“How Money Walks” has no leg to stand on

During the debate over Oklahoma’s most recent income tax cut, one House lawmaker speaking in favor of the bill waved a book in the air that he said showed why cutting taxes further would help Oklahoma’s economy. The book was “How Money Walks” by Travis Brown, a Missouri lobbyist and the President of “Let Voters Decide,” a group founded by billionaire Rex Sinquefield to push for abolishing Missouri’s income tax and replacing it with higher sales taxes.

Brown has been busy in recent months, travelling the country to push his book and advocate for abolishing state income taxes from Arkansas to Maine. His primary argument is that Americans are migrating to states without income taxes. In April, the Oklahoman editorial board said his work “gives credence to Oklahoma’s tax-cutting strategy.”

There’s just one problem—as we might expect of “research” done by an anti-tax lobbyist, “How Money Walks” is misleading propaganda. Here are a few reasons why:

“How Money Walks” manipulates illustrations to create a false impression.

 The “How Money Walks” website includes a map of states and counties color-coded by how much wealth and people they have gained or lost over more than two decades, along with a bar chart tracking it over time. For example, here’s the “How Money Walks” chart of Oklahoma net migration: 

The chart appears to show that Oklahoma has lost people to other states every year since at least 1986. However, that implication is misleading in two ways. First, the data being used is the number of tax returns, not exemptions, so it is really showing households, not people.

Second, these numbers are not year to year migration. They are cumulative, which means that each bar includes the total of all the bars that come before it. Designing the chart in this way means that the arbitrary choice of a start date dramatically changes its appearance. 

So why does it matter? Because Brown’s chart is hugely skewed by a factor that has nothing to do with tax rates. In 1986, Oklahoma was in the middle of one of the worst oil busts in state history. The flood of people leaving the state from 1986 to 1990 account for almost all of the cumulative out-migration that Brown wants us to believe was caused by income taxes. 

In more recent years, migration has fluctuated up and down but has not been a significant factor in our state’s overall population growth. Here’s how it looks if you present the data more honestly, as annual migration (going back to 1994, which is the first year for which we have data):

Oklahoma attracts nearly as much income from no-income tax states as vice versa.

How Money Walks’ premise is that income taxes are the major reason for why people and their income move from one state to another. Yet from 2009-2010, Oklahoma gained almost as much adjusted gross income from people migrating away from no-income tax states as we lost to those states.

Even if the net gain of no-income tax states was entirely due to state tax policy (which is highly unlikely), then it was worth a barely 2 percent advantage out of all the migration between the states. In 2010, Oklahoma actually gained net AGI from 5 out of the 9 no-income tax states: Florida, Nevada, South Dakota, Tennessee, and Wyoming. Whatever the motivation is for all of this migration, it’s obvious that taxes are not the deciding factor. 

Net migration is not a significant factor in state growth.

By using cumulative numbers over many years, “How Money Walks” tries to makes it seem that migration is responsible for a huge shift of people and dollars. Yet migration between states is rare. From 2001 to 2010, just 1.7 percent of U.S. residents moved from one state to another per year on average, and the effect of migration was close to meaningless compared to our state’s total population change. For example, here’s what Oklahoma’s total population did over the same time period that Brown says we “lost” 33,649 people:Instead of following a lobbyist being paid by a Missouri billionaire to push tax cuts across the country, Oklahoma should listen to our state’s own economists and business leaders, as well as the majority of economic research, which shows that cutting the income tax is not a reliable path to prosperity for states.