If you live in a state that is having budget problems (Hint: You are living in a state that has budget problems), your legislature is probably trying to figure out how to fix said problems.  There’s lots of ways to do this, but only some of them actually make sense.  One of the politically least popular (especially in Purple to Blue states) is to cut taxes.  And when I say cut taxes, I mean cut, eliminate, end, cease, destroy taxes.  Why do this?

As Arthur Laffer (Yeah, the Laffer Curve guy) and Stephen Moore point out in the Wall Street Journal, people are sensitive to higher taxes {h/t QandO}.

Here’s the problem for states that want to pry more money out of the wallets of rich people. It never works because people, investment capital and businesses are mobile: They can leave tax-unfriendly states and move to tax-friendly states.

And the evidence that we discovered in our new study for the American Legislative Exchange Council, “Rich States, Poor States,” published in March, shows that Americans are more sensitive to high taxes than ever before. The tax differential between low-tax and high-tax states is widening, meaning that a relocation from high-tax California or Ohio, to no-income tax Texas or Tennessee, is all the more financially profitable both in terms of lower tax bills and more job opportunities.

Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts.

Re-read that last paragraph again.  1,100 people a day!  89% more jobs!  32% faster income growth!  Those aren’t insignificant numbers.  Those should be the big neon lights that even politicians can understand.  Who wouldn’t want to be the Speaker of the House, Governor, Senator, whatever who helped bring about that kind of success.  You’d practically be set for life (barring any, ahem, indiscretions).

What’s more is that many of these high tax jurisdictions are trying to make their taxes higher.  It’s almost like they are trying to give their Millionaires (and even Billionaires) away for free.

The Buffalo News: Golisano leaving New York to escape income taxes {h/t AoSHQ}

ALBANY — Ending any speculation about another possible run for governor, Rochester businessman and Sabres owner B. Thomas Golisano said Thursday he will be moving his legal residence to Florida to escape New York state taxes.

Baltimore Sun: Maryland plan to tax millionaires backfires {h/t Dan Mitchell}

But as the state comptroller’s office sifts through this year’s returns, it is finding that the number of Marylanders with more than $1 million in taxable income who filed by the end of April has fallen by one-third, to about 2,000. Taxes collected from those returns as of last month have declined by roughly $100 million.

NY Daily News: Conservative radio host Rush Limbaugh says he’ll leave New York over Gov. Paterson’s tax increases

Rush Limbaugh, the conservative talk show king, announced this week that he’s ditching his New York digs and finding another alternate location for his top-rated show in the wake of Gov. Paterson’s “stupid, punitive, massive tax increases.”

So, message to the rest of the states: Cut your taxes.  Better yet, eliminate your income tax.  I know.  It sounds crazy.  I assure you, you will find other ways to fund government.  Heck, that many incoming Millionaires is sure to spur economic growth.  Economic growth means sales taxes, property taxes, etc, etc, etc.

In a related message, Bill Whittle has a message for the millionaires: Leave Now.  His message is to the nation-at-large, but the notion is the same.  This punish the rich mentality will only be at the detriment of the jurisdiction raising the taxes while benefiting those jurisdictions with low taxes.