State Migration Increasingly Driven by Taxes: New at Reason

Americans move from one state to another for a variety of reasons, observes Veronique de Rugy. They move to retire, to find jobs, to lower their housing costs, or to enjoy nicer weather. While experts disagree about whether tax competition between states plays a large or small role in these relocation decisions, a new study finds that taxes are actually a factor for migration and will increase in importance as a result of the 2017 tax reform.

That new study on Tax Reform and Interstate Migration is from Chris Edwards, a tax expert at the Cato Institute. Using 2016 data from the Internal Revenue Service, he finds that 578,269 people moved, on net, from the 25 highest-tax states to the 25 lowest-tax states. That’s a loss of $33 billion in aggregate income for these vacated states. In that year, 24 of the 25 highest-tax states suffered from net out-migration. In short, tax competition between states is alive and well.

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