A 2025 landmark study from the University of Chicago confirmed what we’ve known for a long time: State tax levels have little effect on whether and where people move. Wesley Tharpe of the Center on Budget and Policy Priorities explains:

While the researchers found that raising state tax rates likely has some marginal impact on where millionaires choose to live, they estimated any overall effects to be minimal: namely, that “if a state raises its top tax rate by 1 percent, it would ultimately see a 0.14 percent reduction in its millionaire population.” Given that finding, the researchers concluded that “every state has capacity to raise additional revenues from top earners.”

Taxes are not the reason most people move:

Most people and companies are firmly rooted in their communities, and the few who do move most commonly cite jobs, housing, family, and even weather as the reasons for doing so — not taxes. Only about 1.5 percent of people make interstate moves in any given year and, when surveyed, more than two-thirds cite job- and family-related reasons as the primary driver.

Fair tax levels – and the investments they fund – can make states more attractive destinations:

Meanwhile, when states approve higher tax levels on wealthier taxpayers, the resulting substantial revenue gains help enable all residents to have a better quality of life. States invest new revenues into their economies, local communities, and families’ pocketbooks in the form of stronger schools, better infrastructure, targeted tax benefits, and more access to economic opportunity. Those investments put people and communities in those states on a brighter path.

Costs of courting rocket companies

State lawmakers will begin hearing a package of bills on Tuesday that aim to attract aerospace companies to Louisiana. The Times-Picayune | Baton Rouge Advocate’s Stephanie Riegel breaks down what incentives and protections Louisiana is offering to these billion-dollar companies: 

The legislation, filed by House leadership just hours before last week’s deadline for filing new bills, would make companies that build, launch and service rockets in the state eligible for massive sales and property tax breaks, shield them from lawsuits over injury, environmental damage and loss of property values, and exempt them from public records laws.

The bills would force local communities to give up their rights to reign in – or seek damages from – aerospace operations:

“This is a massive leap of faith, and if I were in a community affected by projects like these, I would want to know what the project is and I would want my legal rights protected,” [Invest in Louisiana Executive Director Jan Moller] said. “You have to strike a careful balance between economic development and the needs of communities and constituents that are affected by these projects.” “These bills do not appear to strike that balance,” he added.

Balanced-budget requirements fall short

Most states, unlike the federal government, are required to balance their budgets each year. But these requirements do not deter state lawmakers from pushing multiyear obligations, such as pensions, infrastructure and Medicaid costs, to future years. Governing’s Craig S. Maher explains: 

Payments can be deferred, transfers from other funding sources can be used, assumptions can change and costs can be shifted across periods or outside the general fund. The result is a system where budgets appear balanced at adoption, adjustments occur throughout the year and structural imbalances emerge just beyond the budget window. 

Maher breaks down three elements that are crucial for states’ ability to manage fiscal stress effectively: 

  • Horizon: multiyear budget frameworks that capture the full cost of policy decisions.
  • Measurement: financial metrics that extend beyond cash balance to include structural balance and long-term obligations.
  • Accountability: processes that require midyear transparency, constrain the use of one-time solutions and force corrective action when conditions change.

Federal megabill’s impact on tax refunds

The federal tax and budget megabill, which passed along partisan lines last summer, was supposed to deliver bigger tax refunds to American households. The New York Times surveyed hundreds of people about their refunds, which Andrew Duehren breaks down: 

Among the biggest winners were higher earners and large companies. Some did not gain much of anything. Overall, the average tax refund is $3,521 according to Internal Revenue Service data through March 27, roughly 11 percent higher than it was a year earlier. While that is a sizable increase, it has so far fallen short of some analysts’ expectations of what the tax law would deliver.

Many low-income Americans are not receiving bigger refunds this year and are simultaneously being hit by cuts to food assistance and health care that were included in the new law:

To offset some of the cost of the tax cuts in last year’s law, Republicans cut funding for health care programs, including Medicaid, and food stamps, meaning that the law overall will harm poor Americans more than it helps them. The law also did not include an extension of more generous tax subsidies for Affordable Care Act health insurance plans. 

A recent issue brief from Invest in Louisiana’s Paul Braun explains how the federal megabill will leave behind millions of working families this tax filing season.

Number of the Day

60% – Share of Americans who say the feeling that some corporations don’t pay their fair share bothers them a lot. (Source: Pew Research Center)