States Cracking Down on People Fleeing High Taxes

March 14, 2013

I often note that people move for all sorts of reasons, including weather, housing prices, job and education opportunities, and family. One of those reasons – and one that legislators can do something about immediately – is tax policy. There are people out there who say that no one moves for tax policy and people who say that every move is because of tax policy, but the real answer is in the middle.

States certainly understand that taxes induce people to move, as their auditors are cracking down on the practice. A Bloomberg News article today reports the following:

  • Massachusetts tax authorities are conducting “domicile audits,” seeing whether taxpayers live where they say they live. A Boston litigator has nine cases in litigation and five in the audit process, which he compared to an “exit tax.” Audits in the state have doubled to 45,887 in 2012, totaling $79 million.
  • Minnesota’s Governor has proposed requiring tax returns from those who live in the state just 60 days out of the year, down from 183 days.
  • An asset manager working for Wells Fargo says families are especially considering moving out of New York and California due to high income tax rates.
  • Hedge fund manager John Paulson of New York is considering moving to Puerto Rico for tax reasons.
  • Revenue departments are using IRS databases, E-Z pass records, credit reports, and automated programs to hunt down former residents.

Want to see where people have moved over time? Visit our migration data lookup tool.

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