Last updated on 2013.02.19
Gerard Depardieu and other fat-cats may have the luxury of moving to grandstand over taxes, but most of us are tied to our homes by more than the local tax structure. Tax rates just don't drive migration as much as conservative mythologists want you to believe.
For more evidence to that effect, we turn to economist Robert Tannenwald:
A star like Mr. Depardieu “can go to Paris whenever he wants,” Mr. Shure noted. Professor Tannenwald agreed. “People who are very rich, who are retired or who aren’t tied to a particular location, do change their residency at a high rate based on tax differentials.”
But there aren’t many people like that. “Tax-induced flight is rare,” Professor Tannenwald said. “The rate of interstate migration is low to begin with. To the extent that people leave a state, or shun a potential destination, they do so primarily for other reasons, such as to find more affordable housing, better job prospects or a more attractive climate” [James B. Stewart, "The Myth of the Rich Who Flee from Taxes," New York Times, 2013.02.15].
Tannenwald and associates' 2011 paper debunks the anecdotes and flawed studies of pro-business/anti-tax lobbyists and shows that what little migration may coincide with changes in the tax code is outweighed by the increased revenue states will see by raising taxes to make their Depardieux pay their fair share.
The Census Bureau has data on state-to-state migration flows. I invite you to play with those numbers all day long at work. Let's see who moved where in the states in South Dakota's neighborhood in 2011:
| Residence in 2011: | Iowa | Minnesota | Montana | Nebraska | North Dakota | South Dakota | Wyoming |
| Population | 3,027,718 | 5,277,329 | 987,076 | 1,817,126 | 675,161 | 814,175 | 561,389 |
| Here more than 1 yr | 2,573,313 | 4,505,462 | 828,254 | 1,505,191 | 559,906 | 688,436 | 462,808 |
| Diff house 1 yr ago | 370,554 | 646,176 | 122,210 | 253,269 | 79,837 | 94,655 | 66,648 |
| Diff state 1 yr ago | 70,405 | 101,029 | 33,553 | 52,070 | 32,510 | 27,506 | 30,651 |
| Iowa | 541 | 47 | 3,085 | -396 | 1,930 | 202 | |
| Minnesota | -541 | -488 | -481 | 4,670 | 37 | 133 | |
| Montana | -47 | 488 | -320 | 867 | 5 | -1,308 | |
| Nebraska | -3,085 | 481 | 320 | -74 | -1,304 | 819 | |
| North Dakota | 396 | -4,670 | -867 | 74 | 767 | 98 | |
| South Dakota | -1,930 | -37 | -5 | 1,304 | -767 | -267 | |
| Wyoming | -202 | -133 | 1308 | -819 | -98 | 267 |
These data show that in 2011, South Dakota had net in-migration from every adjoining state but Nebraska, which managed to lure away 1,304 people who lived here in 2010. But check out Minnesota, the supposed symbol of all that is wrong with taxation compared to South Dakota. If regular Minnesotans can't stand their income tax and other government oppression, they aren't escaping to South Dakota: the number of Minnesotans moving to South Dakota exceeded the number of South Dakotans moving to Minnesota by just 37.
Perhaps more tellingly, let's look at net migration rates for South Dakota and our neighbors:
| state | net migration | % of pop |
| Iowa | -4111 | -0.14% |
| Minnesota | -2224 | -0.04% |
| Montana | 2349 | 0.24% |
| Nebraska | -739 | -0.04% |
| North Dakota | 5947 | 0.88% |
| South Dakota | -1877 | -0.23% |
| Wyoming | -1340 | -0.24% |
North Dakota and Montana drew more folks from other states than they lost. South Dakota and Minnesota both had net out-migration, but South Dakota's loss as a percentage of population was more than five times that of Minnesota. These percentages are all small, but if taxes have any effect on migration, they appear to be outweighed in our local calculus by Vikings and Twins games and well-funded public goods.
Update 2013.02.19 07:05 MST: Cross-reference David Lias's April 2011 discussion of how our tax structure and budget austerity may attract retirees who aren't as worried about public goods, leaving young workers and families in the lurch.