Keeping a millionaire 

How do you get more millionaires to live in your state? You tax them fairly and equitably. And you use that money to pay for investments that improve quality of life, like education and infrastructure that produce successful businesses. The wealthiest people might not be excited about their tax rates, but research shows that nearly none of them will be bothered enough to leave.

In general, people rarely change their state of residence. Those who do are often low-income, not wealthy elites searching for a better tax deal. People making around $10,000 are by far the most likely income group to move from state to state. Even among that relatively mobile group, only about 4.5 percent switch states in a given year. According to research by Stanford University, millionaires are even less likely to move. They switch states about half as often as low-income people.

Millionaires stay put because they're particularly tied to their communities. They're older, more likely to have kids and own homes, and almost all of them are married (90 percent). They have business and career success that depends on local relationships and knowledge specialized to their region — all things that don't easily translate to new locations.

Of the small percentage of millionaires who do move, there's little evidence that they're motivated by taxes. About half of those who move go to states that have higher or equivalent tax rates. A small sliver of millionaires move, and only a fraction of that sliver is more likely to move to a lower-tax state over a higher-tax state. If you put it all together, it amounts to a net 0.3 percent of the entire population of millionaires (three out of every 1,000) that move to lower-tax states on an annual basis.

And even that low percentage is skewed by Florida. It has become a haven for the rich for reasons beyond taxes, such as location, climate, cruise ports and plentiful established luxury amenities. If you exclude the Sunshine State from the data, "low-tax" states have virtually no edge on other states in terms of attracting affluent residents. It's a wash. Even Texas, which is also coastal and has no income tax, can't compete with Florida for new millionaires. This tells us it isn't about the taxes.

Once people succeed, they tend to stay put. And millionaires become even less likely to move once they retire. Some of the most frequent movers, on the other hand, are young, recent graduates who are unmarried.

And what do these young, college-educated, potential millionaires care about? It isn't tax rates on top incomes, which they don't yet earn. They want what everyone wants. A well-educated population. Thriving communities with arts and good restaurants. They care about the cost of living, quality of life, job markets and the availability of top-notch public schools where they can send their kids when they start families. We get those with public investments, not by slashing taxes.

If we give up hundreds of millions of dollars in tax revenues to make Arkansas's income tax rates more "attractive" to the wealthy, the best-case scenario is that lawmakers will eviscerate their own most important area of influence (the budget) and we will continue to be at the bottom of all the rankings on child well-being. The worst-case scenario? Arkansas becomes Kansas. And we will do all of that in exchange for, at most, a negligible effect on interstate migration.

State lawmakers hold the keys to the budget, which means they influence access to quality education, health care, an unbiased justice system, income mobility, modern roads and bridges, and even safe homes. All of these things matter desperately, and they matter right now. The Arkansas Tax Reform and Relief Task Force is preparing to release in September its recommendations for tax and budget decisions, with the hope of influencing legislators as they prepare to convene the General Assembly in January 2019.

Eleanor Wheeler is a senior policy analyst for Arkansas Advocates for Children and Families.


Sign up for the Daily Update email


Comments (2)

Showing 1-2 of 2

Add a comment

Subscribe to this thread:
Showing 1-2 of 2

Add a comment

More by Ellie Wheeler

  • Unfruitful labor

    When 6-year-olds in Arkansas blow out their birthday candles, they might wish for a new toy or a family pet. Thanks to proposed changes to SNAP benefits, their parents might soon wish for a miracle just to keep food on the table.
    • May 3, 2018
  • Tax truths

    The idea that a tax cut for the wealthy will help everyone, though false, is a stubbornly marketable notion.
    • Nov 9, 2017
  • More »

Readers also liked…

  • Seven

    The controversy over the Ten Commandments monument on the Capitol lawn just won't go away.
    • Feb 9, 2017
  • Banned in 2018

    Here's some arcana reeking of 2017 that I'm banning from consideration, attention, even out-loud mention in 2018. I'm unfriending all this 2017-reminding shit. It's dead to me in 2018.
    • Jan 11, 2018

Latest in Guest Writer

  • 20 years of progress

    An unlikely experiment in grassroots democracy begun 20 years ago in Arkansas today boasts a rich track record of profound improvements to the state's agriculture, civil rights, education, economic, education, election, environmental and health laws.
    • Jun 7, 2018
  • Gun safety

    The Arkansas School Safety Commission has been discussing important steps that can be taken to keep students safe. It is considering factors like mental health, prevention programs and school infrastructure as part of a comprehensive plan. And while school security can help mitigate the crises we currently face, volunteers at Moms Demand Action for Gun Sense in America believe the key to preventing gun violence in our schools is to keep guns out of the hands of people with dangerous histories.
    • May 31, 2018
  • Support the Times, get free stuff

    If you are a regular reader of the Arkansas Times online, you will have noticed a change. The Times, like most other publications, has adopted a strategy to help us stay in business: We've extended our paywall. We now limit free views of articles and blog posts in the Times to three a month.
    • May 10, 2018
  • More »

Most Recent Comments

  • Re: Him, again

    • That's why it is better to bag babes at the bigger libraries. You get a…

    • on June 20, 2018
  • Re: Legislative boodlers

    • The U6 unemployment rate is still at 8%, partly because they can get benefits and…

    • on June 19, 2018
  • Re: Him, again

    • Regardless of my success or lack of it, I've been way ahead of Trump all…

    • on June 19, 2018

© 2018 Arkansas Times | 201 East Markham, Suite 200, Little Rock, AR 72201
Powered by Foundation