Press Releases Legislative Alerts Congressional Ratings Heroes and Enemies Maps Email ATR Site Map Search
Home Press National Issues State Issues The Pledge Special Projects Get Active Join Donate
Legislative Alerts
Open Letters
National Projects
Cost of Government Day
Congressional Caucuses
Legislative Advisory Project
Congressional Ratings
K Street Project
National Issue Areas

Speeches and Testimony
Join ATR
Take Action!
Search ATR
Get Acrobat Reader

Cost of Government Day (COGD)
[2005] [2004] [2003] [2002] [2001]

Special Focus: Interstate Migration

Several empirical studies have documented the surge of taxpayers moving from high tax to low tax states over the past 15 years.  Indeed, these studies show that taxes are the single largest factor in interstate migration, rather than such factors as weather, employment, family relocation, etc.

Our analysis here takes these previous studies one step further.  Using IRS data, we calculate not only the number of taxpayers migrating, but also the income of these migrants.  Our findings confirm previous studies that taxpayers are leaving states with higher taxes, and also show that they are migrating from states with higher unfunded pension and healthcare liabilities

Taxes matter and the states raising taxes are losing population.  The 9 states with no income tax gained over 300,000 residents from the other 41 states in 2004 alone.  These residents took with them an additional $10.6 billion of adjusted gross income according to IRS data.

In 2005, these states gained 348,404 new residents from the other 41 states, bringing with them $12.9 billion in additional income.  In 2006, these states gained 410,542 new residents from the other states, bringing with them $13.8 billion in new income.  Consequently, over the last three years for which data are available, the states with no income tax gained well over 1 million residents (1,082,525) from the other 41 states, bringing with them $37.3 billion in new income over that period.

Moreover, from 1996 through 2006, the 10 states with the highest tax burden lost 2.4 million residents to the other states.  These residents took with them to those states during that period a staggering $70 billion ($69.51) in income.

During the same period, 1996 through 2006, the ten states with the lowest tax burden enjoyed an in-migration of 1.4 million residents from the other states.  From 2004 to 2006 alone, 305,594 residents moved to these low tax states.  Due to that inflow of residents, these 10 lowest tax states enjoyed a cumulative real income gain of $30.5 billion from 1996 to 2006.

Retirees are also moving to seek lower tax burdens.  Apart from Alaska, which has a unique fiscal situation, the overwhelming trend is resident growth in the 9 states without income taxes.  This includes not only sunny southern states, but also New Hampshire, which gained over 72,000 residents from 1996 to 2006, and Washington State, which gained over 150,000 residents during the same period.

No Income Tax States Attract Residents and Income

At the same time, states with large unfunded liabilities for public employee health care and pension programs are losing population.  Workers ages 30 to 40 just entering their prime earning years are in particular fleeing the future higher taxes that will be needed to pay these unfunded liabilities. 

Unfunded Pensions Yields Population Out-Migration

The migration of residents from high to low tax states is the biggest issue facing state governments in over ten years.  Without significant fiscal restraint as well as reform in public employee pension and health care retirement programs, states with heavy tax and entitlement burdens will continue to see residents leave for lower tax states, further draining state treasuries.

‹----Back Next----›