Below is a chart and brief excerpt from today's Early Look written by Macro analyst Christian Drake.
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The chart below plots State Tax Rates and Interstate Net Migration in 2019. In short, the relationship between effective tax rates and state level net migration is strong. The R-squared isn’t super tight but the distribution plots largely as you’d expect with the highest tax states (Illinois, New York, Connecticut, New Jersey) seeing the largest net outmigration. The converse holds as well and the distribution is persistent from year-to-year. We’ve discussed both the causes and implications of extant migration trends previously, but it’s worth a redux. High Tax States – and the tri-state in particular – continue to experience a severe population exodus as taxes, tax policy and demographics (Northeast = older which amplifies the tax migration dynamic as retirees seek more favorable weather while attempting to lower costs and optimize income) conspire, collectively, to drive secular outmigration and capsize growth potential in reflexive fashion. |
