You've heard the argument before. A state proposes raising taxes to fund schools and pave roads; then gets cold feet fearing the higher rates will chase away its highest-earning residents.
Now a new study by researchers at Stanford University and the Treasury Department suggests those arguments may be a bluff by wealthy residents who don't want to pay--the fiscal equivalent of your Facebook friends claiming they'll "move to Canada" if their chosen candidate doesn't win the White House.
The study, published in the June edition of American Sociological Review, examined 13 years of tax returns by Americans earning more than $1 million. It's not that no millionaire has ever moved to Florida to avoid hefty tax levies in New York or California. (In fact, New Jersey recently lost one taxpayer -- hedge fund billionaire David Tepper -- who was so rich, his departure to Florida risked hurting the state's budget all by itself.) But such moves are relatively rare, the researchers found -- and typically don't affect what the researchers call the "tax-base," that is, the pool of millionaires available to pay into the state's coffers.
Overall, however, the study put the annual state-to-state migration rate for millionaires at 2.4%, below the 2.9% migration rate for the population at large.
What gives? The researchers argue the rich are essentially pillars of their communities (or local grandees, depending on your perspective.) Family responsibilities, such as marriage and children, and local business ownership were both big factors holding them in place.