Here’s a map based on data from U-Haul. It highlights the states that people are escaping (in red) and the states where people are seeking refuge (in green).
Unsurprisingly, most of the states gaining population are no income tax and flat taxes.
Meanwhile, the states losing population include some of the country’s worst tax-and-spend jurisdictions.
Taxes obviously are not the only reason why people move from one state to another, but there’s a long-standing pattern of people moving to places that have lower fiscal burdens.
And, thanks to tax competition, this process will probably get even stronger. Here are some excerpts from an editorial in yesterday’s Wall Street Journal.
Tax changes that took effect on Jan. 1 are widening the tax divide… Start with New Hampshire, which eliminated its 5% tax on dividends and interest income, thanks to Gov. Chris Sununu and the GOP Legislature. The Live Free or Die State already had no income tax on wages. The lack of a levy on investment income will make the state even more of tax refuge in the Northeast. Look for more migration from Massachusetts, which abandoned its flat tax in 2022 to enact a 9% top income-tax rate and is Taxachusetts again. …Iowa enacted a 3.8% income-tax rate for all—the culmination of Gov. Kim Reynolds’s six-year campaign to cut the top rate from 8.98%. First-term Louisiana Gov. Jeff Landry signed a flat tax last month, dropping that state’s income-tax rate to 3% from 4.25%. …Mississippi…dropped its rate to 4.4% from 4.7%, and North Carolina, which cut to 4.25% from 4.5%. The Tar Heel State, which has boomed since cutting taxes in 2014, will further reduce the income rate to 3.99% in 2026.
Needless to say, all of these changes create an ever-larger incentive for people to escape high-tax states such as California (top rate of 13.3 percent) and New York (top rate of 10.9 percent…and over 14 percent in New York City!).
P.S. I have a four-part series on people escaping from blue states to red states.
In Part I of this series, we looked at how people – and taxable income – are moving from high-tax states to low-tax states.
In Part II of this series, we reviewed how tax-motivated migration will create further fiscal nightmares for high-tax states.
In Part III of this series, I shared excerpts from a column I wrote for Bloomberg about why state tax competition is desirable.
In Part IV of the series, I examined at the 10-biggest state-to-state moves in 2022, with California looking very bad.
P.P.S. The most astounding example of out-migration surely must be Venezuela. More than 7 million people have fled that nation’s socialist disaster.
Dan Mitchell is co-founder of the Center for Freedom and Prosperity and Chairman of the Board. He is an expert in international tax competition and supply-side tax policy.
