Ah, tax flight… the Boogeyman our governor uses to scare us away from raising taxes on wealthy Vermonters. Take this little bedtime story from Wednesday’s news conference.

There’s a point of no return on progressive taxation. There’s a point where, as you know, income taxes are portable.We know that Vermonters already migrate to Florida, New Hampshire, and other states to avoid paying income taxes. The higher your rates, the more they migrate.

It makes sense as long as you don’t think too hard. Especially with New Hampshire right across the river — so close that, as the Governor is constantly reminding us, he can see it from his house.

But then I wondered: if rich folk are motivated to move by high taxes, why didn’t they all leave long ago? I mean, look at these numbers from our friends at the Institute for Taxation and Economic Policy:

Total state and local tax burden for the top 1% in Vermont: 8.0%

Total state and local tax burden for the top 1% in New Hampshire:  2.4%

Geesh. Our richest, and most mobile, Vermonters could save a damn bundle by moving to New Hampshire — a state that shares many of Vermont’s advantages: great scenic beauty, mountains, lakes, a whole lot of luxury housing. Hell, in New Hampshire you can even live near the ocean and eat lobster every night.

The top 1% pay a whopping 5.6% higher taxes in Vermont than in New Hampshire. For a millionaire, that’s $56,000 a year — the list price of a 2014 Corvette.

So I ask again: why does Vermont still have any millionaires to lose?

The answer, of course, is that tax flight is a myth.

After the jump: Exploding the myth.

It’s been disproven by study after study. An excellent summary — with links to the full studies — has been posted by Citizens for Tax Justice.

CTJ cites five separate studies involving states that raised taxes on the wealthy. In all five cases, tax flight was negligible.

Example: In 1996, California cut taxes on high earners; there was no discernible in-migration. In 2005, California raised its top income tax rate by a full percentage point; there was no discernible out-migration. In fact, after the 2005 tax hike, out-migration actually declined among millionaires.

Another: In 2004, New Jersey enacted a rather stunning tax hike on incomes over $500,000 — from 6.37% to the current 8.97%. A subsequent study found no evidence of tax flight.  (There was a small net out-migration; but there was an equal out-migration among those earning between $200,000 and $500,000, whose taxes did not go up at all.)

So, why do rich people (or other people, for that matter) move? A state’s tax burden is extremely low on the list. Factors that make a bigger difference include employment opportunities, housing prices, family reasons, change in marital status, climate, the draw of a particular city or town, and recreational or cultural opportunities. High-tax states are attractive places in many ways; they have enough money to support quality public services, schools, roads, infrastructure, amenities. This issue is thoroughly explored in a study from the Center on Budget and Policy Priorities.

Now, there have been bits and pieces of evidence that seem to prove the reality of tax flight. But they’re based on misinterpretations of the data.

Some have cited a big turnover in top earners after a tax hike. But the fact is, there’s always a lot of churn at the top end. The California study reported that “At the most, migration accounts for 1.2% of the annual changes in the millionaire population.” The other 98.8% is due to yearly fluctuations in incomes, that move rich taxpayers above or below the top bracket. The California researchers add:

“Most people who earn $1 million or more are having an unusually good year. Income for these individuals was notably lower in years past, and will decline in future years as well. A representative “millionaire” will only have a handful of years in the $1 million + tax bracket. The somewhat temporary nature of very-high earnings is one reason why the tax changes examined here generate no observable tax flight. It is difficult to migrate away from an unusually good year of income.”

One dramatic example of this fact, which has been cited as evidence for tax flight: In 2007, Maryland raised its top tax rates for individuals earning over $150,000 and families earning over $200,000. The following year, Maryland saw a massive 13.4% decline in its millionaire population. Aha, you might be saying: Tax flight!

Well, no. You might recall that in 2008, our economy imploded. In Maryland,as elsewhere, a whole lot of 2007 millionaires became “hundred thousandaires” in 2008. The number of taxpayers in the second, third and fourth highest tax brackets — between $150,000 and $999,999 — increased dramatically, and more than compensated for the drop in millionaires.

All those folks saw their taxes increase in 2008. The truth is, hardly anyone moved out of Maryland; they just saw their taxable incomes shrink. And Maryland’s public finances were much stronger during the Great Recession thanks to the 2007 tax hike.

In short, there is no credible evidence that modest tax increases cause the wealthy to flee. Governor Shumlin may believe it, and he may loudly and repeatedly assert his belief; but it simply is not true.