Costly Tax Cuts Won’t Keep People in Maine

Findings explode the common myth “if you tax them, they will flee”
Augusta, Maine (Thursday, Augusta 4, 2011)–  Contrary to the arguments of supporters, the income tax cuts proposed by Governor Paul LePage and recently enacted by the Legislature will not affect residents’ decisions to stay in or leave Maine, according to a new report from the non-partisan Center on Budget and Policy Priorities (CBPP). 

The CBPP findings demonstrate that Americans move from state to state for a variety of reasons, but tax levels rarely factor into such decisions. 

“Time and again during the recent debate, supporters of the proposed tax cuts claimed that Maine’s tax rates encourage people, especially the wealthy, to move to states with lower income and estate tax rates,” Christopher St. John, Executive Director of the Maine Center for Economic Policy (MECEP) said today.  “This new report provides convincing evidence that the argument ‘if you tax them, they will flee’ is simply false. “The truth is that these recent tax cuts will cost the state resources Maine needs to create the highly-educated workforce, quality infrastructure, and safe communities that form the building blocks of a strong economy.”

CBPP is a nonprofit, nonpartisan organization that conducts research and analysis on a range of government policies.  Its new report cites numerous examples of research debunking the migration myth and, through case studies, shows how misinformation about the impact of taxes on migration can influence policymakers and the media.  In April 2010, Robert Tannenwald, co-author of the report and senior fellow at CBPP, was also the first speaker in MECEP’s Shepard Lee Lecture series. 

St. John added that the CBPP report mirrors the findings of The Impact of Taxes on Migration in New England, a recent study by a University of Massachusetts-Amherst Political Economy Research Institute (PERI) researcher, Jeffrey Thompson.  Thompson found that in Maine, the reasons people move to other states are job-related (36%), family-related (22%), housing-related (28%), quality of life-related (8%) and all other (7%).

“As Maine struggles to recover from the Great Recession, grow our economy and create good jobs, cutting taxes isn’t the miracle cure some claim,” St. John said.  “Maine policymakers must make good choices based on proven solutions.  Failing to support education, improved communications infrastructure, good roads and bridges and other critical investments threatens our fragile recovery and our long term prosperity.”

To view the CBPP’s full report, click here.