You can tell from one look at the map below provided by the Tax Foundation where Americans want to be, and where they don’t want to be. Katherine Loughead writes for the Tax Foundation:
The IRS data show that between 2019 and 2020, 28 states experienced a net gain in income tax filers from interstate migration—led by Florida, Texas, Arizona, North Carolina, and South Carolina—while 22 states and the District of Columbia experienced a net loss—led by New York, California, Illinois, Massachusetts, and New Jersey. When all individuals associated with each tax return are accounted for, including spouses and dependents, 29 states experienced a net gain in individuals while 21 states and D.C. experienced a net loss. Only one state, Wisconsin, saw a loss in tax returns attributable to interstate migration but a gain in individuals associated with the returns of those who moved in.
The map and table below show states’ gains and losses in resident population, income tax returns filed, and AGI attributable to interstate migration.
Many factors influence an individual’s or family’s decision to move from one state to another—employment or educational opportunities, proximity to family or friends, and geographic and lifestyle preferences like weather, natural landscape, and population density, to name a few. Cost-of-living considerations, including tax differentials, may not be the primary reason for an interstate move, but they are often one of several factors people consider when deciding whether—and where—to move.
More Americans Moved to States with Lower Taxes and Sound Tax Structures
With this in mind, one observation from the 2019-2020 IRS migration data is that a strong positive relationship exists between state tax competitiveness and inbound migration. Overall, states with lower taxes and sound tax structures experienced stronger inbound migration than states with higher taxes and more burdensome structures.
Of the 10 states that experienced the largest gains in income taxpayers, five do not levy individual income taxes on wage or salary income at all, and two others had top marginal individual income tax rates that were below the national median at the time. Recently, those states have grown even more competitive. Nine of the top 10 states either forgo individual income taxes on wage and salary income, have a flat income tax, or are moving to a flat income tax.
Additionally, among the 28 states that experienced net inbound migration of income tax filers, only nine had a top marginal individual income tax rate above the national median. Meanwhile, among the 22 states (and the District of Columbia) that experienced net outbound migration of income tax filers, 15 states and D.C. had top marginal rates above the median. In the aggregate, states with a top marginal rate at or below the 2019 median of 5.4 percent gained 225,000 net new residents from the states with rates above the median.
Action Line: It’s obvious that citizens around the country are looking for a better America. They want to live in places where politicians work for them, not the other way around. Anyone beginning the search for a better America should start with my Super States. Then, sign up for my free monthly Survive & Thrive letter by clicking here to learn about other ways you can help your family achieve personal and financial security in America.
