change counties, and 8.4 percent of Americans change states. Mobility radically constrains the ability of geographically small governments to redistribute.

Hmmm.  Maybe this is why Massachusetts has a flat tax, but it doesn't explain why Texas has no income tax at all.  Anyway, the post is very highly recommended (indeed, I will probably re-read Glaeser's post and follow the links again this year).

Comments

[evander40]

Thanks for pointing out the article. The comments were as interesting as the actual posting.

[Charles]

Dr. Kane,

I found this post very interesting, but I should note that Massachusetts may be an odd example in that it is one of the few rich states in which most of its inhabitants were born in the state. This is not so for California or New York.

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