This article first appeared in the St. Louis Beacon, Jan. 16, 2013 - When most of us look at a map, we see roads and rivers, names and places. But after reading “How Money Walks,” you might see traveling dollar signs.
In his new book, Travis H. Brown examines how people have moved around the country over the last 15 years and how they’ve taken their money with them.
Brown will speak about his book “How Money Walks: How $2 Trillion Moved Between the States,” at 7 p.m. Fri., Jan. 18, at St. Louis County Library Headquarters, 1640 S. Lindbergh Blvd. The program is free and open to the public.
Brown, CEO of Pelopidas LLC, a Missouri lobbying firm, took some time to speak with the St. Louis Beacon about his work and his findings.
Beacon: You’ve had a diverse career working in one-third of the 50 states in local and state lobbying, corporate sales and marketing and government affairs. Tell us about how “How Money Walks” came out of the places your career has taken you?
Travis Brown: Several years ago we thought, wouldn’t be interesting to actually know how taxpayers have moved over a long sequence of time, and we came to learn that the Internal Revenue Service along with the U.S. Census Bureau has a way of tracking that. What was not clear then was how you could make it intelligible into little packets of data for your county, your city or your state. So we’ve integrated that through some data mining techniques.
It’s probably not surprising that Americans are moving around the country as we’ve become a more mobile society, but what does it mean for the states left behind and the ones getting those transplants in terms of their fiscal health?\
Brown: Our home state, Missouri, is one of only two states in the country that never saw a single decade of double digit growth in the last 100 years. And what it means to a state like ours is you can still have a relatively low overall tax burden, you can essentially be on the right track but still get run over by absence of economic growth. States like Texas and states like Florida have been taking our wealth and applying it to their tax base and their economy, so we’re losing a relative advantage. About $60 a minute over the last 15 years have been going to those states, neither of which tax personal income at all.
How are Texas and Florida achieving that? Is it because there’s no income tax in those states?
Brown: We know that your income is the most mobile of your resources. We also know production and earnings are probably the worst things to try to tax, rather than consumption or property, so you have a situation where, by inheritance or evolution, there are nine states that do not tax personal income and, over the last 15 years, our data on Howmoneywalks.com show they are gaining nearly $150 billion net of adjusted gross income. You see the reverse as well, that the nine states with the highest personal tax burdens have been losing nearly that amount. So there’s massive swings in wealth advantages and the size of an economy based on how they do or do not tax personal income. It’s not the only factor, but it’s a very important one.
How does tax policy in Missouri compare with some states that aren’t on the top or on the bottom? Are we sort of stuck in the middle?
Brown: What Howmoneywalks.com measures is the net gain or loss of adjusted gross income, the amount you would report as a resident of Missouri on your state 1040 taxes versus the amount that someone else might report located elsewhere. And because we have 15 years to look at it, it gives you a very good indication of relative strength or weakness of our base. In the case of Missouri as a state, we’ve lost a little over $1.6 billion net. The good news is that’s not worse, like higher tax states like New York or Illinois or California. The bad news is we’re not participating in the prosperity and the growth. Other states like Florida have gained $86 billion in the same period. I guess you could say if it was baseball, we’re missing a good game.
What do this state and this city need to do to attract more people, and do you think there’s the political will there to do it?
Brown: I think the job and economic trading partner for Missouri as a state is not actually Illinois, it’s Kansas, and what’s an urgent wake-up call for Missouri government is what Kansas has just done, by zeroing out any subchapter S LLC LLP income from income tax effective this Jan. 1. Our data from "How Money Walks" show that If we start losing our job and economic creating partner the way we’ve already been losing to Texas and Florida, then we’re in a real problem. We’re in a real trouble zone right now if we don’t act. There’s a number of state tax reform measures prepared by several senators this year to try to address the Kansas jobs border war that has just gotten closer to a crisis.