The State of Connecticut will provide $31 million in state funds to Bass Pro Shops to construct a new retail store in Bridgeport. The move is being called “economic development” but most recognize it by its real name: corporate welfare. Gov. Dan Malloy often notes that in a perfect world, such assistance to businesses would be unnecessary but since other states do it, the State is forced to compete.
Gov. Dan Malloy often notes that in a perfect world, such assistance to businesses would be unnecessary but since other states do it, the state is forced to compete.
One can’t help but wonder why the Governor’s spirit of competition doesn’t extend to other issues. For example, policymakers in North Carolina decided this year that the state’s tax code posed a significant disincentive to business growth in the Tar Heel State, pointing to a state business tax climate ranked 44th in the nation last year.
Lawmakers passed a sweeping overhaul of the tax code, reducing personal income tax rates, business tax rates, eliminating the estate tax, and other measures. The Tax Foundation estimated that with the changes, North Carolina’s business tax climate would rank 17th in the nation. Connecticut’s business tax climate was ranked 40th in the same study.
But the Governor is right that other states are competing and it isn’t just for jobs. In August, the Tax Foundation highlighted the migration of personal income among states between 2000 and 2010. The data indicates that $4.5 billion in personal income left Connecticut during that time period.
According to a new web tool, How Money Walks, it is apparent that Connecticut’s loss was mostly Florida’s gain, with $4.83 billion moving south between 1992-2010. The tool also offers an interesting look at county-level data. Among several interesting points, it shows that nearly $1 billion moved from Fairfield County to just three counties in Florida: Palm Beach, Lee, and Collier counties.
Strikingly, half the counties in Connecticut actually grew during that time (Litchfield, Middlesex, Tolland, and Windham), speaking to the magnitude of the migration from Fairfield, New Haven, and Hartford counties.
As if that weren’t enough, there is also a new web tool to show how much income and wealth can be gained or lost by moving to a new state. WhyNotMove.org uses marital status, birthdate, current annual earnings, retirement and other savings, and other data to estimate the discretionary income gain or loss associated moving to another state (and holding other factors equal).
For example, a married 40-year-old couple making Connecticut’s median household income of $70,000 (Connecticut’s median household income according to the Census Bureau), would save $1,282 per year by earning it in Florida rather than Connecticut. However, the household remains better off in Connecticut than in New York or Massachusetts. A move to the Empire State would cost $645 in discretionary income while a switch to the Bay State would cost $388.
The tool also offers the ability to calculate based on property and other taxes if you enter information about your home value, monthly mortgage payment, and years left on your mortgage.
Though imperfect tools in many ways (they are estimates that require several big assumptions), these resources highlight the competition for people and jobs between the states. Subsidies for Bass Pro Shops or other employers represent a strategy for competing, but compared to the larger changes pursued in other states, Connecticut needs to do more to keep up.
Heath W. Fahle is the Policy Director of the Yankee Institute for Public Policy and a former Executive Director of the Connecticut Republican Party. Contact Heath about this article by visiting www.heathwfahle.com