Innovate, Educate, Elevate

For many years, states without income taxes like Florida, New Hampshire, and Texas have been a big draw for high-wage earners looking to retain more of their salaries and retirement savings. For example, a person with an annual salary of $400,000 who moves from California to Nevada saves roughly $30,000 in income taxes. There is a strong case to be made for moving for tax purposes if a person’s income is higher than $200,000, they reside in a high-tax state, or the person is approaching retirement age with a large investment portfolio. While there are benefits to the taxpayer, these large taxpayer migrations have significant effects on the states themselves.

Adjusted for inflation, average college tuition has more than doubled since 1970 (Figure 1). This tuition rise impacts more than just college payers, as an annual $124 billion of federal tax dollars subsidizes financial aid. As tuition climbs, so does the federal contribution. Despite the rise in tuition, most of this increased funding does not go toward academic instruction. So, where is it going? Tuition circulates throughout a university, contributing to everything from student services to administrators hired to oversee compliance. Increased costs in these non-academic areas have forced universities to hire an exorbitant number of administrative staff. In fact, most universities have more administrative staff than professors (Figure 2).

Across the United States, annual homeowner insurance premiums have increased by an average of $648 from 2021 to 2024, according to the Consumer Federation of America. While there are widespread cost increases nationally, several communities have been hit harder than others due to the rise in severe weather events in the past few years. The states that saw the greatest percentage increase in premiums were Utah (59%), Illinois (50%), Arizona (48%), and Pennsylvania (44%). This contrasts with those states that saw the greatest hike in absolute dollars, which were Florida ($2,118), Louisiana ($1,775), and Kentucky ($1,426). These two pieces of data tell us two things about the effect of climate risk on insurance premiums: new areas are being exposed to disasters and known high-risk areas are facing exacerbated impacts.

Federal regulation has grown into something almost impossible to fully grasp. The U.S. Code of Federal Regulations now runs over 180,000 pages, compared to just 10,000 pages in 1950. States have not fared any better. Ohio’s code recently surpassed 17 million words. At that scale, checking every rule against current law to see what is outdated or contradictory is not realistic. Therefore, almost nobody does, and the rules keep piling up. In the past some states have attempted to arduously tackle the problem by hand. For example, former Massachusetts’ Governor Charlie Baker launched a “regulatory review” effort in 2015 that ran through 2017. Many other states have attempted similar reviews over the years. Reviewing an entire regulatory code, however, is slow and labor-intensive, and many of these earlier efforts ended up incomplete.