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Tax rates have a negligible effect on people's decision to move out of state

9:30 AM EST, December 29, 2012

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Commentator Jim Pettit recently called on the IRS to continue to publish data on people's migration between states as revealed by tax their returns ("Tax data Md. needs — and almost lost," Dec. 19).

Government agencies actually produce a wealth of useful statistical data, and we are certain to lose some of it as we continue to cut budgets to reduce the federal deficit.

The tax data on migration is useful and interesting, and I would be happy to see the IRS continue to produce and publish it. One should know, however, that the data does not suggest tax rates are an important motivator for people to move from Maryland to Virginia.

The number of Marylanders who move to Virginia is small and it does not change much from year to year — it's about five- or six-tenths of 1 percent each year.

At the same time, nearly as many Virginians move to Maryland as vice versa each year. And the average income of the "movers" is well below the average income of "stayers." Maryland's wealthiest people aren't fleeing the state in some kind of mass exodus.

Mr. Pettit points out that the IRS data does not tell us why people move. But economic and demographic research on migration shows that comparative tax rates are a negligible factor in people's decision to relocate.

Employment changes, family considerations, and life changes, such as graduations, marriages, divorces and retirement, are all much more important factors when people decide to move.

Neil L. Bergsman, Baltimore

The writer is director of the Maryland Budget & Tax Policy Institute.

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