We want Connecticut to be a place where everyone is welcome, regardless of who they are or where they come from. A place where every resident can thrive and opportunity is just around the corner.
In many ways, our state has done much to fulfill these aspirations. Connecticut has a proud abolitionist tradition and has made significant progress in civil rights. We were among the first to recognize same-sex marriage, and much of the culture war gender nonsense that conservatives push in other places has been outright rejected here.
Of all the groups, identities, ethnicities, and cultures that live in Connecticut, state leaders have long paid special attention to one group of people they deemed endangered and in need of special care: the wealthy. The very rich, it is said, are incredibly sensitive to their environment and have strong reactions to anything that might disturb their feelings, culture, or money. As a result, state policy has long been designed to provide the utmost comfort and protection to this at-risk group.
For many years, we have heard that the wealthy scare very easily. They get upset when someone criticizes them, often responding with angry op-eds about their own importance. They react aggressively when someone tries to build housing in what they consider their territory, releasing angry lawyers to preserve the character of their towns. Finally, many say they are incredibly sensitive to marginal tax rates and flee in panic to other states the moment someone raises their taxes.
I am afraid that both the op-ed and the aggressive lawyering against new housing are entirely true (I am sure there will be a very offended article somewhere following this column); the wealthy are indeed quite sensitive. However, the idea of fleeing in panic due to taxation is much less clear, and all available evidence seems to consistently point out that millionaire migration is largely a myth.
A good start is to look at the data. Using IRS figures, Connecticut Voices for Children analyzed migration by income level in our state right before the pandemic. What they found is that our state was losing population in all income groups making under $200,000 a year – but gained population among those making more than $200,000. Three-quarters of those who left the state made less than $75,000. The idea that the wealthy have been panicking and leaving in droves due to our income tax is largely fiction.
A more recent report from Thomas Cooke at the A Better CT Institute offers an in-depth review of the academic literature around the migratory habits of the wealthy. Cooke points out that Connecticut has been incredibly successful in attracting millionaires; our one-percenters are among the richest in the nation, and we have one of the highest shares of actual millionaires of any state in the country.
Academic studies have found that millionaires very rarely move for tax purposes. When they do, they are much more likely to move to states with high residential land prices – meaning that cost of living is not what drives migration at all. Business owners are also less likely to move, as their well-being is tied to where they live; they are embedded in their communities, not running away from them. The only state with no income tax that seems somewhat attractive to millionaires in the data is Florida. Seeing that this attraction does not apply to other states without income taxes like New Hampshire, Tennessee, or Texas, we can safely declare that weather, more than taxes, plays a leading role.
It appears that the constant fear that the wealthy might leave if taxed an extra percentage point on their income over a million dollars is a bit misguided. We can and should consider taxing those who make the most in our state and use that revenue to ensure that opportunity and prosperity for all are really accessible for all of us, not just a well-connected few.
The wealthy might be louder and have many lawyers, but they do not need special protection. We can tax them. They will be fine.