Taxes And The Best Places To Find A Job

Does how much you're taxed affect how likely you are to find a job in the recession?


I was looking at my colleague Liz Wolgemuth's list of the best places to find a job. This got me thinking—what role have taxes played determining which places have had steady employment? Depending on your ideology, you might have one of two predictions: First, places with high taxes might have better public infrastructure and programs to provide jobs and stymie job losses. Second, you might think that high taxes will impede recovery, while areas with lower taxes get a competitive advantage that attracts jobs.

As we've seen before, when regions of the country have problems (or avoid problems), people often look to ideologically-polarizing policies like tax rates for answers.

But if one examines the tax burdens in the ten states in which Liz's employment-steady cities are located, we see just how little local policies like taxation matter.

I looked at the Tax Foundation's calculation of the total local tax rate in each of the 50 states for 2008. The average rate across the whole country is 9.7 percent. Of Liz's ten cities, almost half come from states with tax rates above that average: Hawaii, Ohio, Oklahoma, and Virginia. The six states from the list with lower than average taxes are Alaska, Florida, Kansas, Louisiana, Utah, and Texas.

That's pretty evenly split. Clearly there are much more important factors at work.