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Actions Speak Louder Than Words

By: Fergus Hodgson - @FergHodgson - Aug 21, 2013, 3:46 pm

If you have ever expressed frustration with a particular government policy, no doubt you will have heard the refrain, “Why don’t you move?”

Not that people have an obligation to do so, but many do move, towards economic freedom that is — as evidence continues to affirm. One recent set of data to add to the list comes from the Tax Foundation’s Monday Map and the pattern towards lower or no income tax states such as Florida and Texas.

Tax Foundation Map

When a person moves to a new state, [the Tax Foundation notes], their income is added to the total of all other incomes in that state. This positively affects the total taxable income in his or her new state, and negatively affects the income in the state he or she left.

In this light, constituents are customers, seeking a better deal and withholding their tax dollars where they can. These revealed preferences also tell us more than what voting can, because there is skin in the game. With migration, people face substantial trade-offs, both in terms of transactions costs and immediate policy changes. The same cannot be said for voting (a stated preference).

As I noted in an earlier Fiscal Insight newsletter on the topic of geographical arbitrage and competitive governance, there is a test on the horizon for how much freedom will bring prosperity and attract immigrants and investment. These “Startup Cities” — new jurisdictions with freedom for innovation — remain a key topic of interest here at the PanAmerican Post, and we’ll have more on those very soon.

Fergus Hodgson Fergus Hodgson

Fergus Hodgson was the founding editor in chief of the PanAm Post, up until January 2016, and he now studies finance at Tulane University in Louisiana and Francisco Marroquín University in Guatemala. Originally from New Zealand, he has also lived in Argentina, Canada, Colombia, Ecuador, Ireland, and the United States. Follow @FergHodgson and his Facebook page.