Every time a state legislature considers raising taxes on the wealthy or large corporations, the same cries emerge: They’ll leave. Jobs will disappear. The economy will collapse. This narrative has driven a decades-long race to the bottom, with states offering billions in subsidies to corporations that pay poverty wages while extracting massive profits.

The most comprehensive study ever conducted on millionaire tax migration should have ended this debate permanently. Cornell sociologist Cristobal Young, working with colleagues at the U.S. Department of Treasury and Stanford University, analyzed tax return data from every million-dollar income earner in the United States over 13 years. Only 2.2% of millionaires move primarily for tax reasons.

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New Jersey proved this definitively. When the state raised its maximum marginal tax rate to 8.97% on income over $500,000, the predicted exodus never materialized. California has the highest state income tax in the nation and more millionaires than any other state, nearly 72,500 tax filers with adjusted gross income above $1 million as of 2021.

High-tax states like New York, Massachusetts, and Connecticut don’t just retain their wealthy residents, they have the highest proportions of millionaires in their populations. Millionaires aren’t just calculating tax rates. They want excellent schools for their children, world-class hospitals, functioning infrastructure, and proximity to centers of culture and innovation. All of these are funded by taxes.

But let’s engage with the real question: What exactly would we lose if extractive businesses and billionaires did leave?

Consider Walmart’s impact on small towns. When Walmart arrives, local businesses can’t compete with its subsidized prices. Within a decade, communities lose nearly half their retail trade to the giant. Local pharmacies, hardware stores, and grocers close. Then, when the profits thin out, Walmart leaves. Pana, Illinois lost its Walmart in 2018, 35 years after it had destroyed the town’s three independent pharmacies and countless other businesses. The company gave one month’s notice.

The supposed job creation is equally mythical. Amazon warehouse workers earn median wages of $18 per hour, yet a 2020 Government Accountability Office report found Amazon among the top employers whose workers receive federal assistance. These companies are net drains on public resources while claiming to be economic benefactors.

Communities that lose extractive businesses and build local alternatives often thrive. In Italy, when conventional businesses close, workers increasingly buy them and convert them to cooperatives. According to data from Italy’s Ministry of Economic Development analyzed by the European Research Institute on Cooperative and Social Enterprises, these worker-owned cooperatives have a three-year survival rate of 87%, compared to 48% for all Italian businesses. They weather economic downturns better, maintain higher employment, and keep wealth circulating locally rather than extracting it to distant shareholders.

Worker cooperatives outperform traditional businesses on every metric that matters: lower turnover, higher productivity, better job security, and more family-friendly workplaces. During the 2020 pandemic, employee-owned firms significantly outperformed traditional businesses in retaining employees and maintaining wages.

Community land trusts offer another model. By taking land out of the speculative market and holding it for community benefit, CLTs have achieved foreclosure rates 90% lower than conventional mortgages. They build sustained community wealth rather than enabling extraction.

These alternative models point to an obvious alternative to state economic policy, one that prioritizes local ownership over absentee extraction. States can adopt a framework of strategic tax autonomy. First, implement a commercial property tax based on ownership: a base rate for locally-owned businesses (defined as businesses where at least 50% of ownership stakes are held by individuals who have been state residents for at least three years), double that rate for out-of-state ownership, and triple for properties owned by entities with over $1 billion in annual revenue.

Second, create a living wage tax differential. Businesses paying all employees at least double the state minimum wage receive a 2% tax credit. Businesses with any employees on public assistance pay a 5% tax surcharge.

Third, establish a community wealth fund. All revenue from ownership-based taxation goes into a dedicated fund that provides matching funds for worker cooperative conversions at a 2:1 ratio up to $500,000 per conversion, funds community land trusts for commercial and residential property, and supports municipal broadband, public banks, and other community infrastructure.

Alaska already taxes out-of-state oil companies at different rates, a practice upheld by federal courts. In Exxon Corp. v. Eagerton (1983), the Supreme Court upheld states’ rights to tax natural resources differently based on ownership structure. States routinely offer homestead exemptions that favor resident property owners. While the Commerce Clause prevents explicit discrimination against interstate commerce, states retain substantial authority to structure tax policy around legitimate local purposes, as established in Complete Auto Transit v. Brady.

Critics will argue these policies will destroy jobs. They have it backwards. Local businesses employ more people per million dollars of revenue than large corporations. When Seattle raised its minimum wage to $15, employment increased because workers had money to spend locally.

The tax revenue argument is also absurd. Amazon famously paid $0 in federal taxes in multiple years despite billions in profit. Major retailers cost taxpayers billions annually in public assistance for their underpaid workers.

Some worry that investment will dry up. We should ask what kind of investment we actually want. Extractive investment views communities as colonies to be stripped of resources. Productive investment builds lasting value. Germany’s Mittelstand, medium-sized, often family-owned businesses, dramatically outperform shareholder-owned corporations in innovation, employment stability, and long-term value creation.

These ideas are already working. Vermont offers tax preferences to B-corporations and cooperatives, attracting mission-driven businesses. Italy’s Marcora Law funds worker buyouts of closing businesses, saving thousands of jobs.

Currently, states are being played against each other by corporations that have no loyalty to any community. Amazon’s HQ2 competition attracted 238 bids from cities and regions, which offered billions in proposed subsidies, only for Amazon to choose the two most obvious locations (NYC and DC suburbs) and then partially renege anyway.

The federal government, captured by corporate interests, won’t fix this. But states can. Blue states in particular, with their educated workforces, infrastructure, and innovation ecosystems, have enormous leverage they’re not using.

We’ve accepted a narrative that we need billionaires and extractive corporations more than they need us. We have it exactly backwards. They need our educated workers, our infrastructure, our legal systems, and our consumer markets. We create the conditions for wealth generation through public investment in education, roads, research, and law enforcement. Those who benefit most from these investments should contribute proportionally.

If California, New York, Massachusetts, and other blue states implemented these policies simultaneously, the race-to-the-bottom would end. Corporations would adapt because they need access to these markets. Those that left would create space for local businesses and cooperatives to flourish.

The billionaires threatening to leave for Texas? Let them go. They can enjoy the failing power grid, crumbling infrastructure, and underfunded schools. Meanwhile, states that choose community wealth over extracted wealth can build resilient, equitable economies that work for actual residents, not absentee owners.

The path forward requires specific steps. State legislators should begin with pilot programs in willing cities, testing ownership-based tax differentials on commercial property. States should coordinate through existing compacts to prevent individual states from being isolated. Public pension funds should prioritize investments in local businesses and cooperatives. State economic development agencies should shift from attracting outside corporations to supporting local business formation and worker buyouts.

Humans are more important than corporations, and we can never lose sight of that.

Ready to act? Here’s how:

Contact your state legislators (find them at openstates.org) and demand:

• Ownership-based commercial property tax - Higher rates for out-of-state corporate ownership

• Living wage tax credits - Reward businesses paying 2x minimum wage, penalize those with workers on public assistance

• Community wealth fund - Dedicate revenue to worker co-op conversions and community land trusts

Call, email, or visit their offices. Sample message: “I support ownership-based taxation that keeps wealth local. Will you sponsor legislation creating commercial property taxes based on whether businesses are locally owned?”

If you’re in California, New York, Massachusetts, Illinois, or Washington, you have the most leverage. Your states have the economic power to lead.

Join organizations already fighting for this: • Democracy Collaborative (democracycollaborative.org) • Project Equity (project-equity.org) • New Economy Coalition (neweconomy.net)

If you found this article worthwhile, check out my book

Conservatism: America’s Personality Disorder

https://a.co/d/dc0MDA5

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