Back in 2009, I wrote a commentary about how a record number of Americans were moving from one part of the country to another part of the county. In general, they were moving from the Northeast and Midwest to the South and West. But I argued then that it wasn’t just because Americans wanted a change in climate. If you dug into the data, you would find that Americans were migrating from high tax states to low tax states.
That pattern is even more evident 13 years later if you look at data collected by the Internal Revenue Service. The editors of the Wall Street Journal summarize it and find an even stronger correlation of Americans moving from high tax states to low tax states.
The biggest winners were Florida, Texas, Arizona, North Carolina, South Carolina, Tennessee, Nevada, Colorado, Idaho, and Utah. The biggest losers were New York, California, Illinois, Massachusetts, New Jersey, Maryland, Ohio, Minnesota, Pennsylvania, and Virginia.
Obviously, climate may have some influence, but weather doesn’t explain it all. The editors point out that, “California has the best climate in the country. It also has among the highest taxes and cost of living.” They also note that four of the ten states that gained the most income don’t impose a state income tax (Florida, Texas, Tennessee, and Nevada).
Finally, they notice that the rate of “migration has accelerated since the cap on the SALT deduction took effect.” SALT is the state and local tax deduction. That deduction was limited to $10,000 in state and local levies due to the Tax Cuts and Jobs Act, which was passed when Donald Trump was president.
More than a decade ago, I predicted we would see more Americans moving from high tax states to low tax states. That is what is happening.