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Lewis Shrugs

On Tuesday, I asked (again) ‘Did the Vikings lose because of Minnesota’s high taxes (revisited)?‘ Briefly put, research suggests that states with high income taxes – like Minnesota – have trouble attracting top sporting talent in sufficient numbers and that results of the state’s franchises suffer as a consequence.

This is part of a wider debate about the effect of high tax rates on the state’s economy. Often we talk about Minnesotans leaving because of high taxes. But just as important are those who don’t come in the first place. This week, the Star Tribune offered an example.

In an article about top Twins prospect Royce Lewis, the Strib writes:

Speaking of moving around, Lewis has relocated from California to the Dallas suburb of Frisco. He’s close to Prosper, Texas, where Twins Hall of Famer Torii Hunter lives; he had Lewis over for five days after the 2018 season to work out and talk about baseball and life.

And Texas has no state income tax.

“I didn’t really know about taxes,” said Lewis, whose signing bonus was $6.725 million. “Then my W-2 came in from the contract I signed, and I was like, ‘Yeah, I need to go.’ ”

This should not be a surprise. The large and growing body of evidence on the effects of taxation on migration was summarized recently by economists Henrik Kleven, Camille Landais, Mathilde Muñoz, and Stefanie Stantcheva. They found that, “There is growing evidence that taxes can affect the geographic location of people both within and across countries. This migration channel creates another efficiency cost of taxation that policymakers need to contend with when setting tax policy.”

Taxes are not the only reason people move, but they are a factor. Royce Lewis will be paying his in Texas.

John Phelan is an economist at the Center of the American Experiment. 

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