Americans Continue to Flee High Tax States for Low Tax States

Radical leftists are calling for higher taxes at the federal and state levels. Americans who are already frustrated with current tax rates flee to states that have low or no income tax red.

The problem is so serious that even the government is now aware of it. For example, the IRS’s tax migration data shows that there were approximately 14 million people who received migrant tax returns in 2018-2019. This means that approximately 14 million people moved.

The report stated that those who moved were mostly in higher income brackets.

Read a Passage From That Report:

Overall, the adjusted gross income (AGI) average for returns identified as nonmigrant was higher ($88,420) than for returns classified as migrant ($69,878). For the two youngest age groups, under 26 and 26-under-35, there was a minor difference between the AGI average for nonmigrant and migrant returns. By comparison, for the middle two age groups, 35-under-45 and 45-under-55, the AGI average for nonmigrant returns was the higher of the two, but for the oldest two age groups, 55-under-65 ($119,375) and 65 and over ($96,512), the average AGI for migrant returns was the higher of the two.

This income figure suggests that state taxes might be a major reason for migration. High-income Americans fled blue states with higher taxes to seek out red states that have a smaller share of their income.

RealClearMarkets has confirmed that migrants from high-tax blue states are moving to low-income tax red states. In a recent article, they stated that:

These five states are not known for their fiscal restraint. New York, California, and Illinois lost 219,937 taxpayers, while Massachusetts and New Jersey lost over $28 billion in adjusted Gross Income (AGI). These states have an average effective state tax rate of 11.8 percent.

On the other hand, the five states with the highest number of taxpayers are all low-tax — three states have no income tax and the others have five. The net gains of Florida, Texas and Arizona as well as $28.9 Billion in AGI and 194,340 taxpayers were realized by Washington, North Carolina and Arizona. All this while having a low state-local effective tax rate (just 8.96%). Florida is the clear winner, adding $17.5 Billion in AGI to its existing tax base.

New York’s income tax rates range from 6.49%-8.82% to those earning more than $80650. New York City also imposes a tax burden. Similar income tax rates are found in California, Illinois, and New Jersey as well as Massachusetts.

Texas, Washington, and Florida have no income tax. North Carolina has a flat income tax rate of 5.25%. Arizona’s income tax rate stands at 4.5%. Despite the fact that these states use other taxation methods, the overall tax burden they place on residents is much lower than those in the states with the highest taxation (all of which are run by Democrats).

Americans are intelligent enough to see that and it is likely one of the main reasons why people migrate from New York, California and Illinois to New Jersey and Massachusetts to Florida and Texas to Arizona to North Carolina and Washington. The Tax Foundation, for example, declares that:

While it is difficult to measure the extent to which tax considerations factor into individuals’ moving decisions, there is no doubt that taxes are important in many individuals’ personal financial deliberations.

The same report also confirmed that people are moving from high-tax states to low-tax states:

According to the 2020 National Movers Study, Arizona, South Carolina and Oregon have the highest inbound migration rates. New Jersey, New York and Illinois saw the highest outbound migration.

Unless the blue states experiencing high levels of outmigration reduce their tax rates or are saved from the Democrat attempt at raising the state and local taxes deduction, it is likely that the migration trend continues, even if states migrated to/from change from year to year.