America’s top five inbound vs. outbound states: How do they compare on a variety of economic, business climate and tax burden measures? Part II

From Mark Perry.

"In a CD post last month, I looked at America’s top five inbound and top five outbound states last year, based on household moving data from North American Moving Services US Migration Report for 2017. Specifically, I compared the top five inbound and top five outbound states on a variety of measures of economic performance, business climate, business and individual taxes, fiscal health, and labor market dynamism, and those comparisons are displayed graphically in the table above.

Yesterday USAToday published a nice summary of The Tax Foundation‘s report “Facts & Figures 2017: How Does Your State Compare?” that analyzes the total tax burden in each state, measured as the percentage of a state’s income that goes to taxes for state and local governments (income taxes, property taxes and sales taxes). I’ve added that measure of total tax burden in the table above (in bold) as the new first row in each group above (Top 5 Inbound and Top 5 Outbound states), along with the state ranking for total tax burden.

For example, four of the top five outbound states (Illinois ranked No. 46, Connecticut at No. 49, New Jersey at No. 48, and California at No. 47) were among the five US states with the highest tax burden — New York was No. 50 (highest tax burden). The average tax burden of the top five outbound states was 11.2%, with an average rank of 43.2 out of 50. In contrast, the top five inbound states have an average tax burden of 8.7% and an average rank of 16.6 out of 50. As would be expected, Americans are leaving states with some of the country’s highest overall tax burdens (IL, CT, CA and NJ) and moving to states with lower tax burdens (TN, SC and AZ).

Bottom Line: As I concluded in the original post, now supplemented with another measure of total tax burden by state, the migration patterns of US households last year followed predictable patterns based on differences among states for tax burden, economic growth, vitality and dynamism, labor market robustness, fiscal health, and party control of state legislatures. The comparison above shows that there are significant differences between the top five inbound and top five outbound US states when they are compared on a variety of measures of economic performance, business climate, tax burdens for businesses and individuals, fiscal health, and labor market dynamism. There is empirical evidence that Americans do “vote with their feet” when they relocate from one state to another, and the evidence suggests that Americans are moving from states that are relatively more economically stagnant, Democratic-controlled fiscally unhealthy states with higher tax burdens, more regulations and with fewer economic and job opportunities to Republican-controlled, fiscally sound states that are relatively more economically vibrant, dynamic and business-friendly, with lower tax and regulatory burdens and more economic and job opportunities."