Matthew Yglesias writes

"I actually think this kind of question is better investigating initially through theory. If you’re thinking about Maryland, you can tell a very straightforward story about why lower taxes might lead to job growth."

and

"The tax competition issue is real, but limited, and the further you get from New Jersey the less real it becomes."

I throw a cow.

My comment.


You assume that their must be quite a bit to the argument about taxes and migration, because you hear it so often. I note that you also hear about the Laffer curve and how the US can't afford the ACA. Never assume that a common claim must be supported by significant evidence from anywhere.

You specifically write "The tax competition issue is real, but limited, and the further you get from New Jersey the less real it becomes." "Real" in this context must be some sort of quantitative qualifier* If so you contest the work of Cristobal Young and Charles Varner forthcoming in June 2011 in The National Tax Journal. (warning pdf)

They write

The New Jersey millionaire tax experiment offers a potent testing ground, given the magnitude of the policy change and the relative ease of relocating to a different state tax regime without leaving the New York or Philadelphia metropolitan areas. Using a difference-in-difference estimator, we find minimal effect of the new tax on the migration of millionaires.

What is less real than "minimal" ?

via Balloon Juice

I am not upset because you missed the article especially since it isn't, technically published yet. I wouldn't be surprised if other researchers vehemently contest the conclusions of Young and Varner. In fact, I have no doubt provided one counts Koch financed hacks as researchers.

I am distressed, because you wrote " I actually think this kind of question is better investigating initially through theory." I don't see how a question about the real world could be investigater through theory. I thought the idea that we could learn about the word through theory without evidence was proven to be nonsense in the 17th century. I think you mean to write "we should think about this issue before deciding which data to look at" but the theoretical work is the pre-investigation work, not another kind of investigation.

I am an economist and I know many economists who think that theory without evidence constitutes investigation. I frequently tell them otherwise.

I think that the fact that you have decided based on "theory" that this is a relatively real (evidently not "minimal") issue for New Jersey illustrates, and not for the first time, the sterility of theory without evidence.

I'm fairly sure you consider this post a criticism of those who claim that taxes have a large effect on migration. In passing you mention that their claims work for some places, notably New Jersey. I think you fell into a testable claim which is contradicted by forthcoming empirical research, because you were aiming for a moderate tone.