A growing number of Americans are deserting Democrat-run states and opting to resettle in mostly Republican-run states. In these states, the tax burden is notably lower, causing key left-leaning states to lose populations, according to a Tax Foundation report.
States with No or Low Personal Income Taxes Attract Americans
The study underscores what has emerged as a “great migration” pattern during the COVID-19 pandemic where Americans are choosing states with no income tax or low income tax, which are typically governed by Republicans.
The report focuses on taxes and doesn’t take into account other factors which might be making GOP-run states more attractive, such as lower crime rates.
Jared Walczak, the Tax Foundation’s VP for state projects, told Yahoo News that moving to states with low or nonexistent income taxes is oftentimes due to a desire to reduce one’s tax liability.
The NPO executive pointed out, also, that lower taxes would be a priority for some people, now that coronavirus restrictions have been lifted and Americans are able to move more freely.
A total of 42 out of the 50 states – plus the District of Columbia – do have individual income taxes; in 41 of those states, wages and salaries income are considered taxes.
The eight states that have no personal income tax are Texas, Florida, Tennessee, South Dakota, Alaska, Nevada, Wyoming, and Washington.
According to the analysis of the Tax Foundation, a total of nine states, mostly with Republican administrations, accumulated population gains surpassing 1% in 2021: Texas, Florida, Montana, Arizona, North Carolina, Nevada, Utah, South Carolina, and Delaware.
The report points out that all nine states implemented or enacted reductions to their individual or corporate income taxes.
Millions of Americans moved out of high-tax states in 2021, while states with low- or no-income taxes saw higher levels of inbound migration, according to the Tax Foundation. (Credit: Tax Foundation, U.S. Census Bureau) pic.twitter.com/3IG4I2qYl4
— Mike Netter (@nettermike) February 6, 2022
Democrat-run States are the Biggest Losers
Among the greatest losers in population terms in 2021 were the state of New York and Washington, DC; they were the only two within the last year to increase personal income taxes.
The District of Columbia’s population dropped by 2.8% in the period from April 2020 until July 2021, US Census Bureau data shows. At the same time, New York lost a total of 1.8% of its population.
However, the biggest population losers have been precisely the states requiring the highest taxes on personal income: California, Illinois, New Jersey, and Hawaii.
The nation’s most populous state, California, whose personal income tax rates are between 1% and 13.3%, lost 0.8% of its people to outbound migration. In New Jersey, in the same period, the population loss was 12,613.
The state of Illinois has seen over 100,000 of its residents move elsewhere since 2020, according to the report.
America’s second-most populous state, the staunchly Republican Texas, gained 310,288 people through domestic migration, increasing its population by 1.3%.
Florida, the third most populous state, gained 211,196 new inhabitants, a 1.1% increase. North Carolina attracted 94,000 more people, and South Carolina – 60,000 more people.
Walczak cautioned, however, lower taxes have indirect additional effects on attracting new people since tax codes that encourage economic growth create greater economic opportunities.
He pointed out that tax-motivated migration – which benefits most Republican-led states – also includes young people and just anybody who looks “for better economic opportunities.”
Interesting chart showing US domestic migration: pic.twitter.com/5RKZDH8GdQ
— Ronnie Stoeferle (@RonStoeferle) January 26, 2022