One of the biggest untold stories of 2022 is that of our hardening borders.
I’m not talking about national borders. I’m talking about borders between states.
This started with business. Since a worker can be anywhere, and so can a CEO, companies can now arbitrage their location based on local tax law. Tesla still employs people in California. So do companies like Snowflake, which now says it’s based in Montana because the CEO is there. Caterpillar is still an Illinois company but it’s moving to Dallas. They’re doing it to dodge taxes, moving just their CEOs, and their headquarters, to “low-tax” states.
The scam extends beyond income taxes. It goes to operations. It’s now common for companies to demand tax hand-outs in exchange for building the factories they intend to build anyway. Georgia is doing it for Rivian. Ohio is doing it for Intel. In all cases these companies are pushing tax burdens down, onto the middle class, away from where the money is.
The truth is there are no low-tax states. All states have similar responsibilities, so all states have taxes. Texas has high, regressive sales taxes and high property taxes, which hit the middle class hardest. California chose to target the wealthy with income taxes.
The tax war has been followed by states lobbing missiles at each other over national policies. The stunts cost their taxpayers cash but offer nothing in the way of relief. I’m not just talking about Texas and Florida transporting migrants to D.C. or Martha’s Vineyard. I’m also talking about California buying billboards offering help with red state pregnancies. It’s done in the name of local support, pushing national issues, owning red people in blue states and vice versa.
I fantasized a few years ago about tech workers moving to places like Montana and Wyoming, bringing their values with them and turning red states blue. It may also be the case that tech workers with red state values are just moving to turn these places redder.
Whatever can be said about the current headlines, this must be said. The Internet changes the game on location. People who can work from home will. Many will choose to live where their costs are lower. Others will choose to live where they think their values are appreciated. This increases the tension between states and political extremism.
The Civil “Cold War” is heating up, and the cloud is making it happen.
