Real World Economics: Why did the taxpayer cross the road? – St. Paul Pioneer Press

by | Apr 17, 2022 | Financial

The questions of why some jurisdictions, whether towns, counties, states or nations, grow in population and economic activity, while others shrink, are important in social and political terms. True for economics also. A couple weeks ago, I wrote about how COVID, technology, housing costs and relative birth and death rates affected the demographic data of different geographical areas.Edward Lotterman
But what about relative tax rates and distribution of public goods and amenities? Here, the issues involved are far broader than numbers of taxpayers and what they pay.
To review: A recent Census Bureau report listed changes from 2021 population estimates. Some states and large coastal cities, including California and metro Los Angeles, lost population. Lower-cost Sunbelt areas of Texas, including Dallas, Arizona and Florida grew. In Minnesota, urban Hennepin and Ramsey counties dropped population, ditto for Albert Lea and Fairmont, while Brainerd and Grand Rapids were among the gainers. But very rural counties continue to erode.
Why the migration? Social mores about the number of children? Escaping weather and crime? Quality of schools and distance to the opera or professional sports? Job availability and wage rates relative to living costs? The burden of state or local taxes, particularly relative to government services received?
All of these play a role, but teasing out the importance of such myriad and complex factors isn’t easy. One must not jump to conclusions too quickly, but neither should any factor be ignored because of ideological predispositions.
Remember that populations of given areas depend on two factors: What are births relative to deaths? What is in-migration relative to numbers moving out? Cause and effect after that becomes highly subjective.
The demographic factors can work in tandem for or against each other: In 1890, in virtually every county in Minnesota and nearly every state, births exceeded deaths and immigration exceeded emigration. By my youth in rural southwest Minnesota in the 1950s and 19 …

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