The report acknowledges that the money loss states face due to interstate migration “does not account for the fact that taxpayers no longer paying taxes are also no longer drawing upon government services.”
“However, estimated revenue changes are driven primarily by the movement of high-income earners, who tend to pay far more in taxes than they receive back in government services,” according to the report.
The report’s author and director of the Interstate Commerce Initiative at NTUF Andrew Wilford told The Center Square that “Americans are voting with their feet and saying that they are tired of tax-and-spend policies and the stagnant economies they result in.”
“States that insist on doubling down on these policies will only be left with a shrinking population as overtaxed Americans seek greener pastures,” Wilford said.
Wilford told The Center Square that “interstate migration trends have only accelerated over the last decade as remote work has given taxpayers more freedom to move to more favorable tax environments.”
“States that fail to adapt can only expect faster ‘dollar drain’ to states that have taken steps to provide residents with a competitive tax code and economic opportunity,” Wilford said.
“Interstate migration has a clear impact on state revenue,” Wilford said.
“California, New York, and Illinois are projected to lose a combined $10 billion in tax revenue this year, revenue that, since they refuse to cut spending, will have to come from higher taxes on taxpayers who are still there,” Wilford said.
“On the other hand, despite its low taxes, the influx of taxpayers from other states is projected to lead to $4.2 billion in additional revenue for Florida this year alone,” Wilford said.
Factors inducing interstate migration besides tax rates identifed in Wilford’s report include “family, weather, housing availability, education, transportation infrastructure, employment opportunities, and cost of living generally.”
However, it appears that taxes are the biggest factor for state moves, for the report’s data shows that taxpayers’ location changes are from high-tax states to low-tax states.
“The American federalist system is a double-edged sword,” the report states, meaning that while states have the power to each set their own tax policies, taxpayers hold the power of refusal and can move to another state with preferable policies.
The report calls this competition “one of the most valuable tools in taxpayers’ arsenals to get their individual voices heard.”
“Though a simple majority gets a state legislator elected, residency decisions are made at the household level,” the report said.
“While they have the power to set their own tax policies, taxpayers retain the freedom to leave for greener pastures should tax burdens in those states become overwhelming.”
Wilford’s report advised that “states should recognize that a tax code that attracts businesses and workers and allows them to thrive is the path to long-term prosperity.”
“Meanwhile, states on the losing end of the interstate migration battle should stop trying to make up for lost revenue with higher taxes on residents and nonresidents alike, and start trying to fix what is making their residents leave in the first place,” the report said.
