President Trump congratulated lawmakers in New Jersey for rejecting an effort by Democratic Gov. Phil Murphy to raise taxes on millionaires.
“Congratulations to legislators in New Jersey for not passing taxes that would have driven large numbers of high end taxpayers out of the state,” Trump tweeted Monday. “Many were planning to leave, & will now be staying. New York & others should start changing their thought process on taxes, fast!”
Gov. Murphy, a former Goldman Sachs partner who vowed to continue pushing for higher taxes on wealthy residents of his state, charged that Trump “is fighting for millionaires like himself” rather than the middle class.
Later in the day, The president expanded the scope of his tweets to include his home state of New York, which he accused of harassing his businesses, his family and his now defunct foundation, which is currently under investigation.
“It is very hard and expensive to live in New York,” Trump wrote, complaining that the state’s attorney general is “harassing all of my New York businesses in search of anything at all they can find to make me look as bad as possible. So, on top of ridiculously high taxes, my children and companies are spending a fortune on lawyers. No wonder people and businesses are fleeing New York in record numbers!”
Is tax flight a real issue? While the idea that high taxes spur migration toward lower-tax locales is something of an article of faith among anti-tax activists, and there have been some high-profile cases that seem to fit the bill – billionaire David Tepper leaving New Jersey for Florida serves as one notable example – the research on the issue is decidedly mixed.
“Some academic research shows that high taxes are chasing the rich to lower-tax states, and anecdotes of tax-fleeing billionaires abound,” said CNBC’s Robert Frank in 2016, soon after Tepper announced his move South. “But other studies say there is little evidence showing that the rich move solely for tax purposes. Millionaires and billionaires who move from the high-tax states in the Northeast to Florida, for instance, may be drawn by the sunshine, lifestyle and retirement culture, in addition to lower taxes.”
More recently, conservative economists and major Trump supporters Arthur Laffer and Stephen Moore claimed that more than 800,000 people would be fleeing California and New York due to high taxes and the reduction of the state and local income tax deduction. Stanford economist Cristobal Young, who co-wrote one of the leading papers on tax flight, called their claim “pure nonsense.”