Tuesday, February 12, 2008
Politicians who think taxes don't matter might want to explain the Dakotas. North Dakota ranked second worst in out-migration last year, while South Dakota ranked in the top 10 as a destination. The two are similar in most regards, with one large difference: North Dakota has an income tax and South Dakota doesn't.Source. A 26-foot truck from Minneapolis to Sioux Falls from U-Haul was $489, from Sioux Falls to Minneapolis $288. St. Cloud to Rapid City $880, Rapid City to St. Cloud $518.
Boy, those South Dakotans retiring to Minnesota to take advantage of our high taxes are sure getting a deal there! [/snark>
I had thought they had cherry-picked, and thought perhaps U-Haul was looking to move trucks into a higher-population market more generally, but it doesn't appear so. Someone could have fun with a study of those rates. Clearly you pay less to drop the car in the higher-demand market, and demand is a function of more than tax rates, but the ND/SD distinction takes out a number of confounding factors.
Mankiw asks if one has ever turned down a job that you would have accepted if it paid twice as much. I can think of one job I declined because net of cost of living and higher taxes (than Minnesota! Yes, Virginia, such places exist) I would have ended up with a worse standard of living. But it turns out the U-Haul would have been cheaper.