Interstate Migration: Americans Moving From High-Tax States To Low-Tax States, Research Shows

Interstate Migration: Americans Moving From High-Tax States To Low-Tax States, Research Shows
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In the Trump era, immigration — illegal immigration, in particular — is often discussed, but interstate migration is not. A new Cato Institute study provides valuable insights about migration flows inside the United States.

According to the study, while interstate migration is influenced by a wide variety of factors, such as job opportunity, climate, and housing costs, researched based on Internal Revenue Service (IRS) data points to the conclusion that taxation is an important, underlying cause of migration flows inside the country.

For instance, the state of New York lost 218,937 households in 2016 alone, gaining 142,722. Conversely, the state of Florida lost 211,950, but gained 307,022 households.

As one would expect, low-tax states have enjoyed a net in-migration in 2016.

In the Northeast region, New Hampshire (a state with no individual income tax) enjoyed an influx of new citizens, while high-tax states like Massachusetts, Rhode Island, Vermont, and Connecticut did not, losing households.

In the Southeast, Tennessee has seen an influx of new citizens. For the state of Kentucky, the situation is the exact opposite.

When it comes to the West coast, many Americans are moving out of California, a high-tax state, to Nevada, Washington, and Texas, all states with no income tax.

In the Midwest, South Dakota has seen a modest influx of new citizens, but neighboring high-tax states of Nebraska, Minnesota, and Iowa have all suffered population losses. Wyoming, which also has no income tax, has seen a net in-immigration, but only when it comes to high-earning households.

In total, 286,431 households moved from the 25 highest-tax states to the 25 lowest-tax states in 2016, according to Cato.

The 2017 tax reform will, Cato Institute concludes, further intensify interstate migration in the United States.

In April, RealClearPolitics predicted that the United States could soon see the greatest interstate migration since World War II, with 15 million Americans moving from high-tax states to low-tax states by 2028.

This phenomenon will, according to the outlet, be fueled by the elimination of most state and local tax deductions. The high-tax states of New York and California in particular, according to RealClearPolitics, could feel the devastating effects of interstate migration.

“Rather than penalize hard work and innovation, California and New York must take steps to reward it. Most of all, politicians in high tax states must recognize that the very opportunity that has long served as a lure for the best and brightest could be snuffed out if they allow the cost of success to skyrocket in the Empire and Golden states.”

This is why state politicians in high-tax states need to send a “pre-emptive message right back to Congress that they’re ready to do what it takes to keep the world’s most creative and successful people,” RealClearPolitics concluded.