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Josh Barro

Home Prices Drive People Out of California

Josh Barro explores the relationship between high-income-tax states and their housing policies.

Over the past few decades, states with no income tax have significantly outpaced states with the highest income taxes in population growth and therefore in economic growth. Conservatives like to point to this as an argument for cutting state income taxes.

But states in these groups have confounding similarities. For example, the highest income-tax states (a group dominated by California and New York) tend to have restrictive development policies and resultantly high housing costs; no-income-tax states (a group dominated by Florida and Texas) tend to have much easier development rules and lower home prices.