Immigration and Customs Enforcement (ICE) has increased the number of agents deployed in foreign countries by 16 percent from 2020 to 2022, according to new data obtained by the Cato Institute via a Freedom of Information Act request. The number of foreign deployments rose from 169 in 2020 to 196 in 2021. This increase comes after a 2020 Senate investigation finding that agents with ICE’s sister immigration enforcement agency, Customs and Border Protection (CBP), in Guatemala misused State Department funds to help the Guatemalan government deport Hondurans.

Figure 1 shows the number of agents detailed to another country by fiscal year. ICE has said that earlier data were unavailable because of an internal reorganization of the agency in 2019.

We don’t know what all these agents are doing, but ICE agents have been helping the DEA’s drug war in Mexico for many years, which got one of them killed, and in 2022, ICE revealed that it is working in Guatemala to identify and arrest people—who it labels “smugglers”—who help immigrants leave or transit the country. WOLA’s Adam Isacson has a list of other various activities of ICE and DHS in Guatemala, including training its corrupt police force and acting as deportation liaison to help facilitate more deportations from the United States to Guatemala.

In 2020, it was revealed that CBP, ICE’s sister immigration enforcement agency, helped foreign governments interdict and deport people trying to reach the United States. It often goes further than merely helping. As the Senate report found:

In January 2020, Senate Foreign Relations Committee (SFRC) Democratic Staff uncovered a disturbing incident in which DHS [the Department of Homeland Security] misused State Department funding to carry out an unauthorized operation. Specifically, CBP personnel in Guatemala transported an unidentified number of Honduran migrants in unmarked vans to relocate them to the Guatemala-Honduras border. DHS informed SFRC Democratic Staff that DHS personnel used the vans to transport migrant women and children, but was unable to clarify whether any family members had been separated during the operation or whether there was any process to reunify any family members that may have been separated. Moreover, the DHS operation to transport Honduran migrants was conducted in an improvised manner without any protocols in place to address security considerations or ensure the personal safety and human rights.…

the DHS operation exposed the U.S. Government to possible complicity in any potential violation of the principle of non-refoulement enshrined in the 1951 Refugee Convention and its 1967 Protocol, as well as the 1984 Convention Against Torture, which both Guatemala and the United States are required to uphold.

The Biden administration has said it is working on addressing the root causes of emigration, but it has been more successful and diligent about getting foreign governments to change their own immigration policies and enforcement practices to match the U.S. goal of squashing immigration.

State and local governments raised $1.9 trillion in taxes in 2020. The main sources were sales taxes (35 percent), property taxes (32 percent), and individual income taxes (23 percent). But nine states do not impose an individual income tax. How do they run their governments without it?

The nine states without an individual income tax are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. The states are in every part of the country and have different industry mixes, histories, and political cultures. What they have in common is providing needed state-local services to their residents without complex, anti-freedom, and anti-growth individual income taxes.

Most of the nine run leaner and more efficient governments than most other states. They only partly make up for the income tax revenue gap with other revenues. In terms of overall tax burdens, eight of the nine states are toward the bottom of the 50 states and Washington is in the middle.

However, Alaska and Wyoming are different because revenues related to their energy industries have induced them to fund bigger governments. They spend more and have larger bureaucracies than most other states, and thus do not provide fiscal models that other states could or should follow. That leaves seven states without individual income taxes that others may seek to emulate.

The chart shows state-local taxes in 2020 as a percentage of personal income for the seven states, as well as Alaska and Wyoming, New York, and the other 40 states. This tax-to-income metric accounts for different state populations and income levels. New York may need to pay school teachers more than does a lower-cost state such as Florida, but the metric roughly adjusts for this. Data is from a TPC table based on Census figures.

Some observations:

• Total taxes in the seven states average 8.1 percent of income. The average in the 40 other states is 9.6 percent. Thus, the lack of individual income tax restrains the overall tax burden.
• Property and sales taxes are higher in the seven-state average than the 40-state average, but the overall tax burdens are lower.
• Among the seven, Washington has the highest taxes, but the burden is still below the average of the other 40. Since at least 2005, Washington has had leftist governors who scored at the bottom of the Cato Fiscal Policy Report. The lack of income tax has likely been a barrier to further government expansion in that state.
• New Hampshire recently repealed its tax on interest and dividends, so residents will soon be fully free of individual income taxation.
• New York has the highest state-local tax burden in the nation at 13.9 percent, which is almost twice Florida’s burden of 7.2 percent. New York’s individual income tax raises 4.7 percent of income—twice that raised by the average of the other 40 states. New York also has higher property, sales, and corporate tax revenues than the other 40 states.
• My favored tax structure is a property tax to fund local government and sales tax to fund state government, and that’s about it. In some cases, local sales taxes and fees for government services are appropriate. The seven states have close to this ideal tax structure, but some of them have corporate income and gross receipts taxes that should be repealed. These business taxes are economically damaging and impose nontransparent burdens on individuals.

I highlighted New York because its high tax burden is remarkable. New York’s bureaucracy is 34 percent larger than Florida’s, even though Florida has more residents. New Yorkers pay the most in taxes and enjoy the least freedom of any state. Why can’t New York provide services as efficiently as Florida, Texas, or Washington?

New York and the other 40 states should learn from the seven. There is a movement toward repealing individual income taxes in some Republican states. Mississippi Governor Tate Reeves approved major income tax cuts this year and wants full elimination: “If we can eliminate the income tax, we will achieve an historic victory for this state. We can become a place that money flows more freely, and all Mississippians will benefit.”

Repealing state individual income taxes is a good goal. The seven states are diverse, but they’ve all made it work. Residents get the state-local services they need, but at lower cost. Within the seven states, policymakers should cut business taxes, as Governor Chris Sununu of New Hampshire has done.

The combination of property taxes, sales taxes, and fees for some services should be enough to run state and local governments. If policymakers deliver needed services in a lean and efficient manner, they can free their residents and businesses of complex and damaging state income taxes.

The H‑2B program allows employers to hire foreign workers for seasonal or temporary nonfarm jobs. But this month, U.S. Citizenship and Immigration Services (USCIS) announced that employers had already reached the H‑2B cap of 33,000 visas for the winter months (October to March) before the start of the season. Employers with pending applications or those wishing to file applications for jobs that U.S. workers turned down later will not be able to do so. It’s very bad news for the seafood industry, winter resort destinations, and related industries.

The announcement occurs as the United States is experiencing one of the worst labor shortages in decades. Nationwide, there were about twice as many job openings (11.2 million) as unemployed persons (5.7 million) in July. This shortage has persisted for well over a year, and last year, Congress authorized USCIS to increase the H‑2B winter cap in September 2021 in a Continuing Resolution which kept the government funded during the months of October through December.

But USCIS waited until January 28 to use the authority—that is, just 2 months left in the season and since the process itself takes more than a month, USCIS threw away nearly all the benefit of the congressional authorization. Now Congress is poised to again authorize a winter H‑2B cap increase. USCIS could have said last year that Congress had never authorized such an increase in prior years, and its action that year was unprecedented, but it has no such excuse this time. It should act quickly.

As Figure 1 shows, H‑2B demand during the winter months has increased from 35,666 for the 2019–20 winter season to 51,224 for the 2021–22 season. In the first three days of the 2022–23 winter season, the Department of Labor received nearly as many requests (29,856) as it certified in all of 2019–20. Based on this, we should expect about 72,000 total certified H‑2B jobs for this winter (assuming the ratio of requests in the first three days to total certified jobs stays the same).

Table 1 shows the number of cap-subject certified jobs by industry for the 2021–22 winter season. The largest was 16,028 positions for professional and business services (mainly for groundskeepers and landscapers)—many of them servicing vacation destinations like resorts or golf clubs. The next largest is 10,232 for agriculture, forestry, fishing, and hunting—mainly forestry workers and then some fishers. Manufacturing is mainly fish cutters and stockers for producing and packing salmon in Alaska but also crawfish, shrimp, and other seafood in Louisiana.

Arts, entertainment, and recreation industry was certified for 4,836 positions—largely hiring recreation attendants and maintenance workers, such as carnival ride operators and maintenance workers, golf course maintenance workers, ski instructors, and horse trainers and groomers. The last major industry is accommodation and food services—many of these positions are also tied to resort destinations. As Table 1 shows, the certification rate for the top 4 industries is very high—with between 84 and 95 percent of workers certified.

Overall, these jobs are a drop in the bucket of the 11.2 million open jobs, and no industry is filling a high proportion of jobs through the H‑2B program. The H‑2B program is filling jobs in relatively niche areas or positions where the shortages are most severe. DHS should immediately raise the cap to allow more H‑2B workers to enter these positions.

The one thing that the American welfare system does not need is a middle-class expansion. This year, the federal government will spend more than $1.1 trillion to fund 134 welfare or anti-poverty programs, and because many of those programs are jointly administered and funded with states and localities, those governments will contribute an additional $744 billion. In total, we will spend roughly $1.8 trillion on welfare this year. When you consider that this amounts to roughly $49,700 per person below the poverty level, it is obvious that welfare spending reaches well into the middle-class.

Of course, we wouldn’t want to cut off program eligibility at the poverty level. Doing so would create an enormous welfare cliff—a marginal tax rate that discourages work, savings, and family formation through a rapid drop-off in benefits as individuals earn additional income. Still, our welfare system is not narrowly targeted.

None of this, of course, includes one-time expenditures like those designated as pandemic relief. Nor does it include middle-class entitlements such as Medicare and Social Security, which while not purely welfare, nevertheless represent transfer payments from the government and are cornerstones of the modern welfare state. Overall, government payouts, including middle-class entitlements, now account for more than a third of all wages and salaries in the United States.

One form of middle-class welfare being widely discussed on both the left and right are various forms of wage supplements. There may indeed be an argument for wage supplements as a second-best solution for low-income workers, notably for changing the Earned Income Tax Credit (EITC) from the largely natalist child subsidy it is today, to more of a pure wage supplement. But even here, there are trade-offs involved. Such a subsidy limits labor mobility and imposes substantial compliance costs on businesses. Employers often lower wages and absorb the subsidy, shifting labor costs to taxpayers. There is also a high fraud and unintentional error rate. Those negatives may be preferable to the alternatives (such as a higher minimum wage or the existing structure of the EITC) for low-income workers facing steep welfare cliffs, payroll tax burdens, and low wages.

All the negatives of wage supplements are as applicable, if not more so, as those supplements expand into the middle-class, but without any of the potential benefits that might apply to low-wage workers. Moreover, while changes to the EITC could be made cost neutral by limiting the child-subsidies embedded in it, an expansion of welfare, including wage supplements into the middle-class, would need to be paid for, most likely through either higher debt or increased taxes. Either approach would be likely to lead to slower economic growth, lower wages, and fewer jobs (as well as potentially higher inflation). In that way, the expansion would end up becoming self-defeating.

No doubt many working- and middle-class families are struggling in today’s economic environment. But there are many ways to help those families without a massive expansion of the welfare state. Many of those solutions will be featured in a new book from Cato to be released this Fall. Be on the lookout for Empowering the New American Worker: Market-based Solutions for Today’s Workforce, edited by Scott Lincicome.

Last month, the United States enacted the Inflation Reduction Act (IRA), purportedly to address rising inflation. In practice, though, the act mainly serves as a vehicle for some of President Biden’s and the Democrat’s legislative priorities. The act includes many provisions to subsidize clean power plants, including nuclear generators.

Many believe that nuclear is the perfect solution to climate change. It is a zero-carbon power source that is nearly constantly available unlike intermittent renewable sources, such as wind and solar. Our recent working paper (and a summary of the paper in the most recent issue of Regulation) examines the economics of nuclear power and concludes that it is very high-cost relative to natural gas generators. Most importantly in the context of climate change, we also determine that the potential climate benefits of nuclear are insufficient to offset its costs.

From the 1960s to 1980s, many nuclear power plants were built, but nuclear construction costs rose dramatically resulting in a severe decline in new construction. Very few plants have been built in the United States and Western Europe in the past several decades. In fact, the most recent projects in the West (the United States, France, the United Kingdom, and Finland) have experienced numerous issues with quality control, supply chains, and labor force management, leading to a more than doubling of construction schedules and costs. The fact that nuclear construction costs increased dramatically in countries with different regulatory regimes suggests that the problem is not simply overly cautious regulators.[1]

The IRA does nothing to address the underlying cost problem with nuclear power. It simply reduces its costs to ratepayers. Is this enough to induce utilities to build nuclear generators rather than coal or natural gas combined cycle (NGCC) power plants?

Our paper calculates the levelized cost of electricity (LCOE) of nuclear, coal, and NGCC electricity generators. The LCOE is the price per unit of electricity produced (in cents per kilowatt-hour (kWh)) required for a power plant to breakeven over its lifetime. The calculation considers both fixed and marginal costs, including construction, financing, operations and maintenance, and fuel costs.

Nuclear power is capital intensive. Thus, its LCOE depends mostly on its construction cost. To model different scenarios, our calculations use three levels of construction costs for nuclear. The highest level (a cost of $9,000 per kilowatt of capacity constructed) represents the average construction costs of the West’s most recent projects. The middle and low levels ($6,700 and $4,000 per kilowatt, respectively) envision substantial reductions in nuclear construction costs through some combination of regulatory reform, improvements to construction management, or innovation. The low level, which is nearly 65 percent lower than the most recent nuclear project in the United States (the Vogtle plant in Georgia where ongoing construction has reached costs of about $11,000 per kilowatt), is particularly optimistic. Whether such a reduction is achievable is not known, but historically US nuclear construction costs have increased as new capacity has been built.

Natural gas electricity generation is not capital intensive. Thus, the LCOE of natural gas plants is largely affected by fuel costs. To account for the uncertainty of future natural gas prices, we use three levels of fuel costs based on the Energy Information Administration’s 2022 Annual Energy Outlook’s reference case and lowest and highest projections of future natural gas prices.

The baseline levelized costs we calculate are presented in Table 1 (see the appendix of our paper for more on the actual calculations involved and additional assumptions). If nuclear construction costs are low, nuclear is competitive with coal. But at all nuclear construction cost levels and all projected natural gas prices, the cost of nuclear is substantially higher than NGCC.

The IRA expands subsidies to new nuclear plants through two options for tax credits, a production tax credit (PTC) and an investment tax credit (ITC). A single facility can only take one of these subsidies. Both credits have two levels, with a higher amount available for plants that meet certain prevailing wage and apprenticeship requirements. To consider the best-case scenario for a nuclear plant, we consider only the higher levels (and these levels are denoted as “base subsidy” in the tables, though there is technically a lower base level included in the act). Additionally, facilities built in an “energy community” (as explained here: a brownfield site, the site of a former coal plant, or an area with high unemployment and large reliance on fossil fuel industries) can receive an even higher tax credit.

The PTC amount is 2.5 cents per kWh of energy produced, and a 10 percent increase (up to 2.75 cents) for a facility built in an energy community. Even though the provision lasts only for the first ten years of a plant’s operation (and its availability is set to phase out based on national emissions targets), it is not hard to imagine that the subsidies will be extended indefinitely so we treat the production tax credit as permanent.

The ITC is for 30 percent of a facility’s investment costs, and up to 40 percent for a plant built in an energy community. To simplify the calculations, we treat the ITC as a onetime payment of 30 (or 40) percent of the plant’s overall construction cost (excluding financing costs) in its first year of service.

Table 2 reports the effective amounts of the subsidies averaged and discounted over a nuclear plant’s life, as well as the total LCOE when the subsidies are included. If the PTC is permanent, the effective value of the subsidy is higher than the ITC except at the highest nuclear construction cost considered (if the PTC is treated as ending after ten years, the ITC is always more valuable). At the lowest nuclear construction cost level, the PTC reduces the levelized cost of a nuclear plant built at the lowest construction cost (5.4 or 5.1 cents per kWh for nuclear with the base subsidy or built in an energy community, respectively) to less than a NGCC with high projected natural gas prices (5.5 cents per kWh from Table 1). If nuclear construction costs are substantially reduced and future natural gas prices are high, the subsidy is sufficient to incentivize private investors to invest in nuclear capacity.

What happens to the analysis if we include the climate change benefits of nuclear power? Subsidies to clean energy act “like” a negative carbon tax (government can either impose a carbon tax on carbon emitters or offer a subsidy to clean energy that lowers its costs relative to “dirty” technologies.) Subsidies for clean sources are traditionally thought to be less efficient than taxes on dirty sources, but recent scholarship challenges that conclusion. Ignoring efficiency differences between clean energy subsidies and a carbon tax, we calculate the implied carbon price of the subsidies and calculate the additional carbon tax necessary for nuclear to have cost parity.

The baseline carbon taxes (in dollars per metric ton of CO₂) needed for parity between a nuclear power plant without the new subsidies and the fossil fuel plants are presented in Table 3. These taxes are calculated by comparing the levelized cost of nuclear to coal and NGCC and then calculating the carbon tax necessary for the levelized costs to be equal based on the carbon emissions of coal and natural gas.[2] The US government and academic experts recommend a tax within a range of roughly $15 to $75 per metric ton in 2020.

As Table 3 shows, the carbon tax necessary for nuclear to compete with coal is within the range of recommended carbon taxes at all nuclear construction cost levels, suggesting that nuclear is competitive with coal if the carbon emissions of coal are priced. The carbon tax necessary for nuclear to compete with NGCC is only within the recommended range if nuclear has low construction costs and natural gas prices are high, implying that unless nuclear construction costs can be reduced substantially, the high costs of nuclear are not worth its climate benefit relative to NGCC plants.

Because the IRA does not reduce construction costs, it does not alter any of these conclusions. For most entries in Table 3 a new nuclear plant would reach cost parity with NGCC only with a significant carbon tax in addition to the IRA subsidy. For example, if nuclear construction costs are low and future natural gas prices are mid-range, nuclear would require a carbon tax of roughly $19 per metric ton in addition to the effective carbon price of $60 per metric ton implied by the PTC of 2.75 cents per kWh. A carbon tax of $19 might be politically feasible, but the overall carbon price of $79 ($19 plus $60) is outside the range recommended by experts and, therefore, implies that the combined subsidy and carbon tax exceeds the social cost of carbon emissions.

Table 3 also illustrates the inefficiencies of subsidies relative to a carbon tax. First, while the PTC is a constant amount paid to nuclear generators, the effective carbon tax depends on whether the generator displaced is a coal or natural gas plant (e.g., the PTC of 2.5 cents per kWh has an effective carbon tax of $20 compared to coal and $55 compared to natural gas). This is because clean energy subsidies do not differentiate between dirty technologies with differing emissions levels. Currently, the levelized cost of coal is higher than NGCC, so the subsidy to clean power is likely to displace dirtier coal power plants first. But if future coal and natural gas prices changed enough for NGCC to have a higher LCOE, or if we were comparing coal to less efficient natural gas power plants with higher costs but lower emissions than coal, the subsidy could have the perverse effect of displacing cleaner natural gas power plants before dirtier coal plants.

Second, the ITC increases as investment costs increase; the implied carbon price of the ITC is actually higher at higher nuclear construction cost levels. Subsidizing investment costs incentivizes the construction of power plants with higher capital costs, an ironic result considering the problem with nuclear power is its high capital costs.

The IRA subsidies are not sufficient to change the economics of nuclear power. Before the IRA, nuclear construction costs were too high for nuclear to be competitive with natural gas or coal. Even with the IRA subsidies and even if nuclear construction costs were 65 percent less than the current costs of the Vogtle plant in Georgia, NGCC plants would still be cheaper unless natural gas prices remain historically high for decades.

For years Americans have been concerned with rising home prices, and, at least grudgingly, recognized that one way to bring down those costs was to build more housing. But many drew the line on building those new homes in their own neighborhood—what made NIMBY (Not in My Back Yard) one of the most recognized rallying cries in local politics.

A newly released Cato Institute National Survey of 2,000 adults, conducted by YouGov, suggests that the tides may be slowly shifting. The road to housing reform remains bumpy—but it is not impassable.

That is fortunate, because housing affordability is one of the most significant economic issues today and zoning regulations that limit home building are one of the greatest barriers to housing affordability. Without public support, it is difficult to make necessary changes to improve housing supply and reduce costs.

Recent research finds that zoning regulations push up the cost of housing by more than $300,000 or $400,000 per quarter of an acre in cities including San Francisco, Chicago, and Seattle. In New York, the “zoning tax” on housing was estimated at more than $500,000 per quarter of an acre near the urban core in 2018.

With regulatory burdens that high, interest rates continuing to climb, and continued inflationary pressures on housing, it is no wonder that Americans are deeply concerned about housing costs. In the survey, fully 87 percent of Americans are at least “somewhat concerned” about housing costs, and 61 percent are either “very” or “extremely” concerned. Roughly 69 percent are worried that their children or grandchildren will not be able to afford a home, and a majority of Americans do not believe they could afford to buy the house they live in today.

What is more unexpected is that Americans seem increasingly willing to build housing in their back yard. Overall, it is still a close call, with just 51 percent supporting more housing in their own neighborhood. Democrats (63 percent) are more likely to support building more housing, while independents (47 percent) and Republicans (39 percent) are more skeptical.

However, support for building housing increases when benefits are mentioned. For example, nearly two-thirds (64 percent) support building more houses, condos, and apartments in their community if it means it would be easier for people to afford housing in their neighborhood. Phrased that way, support for more housing increases among all groups, including Republicans (53 percent).

Republicans, more than Democrats or Independents, adjust their support for building more housing based on who they believe will be moving into their neighborhood. For example, when told that more building would make housing affordable for young families, some 64 percent of Republicans were in favor. On the other hand, Republican support declines steeply if it is suggested that the new residents would be low-income (45 percent) or people of color (44 percent). Interestingly, it was this latter argument (that building housing would benefit people of color) that Democrats favored most in the survey, and an extension of this argument motivated liberal Minneapolis’s reform to end single family zoning in 2018.

Regardless of the politics of building more homes, it is worth noting that the evidence supports the idea that relaxing regulatory restrictions to increase housing supply is beneficial for all mentioned groups—both young families, people with lower incomes, and people of color.

For families with young children, not only can reforming zoning alleviate budget pressures and allow growing families to buy or rent the space necessary to live comfortably, but evidence suggests it can also improve school choice for parents. For example, a study found that Houston—the only major city without a traditional zoning code—has lower home prices at every school quality level than other major cities, which indicates greater access to a broader range of schools for young families.

Just as young families have been blocked from critical amenities and educational opportunities as a result of restrictive residential zoning, low-income individuals have also suffered as a result of the practice: previous research finds that restrictive zoning limits home building in economically productive locations with greater job opportunities, and Euclidean zoning is well known to segregate by income.

For people of color, zoning likewise reduces opportunity and access and freezes segregated living patterns in place. In one study, 50 percent of the difference in levels of racial segregation between leniently regulated (less‐​segregated) Houston and restrictively zoned (more‐​segregated) Boston was a result of restrictive regulation. In another study, reducing zoning regulation was estimated to reduce the difference in racial segregation by at least 35 percent between the most and least segregated areas.

For this and many other reasons, policymakers across the country should marshal current public support for building more homes and make zoning reform a policy priority. Doing so would unlock opportunity for a wide variety of people.

Americans are moving from high-tax states to low-tax states. The smart states know this and are cutting income tax rates, as discussed in the forthcoming Fiscal Policy Report Card on America’s Governors.

One group that states want to attract with tax cuts are seniors and retirees. Just this year, 10 states cut their taxes on retirement income, which means income from Social Security, defined-benefit (DB) plans, and defined contribution (DC) plans, such as 401(k)s. Currently, about three-quarters of the states fully exempt Social Security benefits from taxes. About a dozen states fully exempt DB and DC benefits from taxes, and about half the states partly exempt it.

Why the focus on tax cuts for seniors? One reason is that seniors vote at substantially higher rates than other Americans. Another reason may be that policymakers think seniors impose lower costs because they don’t use state-local services such as K‑12 schools. A further reason may be that policymakers view migrating seniors as particularly responsive to taxes.

Seniors are moving from high-tax to low-tax states, as shown in the chart. On the horizontal axis is the sum of state and local sales, property, and individual income taxes as a percentage of income in 2019. On the vertical axis is the ratio of in-migration to out-migration for households age 65 and older, based on IRS data for 2020. The ratio is above one for states enjoying net in-migration and below one for states suffering net out-migration. Each state is a dot.

Seniors are moving from the high-tax/out-migration states on the bottom right to the low-tax/in-migration states on the top left. The orange line is Excel’s fitted regression line, which is highly statistically significant (F‑stat=12.3, t‑stat=-3.5). There are a few exceptions to the general pattern including Alaska, Maine, and Vermont.

Another angle on seniors and state taxes comes from Kiplinger, which provides a State-by-State Guide to Taxes on Retirees. Kiplinger examines income taxes, sales taxes, property taxes, and taxes on retirement income, and categorizes the states and D.C. as either “most tax-friendly,” “tax-friendly,” “mixed,” “not tax-friendly,” and “least tax-friendly.” It turns out that the degree of tax friendliness is correlated with the senior migration ratios discussed above. The average migration ratio for the “most tax-friendly” states is 1.28, whereas the average ratio for the “least tax-friendly” states is 0.86.

I would rather that states cut overall tax rates than just cutting taxes for favored groups. But for seniors, policymakers across the political spectrum see the need for their states to stay competitive. In Maryland, Governor Larry Hogan said, “Our state’s sky-high retirement taxes remain the one area where we are still not effectively competing with other states.” In Connecticut, Governor Ned Lamont said, “We’re also going to eliminate the income tax on pension and 401(k) income for most households. Stay in Connecticut and watch your grandkids grow up in your living room rather than waving to them from a Zoom room in Delray, Florida.” Both governors followed through this year and cut taxes on retirees.