Thursday, February 12, 2009

Low Taxes Attract $$$$

As I have said before, The End of Prosperity caused me to become an even bigger advocate of low taxes. In today's world, each state in the United States is in effect competing for citizens and business. The more business and people they can attract, the more tax revenue they can bring in and arguably the more prosperous that state will become. People (for the most part) are very mobile. I have heard somewhere (yet I do not have a link so you will have to trust me) that today people move an average of seven times during their adult lives. That is quite a significant change from the generations before us! Besides just people moving around towards low tax areas, businesses are and have been doing this for quite some time now.

Here is just one recent example of business being attracted to a low-tax state: TCF bank is moving its headquarters to South Dakota from Minnesota. From KSTP, "The bank said the move is for regulatory reasons only and that no Minnesota jobs will be lost." Purely regulatory reasons. Hmmm, these regulatory reasons would not have anything to do with the fact South Dakota is much more tax friendly than Minnesota, would they? I'm sure they do.

Whether it is homeowners moving across the border from California to Nevada, businesses headquartering in tax-friendly countries, or even TCF moving their head operations to South Dakota, low taxes will always attract capital.

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