Turns out that it’s easy to make people move out of your state: Just raise taxes.
Recently, residents of high-tax states such as California, New York, Illinois, and New Jersey have been on the move. Specifically, they’ve been flocking to low-tax destinations such as Florida, Texas, North Carolina, Arizona, and Tennessee.
Between April 1, 2020, and June 30, 2023, high-tax states lost net 2.8 million residents to low-tax states. That’s more people than could be seated in all 30 NFL stadiums and 29 NBA arenas combined.
Zero-income tax Florida and Texas were the top two destinations for interstate movers, gaining 819,000 and 656,000 net residents respectively. Americans in the northeastern U.S. and the upper Midwest poured into Florida, while Texas was the destination of choice for many people living west of the Mississippi.
North Carolina (310,000), South Carolina (248,000), Arizona (218,000), and Tennessee (207,000) ranked third through sixth in net population gain from interstate migration. Each of them is a low-tax state (except South Carolina, which stands in the middle of the pack). Tennessee, like Florida and Texas, is one of the seven states with zero income tax.
It’s no coincidence that former Californians led the exodus out of high-tax states. California has the highest state income tax rate in the country at 13.3%, and it lost 1.2 million residents to interstate migration in a little more than three years.
Incredibly, California was the leading source of net domestic migration into every state within 1,000 miles of either Los Angeles or San Francisco.
The most popular destinations for Californians were Texas, Arizona, and Nevada. Texas and Nevada have no income tax, and Arizona has the lowest non-zero income tax rate.
New York state has the second highest income tax rate at 10.9%, and it had the second highest level of net outmigration during the roughly three-year period – a net loss of about 883,000 people. Counting both local and state taxes, nobody faces higher tax rates than do New York City residents.
Frank Sinatra once sang that if you could make it in New York, you could make it anywhere. These days, more and more people have been trying to make it somewhere else.
New Yorkers have been gravitating to greener pastures in Florida, Texas, and North Carolina. Low overall taxes and non-existent income tax play an important role in attracting New Yorkers to Florida and Texas (North Carolina is also among the lowest-tax states in the country).
Other New Yorkers fled to neighboring states like Pennsylvania, Connecticut, and New Jersey – states which have lower taxes than New York, but which certainly can’t be considered low-tax states.
Each of these states lost population to interstate migration overall, despite all the people flowing in from New York. In fact, New Jersey had the fourth highest population loss from interstate migration – about 153,000, behind only California, New York, and Illinois (364,000).
Other factors besides taxes also contribute to population flows. But the pattern of high-tax states losing residents to low-tax states is too strong to chalk up as a coincidence. The pattern holds year after year, between neighboring states, and across regions.
The pattern also holds across the income spectrum. Even low-income Americans (who may themselves pay a small amount of taxes) tend to move from high-tax states to low-tax states. If high taxes are supposed to pay for government services that improve the lives of low- and middle-income residents, well, it’s not working.
The highest-income residents are especially sensitive to differences in tax rates, but that just shows why it’s so counterproductive for state lawmakers to try to soak the rich. Driving up tax rates drives out the people who pay the most in taxes.
State lawmakers eager to harvest more tax revenues must be careful lest they cause the geese with the golden eggs to fly away to somewhere they’re appreciated more and taxed less: states like Florida, Texas, North Carolina, Arizona, and Tennessee.
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Preston Brashers is a Research Fellow for tax policy in The Heritage Foundation’s Grover M. Hermann Center for the Federal Budget. Read his new report: “If You Tax Them, They Will Run: Millions of Americans Flee California And New York.”
The views expressed in this piece are those of the author and do not necessarily represent those of The Daily Wire.
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