December 13, 2005

Study: Population shifting from high-tax to low-tax states

Studies confirm that Americans migrate from high-tax to low-tax states, according to an article by a professor of economics at Ohio University, Richard Vedder, for the nonpartisan Heartland Institute.

“[P]eople are fleeing high-tax, big-government states for low-tax havens where they can keep more of their income,” Vedder wrote in the December 1 article.

Between April 1, 2000, and June 30, 2004, a net 1.4 million native-born Americans moved from states with income taxes to the nine states with no general income tax, Vedder wrote.

“This movement of 310,000 persons a year is a continuation of a trend of the 1990s, when about 3 million persons made similar moves,” Vedder wrote. “From 1990 to the present, about 4.6 million persons have fled the income tax states--a vastly larger number than moved from East Germany to West Germany in the 15 years before the Communists built the Berlin Wall."

Americans move to avoid all taxes, not only taxes, Vedder wrote. “For example, my research shows 2,845,700 Americans moved into the 10 states with the overall lowest state and local tax burden in the 1990s, from other states. Meanwhile, there was a net out-migration of 2,151,300 from the 10 states with the highest tax burdens.”

Vedder noted that many other factors influence migration but wrote that “sophisticated econometric analysis” confirms a relationship between taxation and migration.

“Recently, some scholarly studies have confirmed the aversion of migrants to taxes for specific age groups,” Vedder wrote. “For example, a recent study from the prestigious National Bureau of Economic Research concluded, ‘this evidence is consistent with the notion that wealthy elderly people change their state of residence to avoid high state taxes.’”

“People move to find conditions conducive to a better life," Vedder concluded. "The tendency to move to areas with relatively low taxes suggests that on balance migrants believe life is better where individuals are free to spend a larger share of the money they earn in a manner of their own choosing.”

Analysis of Census Bureau numbers by The Business Council’s research affiliate, The Public Policy Institute, shows that New York, with the nation’s highest state and local tax burden, has lost population in several critical age ranges.

The data add to the evidence suggesting that New York's long-term economic travails may be impelling an increasing number of New Yorkers to move elsewhere, The Institute's analysis shows.

Between April 2000 and April 2003, the Census Bureau estimates New York gained 213,294 in overall population. That is a growth rate of 1.1 percent, the 44th-fastest growth rate in the nation. That growth rate is well behind the national average growth rate of 3.3 percent. Nevada is the fastest-growing state, at 12.2 percent.

New York ranked 46th in growth among young adults and 49th among those aged 15 to 44 - those preparing to enter the workforce and those considered in the prime creative years of their careers. And among children five years old or younger, New York ranked last in growth, behind 49 states and the District of Columbia.

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