The IRS just dropped its 2022–2023 state migration data, and the numbers paint a striking picture of a migratory and fiscal reshuffling with real consequences for state budgets, housing markets, and state economies at large.
Interesting post. I'd appreciate adding in two elements: demographics and housing costs.
On demographics for the longest time east coast retirees have flocked to Florida, warmth attracts those with old bones. Given that America has an aging population it just makes sense that more and more people will seek similar moves.
Also housing costs are very high in northern states, the market builds in the expectation of asset appreciation and this can be a big challenge for would-be first-time homeowners.
Yeah, several things wrong here. First off, surveys have found only small percentages of people cite taxes are their reason for moving. And when you look at matching pairs of states (e.g., NY to NJ, NY to FL, etc) you will see little correlation between taxes and migration. For instance, NJ is the second most common destination for New Yorkers, more than eight of the nine no income tax states.
Also, just because someone moves doesnt mean they "take their income with them." If someone moves, they likely quit their job. Their former employer keeps that income they would have paid usually find a new employee who perhaps will move up the economic ladder. The income, and resulting tax revenue, stayed in the state.
As far as the wealthy are concerned, high tax states are not losing that many. The highest tax states often are the states with the highest percentages of people earning over 200k. For example, CA has a much higher percentage of 200k earners than TX. And that's despite CA having high taxes and TX having no income tax.
We can also look at recent examples that tax cuts won't attract people. Kansas cut taxes massively in 2013. What happened their migration and population? Population grew at a third of the national rate between 2012 and 2016 when the cut were in effect. They also saw more people leave. Iowa has cut taxes since 2023. Is their economy booming? Nope.
I'm not saying no one ever moves because of taxes. Of course some do. But it's not nearly as common as it's made out to be.
Interesting post. I'd appreciate adding in two elements: demographics and housing costs.
On demographics for the longest time east coast retirees have flocked to Florida, warmth attracts those with old bones. Given that America has an aging population it just makes sense that more and more people will seek similar moves.
Also housing costs are very high in northern states, the market builds in the expectation of asset appreciation and this can be a big challenge for would-be first-time homeowners.
Made the move to Florida and it’s been great!
Yeah, several things wrong here. First off, surveys have found only small percentages of people cite taxes are their reason for moving. And when you look at matching pairs of states (e.g., NY to NJ, NY to FL, etc) you will see little correlation between taxes and migration. For instance, NJ is the second most common destination for New Yorkers, more than eight of the nine no income tax states.
Also, just because someone moves doesnt mean they "take their income with them." If someone moves, they likely quit their job. Their former employer keeps that income they would have paid usually find a new employee who perhaps will move up the economic ladder. The income, and resulting tax revenue, stayed in the state.
As far as the wealthy are concerned, high tax states are not losing that many. The highest tax states often are the states with the highest percentages of people earning over 200k. For example, CA has a much higher percentage of 200k earners than TX. And that's despite CA having high taxes and TX having no income tax.
We can also look at recent examples that tax cuts won't attract people. Kansas cut taxes massively in 2013. What happened their migration and population? Population grew at a third of the national rate between 2012 and 2016 when the cut were in effect. They also saw more people leave. Iowa has cut taxes since 2023. Is their economy booming? Nope.
I'm not saying no one ever moves because of taxes. Of course some do. But it's not nearly as common as it's made out to be.