'Leftugees': Red states must defend themselves from the blue-state exodus
Movement within the country has had an underlying theme to it lately: High-tax and expensive cost-of-living states are seeing an exodus. It is partly catalyzed by the Tax Cuts and Jobs Act, which aimed its sights at tax-heavy blue states by imposing a crushing cap on state and local tax deductions and mortgage interest above $750,000 (a threshold high enough to really only hurt high earners with massive homes).
These are two deductions that Democrat-controlled states often relied on to defray the harm of their bloated tax burdens on their middle- and upper-class inhabitants. Even Alexandria Ocasio-Cortez’s grandmother has relocated from New York to Florida on account of taxes.
Just as a refugee resettles to escape hardship, a leftugee does so to flee the punitive financial environment created in their state by big government.
The relocation to lower-tax states has had some high-profile participants, including billionaires, hedge fund titans Carl Icahn and Paul Tudor Jones, Interactive Brokers founder Thomas Peterffy, and Carolina Panthers owner David Tepper. New Jersey is so reliant on state income tax revenue from the top 1% of earners that it faced potential budgeting issues when just one billionaire (Tepper) up and left.
The leftugee influx and the cause behind it isn’t exclusive to just individuals. Companies are moving en masse too.
The migration trend for businessesparallels that of the taxpayer, with many of the same blue states chasing out commerce with broadly unattractive financial and regulatory environments. None has been more effective at ostracizing business via onerous taxes and general contempt for those who are productive than California.
From 2008 to 2016, California lost approximately 13,000 companiesthrough relocation or “disinvestment events” that were public record. The number is actually likely much greater, as typically five or so events fail to become public knowledge for everyone that does. This movement saw the departure of $77 billion in capital funds and roughly 275,000 jobs. In 2018 and 2019, 660 companies left the Golden State, translating to about 6.4 companies per week. Major corporations such as Charles Schwab and McKesson Corp. have continued the trend, and Texas has been the No. 1-destination for California leftugee business for the last 12 years.
The impetus behind this freedom-seeking, cost-reducing resettlement is abundantly clear to all not blinded by ideological possession. Expanding populations in conservative states should help reinforce conservative mindsets, right?
Unfortunately, it doesn’t, and thus the leftugee paradox: fleeing the policies of your home state and yet often voting to import the same legislation that prompted you to leave. This is a voting characteristic that’s found in much of U.S. foreign immigration as well.
You can tell how people really feel about a place by how they vote with their feet. Conservative legislators, however, need to get creative and begin instituting measures to fortify the laws and freedom-prioritizing spirit of their states from migration patterns that threaten to erode it. Some have already begun.
Back in 1992, Colorado enacted the TABOR Amendment to help limit government expansion through budget constraints. It caps the amount of revenue in Colorado’s budget to the lesser of the prior year’s fiscal revenue limit (accounting for inflation and population growth) or that year’s revenue. Voter approval is required for tax increases, something that Colorado’s now-liberal legislature is already actively trying to repeal in 2020. Models like this or Texas’s recent enshrinement of a constitutional ban on a statewide income tax serve as fiscal-policy paradigms for conservative state governments to protect their current citizenry.
It’s also encouraging to see conservatives begin to adopt the same rulebook and win-at-all-costs mentality of their adversaries by leveraging the sanctuary city concept to their advantage.
The first Second Amendment sanctuary county, Effingham County, Illinois, was implemented in early 2018. Since then, the counties have rapidly proliferated. Nineteen states encompassing more than 240 counties have now enacted Second Amendment sanctuaries. Recently, Virginian counties have rapidly adopted the protection after newfound Democratic control of the state legislature almost immediately resulted in anti-gun activity. Additionally, four states (Alaska, Idaho, Wyoming, and Kansas) have implemented statewide decrees stating there will be no compliance with unconstitutional federal gun laws.
The sanctuary city/county defense tactic should be repeated to include protections against taxation and regulatory expansion in conservative states.
Conservatives tend to have strong philosophical and moral underpinnings to their statutes that usually center around core tenets of individualism, freedom, and that central bodies are less adept at managing your life than you are. They also, unfortunately, tend to be quite feckless in their safeguarding of these values and seem to have a predisposition of naively standing pat in the face of unabating migration and cultural trends that can be spotted a mile away and prepared for accordingly. Republicans would be wise to aggressively, proactively, and innovatively solidify their tax, firearm, regulatory, and migration policies so they can defend the standard of living and societies they’ve worked hard to cultivate and maintain in the face of such flattering movement into their states.
Jason Orestes (@JasonOrestes) is a former Wall Street financial analyst who focuses on contemporary political developments affecting economics, markets, and culture. His financial commentary can be found on Jim Cramer's TheStreet, where he is a regular contributor, as well as Seeking Alpha.
- Justin Thyme-Two cents worth of opinion. A pestilence is what liberals are. Just like locusts, they destroy the crops and fields where they reside. Then migrate to other fields and crops to destroy them as well.
If you have property to sell (say 5+ acres). Have a reasonable price for life long locals. And a million $$ price tag for anyone migrating from a liberal blue state.
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