I’ve said it before: if rich people really hate taxes so much, why are they all living in Kenilworth and Lake Forest? The University of Illlinois at Urbana-Champaign recently released data on the destinations of their engineering and computer science graduates. Of those graduating in 2012-2013, 34.5% moved to the Chicago area, 14.4% moved to California, 8.5% moved to Texas, 8.3% moved to downstate Illinois, and 7.0% moved to Washington. In other words, only 16.8% chose to move to the low cost low tax destinations or Texas and downstate Illinois, (although Austin isn’t as cheap as it once was, and it’s fair to assume that engineering and computer science graduates from Illinois are likely to end up in Austin than in Waco or Midland.)
The New York Times recently reported on a study that showed the wealthy people are no more likely to leave New York City than non-wealthy people, and the wealth who move tend to move the places with taxes that are about as high: elsewhere in New York State, New Jersey, Connecticut, and California.
People chose where to live because of overall opportunity. New York and San Francisco are incredibly expensive, but they are exciting cities, and they are the best places to pursue certain careers. West Virginia may have a low cost of living, but how many Googles and Facebooks or Morgan Stanleys or JP Morgan Chases are headquartered there?
The things that people want in a place to live are vibrant culture and great opportunities. Nice weather helps, too. I’ve talked to a lot of people who are thinking about leaving Illinois; they are more likely to say “I can’t take another winter like the last one” than “I was okay with 3% taxes, but 5% is far too much.” It’s not that taxes – or the lack thereof – determine the desirability of a location, but rather the opportunities to earn into a high tax bracket and the things you can enjoy in the meantime.
And so, it would be so nice if politicians would stop starving parks and schools on the theory that unless the cut taxes, the rich people will leave. A billionaire’s life in San Francisco or Manhattan is better than it would be in Muncie or Birmingham.