As the legislature toils to come to consensus on this year’s budget, we urge them to make decisions grounded in facts, research, and long-term planning. Questions about how to build on state strengths and how to position ourselves for long-term success should dominate the discussion and drive tax and spending decisions.
Connecticut has long prided itself for its high quality of life, with tightly-knit communities, an enviable location and natural beauty, and a highly educated workforce. Innovation happened here thanks to our strong labor force and outstanding public education system. Companies moved here because the state was willing to invest in the infrastructure and services necessary to connect them to the world. These efforts were the key foundations to our shared prosperity. Building upon those foundations should be a priority.
But the very idea of investing in the future is limited today because of a pervasive but misplaced fear that progressive tax policies might drive individuals and companies out of state. We call that fear the “myth of millionaire migration.” Like many unfounded fears, that myth began with bad facts.
Back in 2015, an op-ed compared the average income of the people leaving Connecticut annually from 1993-2010 ($45,000) with the amount in 2012 and 2013 ($147,000). The author concluded that this dramatic – if implausible – increase was a result of the 2011 income tax hikes. The actual explanation, however, was that the IRS changed its measurement methodology fundamentally beginning with the 2011-2012 data, stating explicitly that “due to the methodological changes between the two, the data are not directly comparable.” The damage done by the misrepresentation of that data has been extensive, fueling a false narrative that Connecticut is facing a mass exodus of its wealthiest residents.