Paul L. Caron

Wednesday, December 22, 2010

Census Data: Population Flocks to States Without an Income Tax

2010 Census The U.S. Census Bureau yesterday released results of the 2010 Census.

Washington Examiner, Census: Fast Growth in States With No Income Tax, by Michael Barone:

[Population] growth tends to be stronger where taxes are lower. Seven of the nine states that do not levy an income tax grew faster than the national average. The other two, South Dakota and New Hampshire, had the fastest growth in their regions, the Midwest and New England. Altogether, 35% of the nation's total population growth occurred in these nine non-taxing states, which accounted for just 19% of total population at the beginning of the decade.

Wall Street Journal editorial, A Nation in Motion:

The Census reveals a people who are moving to pro-market red states.

The Census is in. There are now 308.74 million Americans, an increase of 27 million, or 9.7%, since 2000. ...

The Census figures also confirm that America is a nation in constant motion, with tens of millions hopping across state lines and changing residence since 2000. And more of them are moving into conservative, market-friendly red states than into progressive, public-sector heavy blue states.

In order the 10 states with the greatest population gains were Nevada, Arizona, Utah, Idaho, Texas, North Carolina, Georgia, Florida, Colorado and South Carolina. Their average population gain was 21%. In the fast-growing states, the average income tax rate is 4% versus 6.9% in the slowest growing states.

The average population gain of the bottom 10 states was 2%. They include most of the states now famous for fiscal distress: Michigan, Ohio, New York, Illinois. Michigan was the one state that actually had a net loss of population in the past decade. Particularly troubling is that three of America's traditionally high-octane states—California, New Jersey and New York—are in the population and economic doldrums.

Americans for Tax Reform, Lower Taxes, Less Government in States Gaining Congressional Seats:

An updated study by Americans for Tax Reform compared states gaining and losing Congressional seats in the decennial reapportionment process and found that states gaining seats had significantly lower taxes, less government spending, and were more likely to have “Right to Work” laws in place. Because reapportionment is based on population migration, this is further proof that fiscally conservative public policy spurs economic growth, creates jobs, and attracts population growth.


Ave. Top Personal Income Tax Rate

Per Capita State & Local Tax Burden

Reapportionment Gainer



Reapportionment Losers






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Anyone compare this data to the number of retirees moving south? Several of the states listed are known for retirement (e.g., Florida). Perhaps it is the lack of tax, or perhaps it is the warm climate, or perhaps because retirement infrastructure is in place.

And a lot of these retirees "moved" to these states as snowbirds (live in south for "season") and snowflakes (go back and forth between homes in the south and homes in the north in no particular pattern or season). So the fact that someone is counted as living in Florida belies the fact that for 4 or 5 month out of the year they live in a northern state (e.g., New York).

And wait until census 2020 when a whole decade of baby boomers have retired and moved south, or moved south for the winter, or moved south and come back up north here and there for several days or weeks at a time.

Posted by: tax guy | Dec 24, 2010 7:01:30 AM

Oh, and what happens as the states in the southwest run out of water? Economic collapse?

Posted by: save_the_rustbelt | Dec 23, 2010 2:00:18 PM

This sort of simple minded analysis is being used to try to eliminate income taxes in northern states. However:

Michigan cannot become Florida (tourism funded)
Michigan cannot become Texas (oil funded)
Michigan cannot become Nevada (gambling funded)

And besides, as cost racheting continues the jobs in Texas will be moving to Mexico, China and Bangladesh, and then what will the workers do?

And doesn't Texas have a budget deficit next year?

Posted by: save_the_rustbelt | Dec 23, 2010 1:59:10 PM

I may not be an economist but I have backgrounds to it. This is indeed true. Population grows when the taxes are lower. It means that people tend to be none risky and not think of the outcome of population growth. But when taxes are higher, people tend to prioritize things such as education and sort of. Well, this is the true scenario that we can learn from. Thanks a lot for featuring it.

Posted by: washington dc web design | Dec 22, 2010 10:05:39 PM