By Elnur @ Shutterstock.com
You already know that America’s growth corridors are where the action is for businesses who want to keep their own money and thrive. The Census has confirmed as much, and the economic numbers do too. Now the IRS is coming in with another analysis to put the final nail in the coffin for high tax states.
The Wall Street Journal explains that new IRS data show vast income losses for high tax states, with low tax, growth corridor states the winners in the migration trend. Allysia Finley and Kate LaVoie report:
New IRS data compiled by research outfit Wirepoints illustrate the flight from high- to low-tax states. The chart above shows the adjusted gross income (AGI) that states lost or gained from population migration in 2019 as a share of their total AGI. States in the Sun Belt and Mountain West generally gained income while those in the Northeast and Midwest lost income.
Retirees in the Midwest and Northeast are flocking to sunnier climes. But notably, states with no income tax (Florida, Nevada, Tennessee and Wyoming) made up four of the 10 states with the largest income gains. On the other hand, five of the 10 states with the greatest income losses (NY, Connecticut, New Jersey, Minnesota, California) ranked among the top 10 states with the highest top marginal income tax rates.
Florida gained a whopping $17.7 billion in AGI including $3.4 billion from New York, $1.2 billion from California, $1.9 billion from Illinois, $1.7 billion from New Jersey and $1 billion from Connecticut. California, on the other hand, lost $8.8 billion including $1.6 billion to Texas, $1.5 billion to Nevada, $1.2 billion to Arizona and $700 million to Washington.
Taxpayers who moved from high-tax states to Florida had significantly higher AGIs. For instance, Illinois migrants to Florida had an average AGI of $182,000—about twice as much as those who moved from Illinois to other states. The average taxpayer who moved to Florida from the other 49 states had an AGI of $110,000, which is about twice the average household income. By contrast, the average taxpayer who left Florida had an AGI of just $66,000.
In sum, high-tax states aren’t just losing more taxpayers—they are losing higher-income ones. Similarly, low and no income states are generally gaining more taxpayers who also earn more.
Read that last paragraph again–“high-tax states aren’t just losing more taxpayers—they are losing higher-income ones.” When state income tax brackets are progressive (meaning the high income earners pay a higher percentage of their income in taxes), it hurts the state exponentially more when a high income earner leaves.
That’s the scenario facing places like Illinois, New York, and Connecticut. Not only are they losing residents, but the ones who are leaving are the most important to balancing the states’ bloated budgets.
Action Line: If you feel like your money isn’t being treated well by your state, look for a better America. Build an island for you and your family in a state where your money and time are respected, and you can focus on something other than paying your tax bill. If you need help staying serious, click here to sign up for my free Survive and Thrive newsletter. I’ll keep your mind on your goals, but only if you’re serious.
E.J. Smith - Your Survival Guy
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