Southward bound
Overtaxed and underemployed, fed-up Tri-Staters are voting with their flip-flops
AMONUMENTAL shift has quietly taken place over the past year: New York — the highest-tax state in the nation – was surpassed by Florida in total job numbers after years of economic stagnation and outward migration. It’s the culmination of innumerable failed policies that have pushed jobs and opportunity elsewhere. And the Empire State is not alone.
Since the beginning of the pandemic, millions of families have rendered a strong verdict on their local governing philosophies by moving their entire lives from one state to another. While this is nothing new, the trend became even more pronounced during the COVID crisis as remote work, job separation and migration became easier and more acceptable.
Data released by the Census Bureau detailed state-by-state population changes for 2022. Using migration data representing the two years since the beginning of the pandemic, there is clear evidence that Americans are abandoning high-tax, poorly governed states for low-tax destinations.
Indeed, the nation’s 15 lowest-tax states, such as Tennessee and Georgia, gained 2.3 million people, or 2.2% of their population, from April 2020 to July 2022. Meanwhile, the 15 highest-tax states — including Illinois and New Jersey — lost 1.2 million people, or 1% of their population during the same period. The population of the two biggest high-tax progressive states, New York and California, each lost more than 500,000 people each. The population of the two biggest low-tax states, Texas and Florida, increased by 1.6 million people combined.
No wonder Florida is now home to nine of the nation’s 12 most affluent ZIP codes. Guess how many are in New York City — which for decades led the count until the arrival of COVID? You got it — zero! (Los Angeles is still going strong with a trio of top enclaves centered around Beverly Hills).
Unsurprisingly, there was a significant correlation between state tax burdens the last year before the pandemic and changes in state population, according to the Tax Foundation. For every two percentage points of additional income that states taxed away, their population fell just over 1% from 2020 to 2022.
Contrary to “snow-bird” cliches, the analysis also finds no significant impact of weather on migration. Even low-tax states like Oklahoma and Wyoming — with large fossil fuel sectors — managed to overcome the effects of shrinking job numbers owing to changes in US energy production. In other words, good fiscal politics of states were clearly able to outweigh outside factors to bring new families in.
Beyond dollars and cents, politics also appears to have a role in interstate migration. The 15 bluest states, for instance, lost roughly 1% of their population from 2020 to 2022, according to the Cook Partisan Voter Index,while the 15 reddest states gained 1.1% at the same time. Although the correlation between population shifts and politics is weaker than tax burdens, this data suggest that a state’s overall political sentiment does matter to potential new residents.
Most importantly, all of these population figures are not just abstractions. They represent millions upon millions of individual families and citizens pursuing the American dream. They also say a lot about how the American dream is now being achieved. In my years campaigning for and serving in the Connecticut state Senate, I’ve heard endless — mostly unsolicited — stories about families, retirees, and small business owners either considering or actually moving to lower-tax states.
One couple that owns a small technology firm in my Fairfield County district told me that they could easily operate their business more profitably in another state but are holding out because of strong ties to their community. A Stamford woman whose family had fallen on difficult times told me they are moving specifically because the cost of living and taxes were just too high to make ends meet. At least one in 10 people nearing retirement that I met campaigning in my district told me unprompted that they would likely move to a lower-tax state in the next several years. These are hard working people who deserve better choices than squandering away their money in high-tax states like Connecticut.
While there has never been more at stake for state policymakers, legislators also have unprecedented flexibility when it comes to reducing the burdens of government. Federal aid, inflation, and other factors have shifted many economic burdens from state taxpayers to federal taxpayers and consumers. State governments now have more fiscal space to reduce their tax burdens and attract families who are less tied to geographic locations for work. Some have even begun to do so.
Some 22 states reduced individual income tax rates in 2021 and 2022. Unfortunately, only one of the 10 highest-taxed states was among them, New York, and it was a very minor change. Hopefully this year, governors of high-tax blue states like Connecticut will find a way to reduce taxes and create much-needed economic growth.
Our Democratic governor, Ned Lamont, has thankfully spoken in favor of doing so. Connecticut and other high-tax states must act now, because inaction will only continue to benefit our legislative counterparts in Austin, Nashville, and Tallahassee.