Americans Fleeing High-Tax States

 

New York State suffered a net loss of 1.5 million people between 2004 and 2013. It is likely not a coincidence that the state’s top marginal personal income tax rate is the second-highest in the nation.

California has the highest top tax rate, 13.3 percent, ahead of New York's 12.7 percent. The Golden State also lost significant population in that time period, with 1.4 million people departing.

On the other hand, states with low taxes have been gaining population, according to the eighth edition of the "Rich States, Poor States" report released by the American Legislative Exchange Council (ALEC) on Wednesday.

Texas saw the largest population gain between 2004 and 2013, 1.2 million. The Lone Star State has no personal income tax.

Florida gained 960,000 during that period. The Sunshine State also has no personal income tax.

Other states with significant population gains include North Carolina (655,600) and Arizona (584,100), while states losing population include Illinois (-646,800) and Michigan (-628,400).

The ALEC-Laffer State Economic Competitiveness Index also ranks states on their economic performance from 2003 to 2013, and their economic outlook in 2015.

The economic outlook rankings are based on 15 factors, including income tax, property tax burden, sales taxes, public employees per 10,000 residents, the state minimum wage, and whether a state is a right to work state.

Utah placed first in economic outlook, due in part to its low marginal corporate income tax rate and lack of an estate tax. Utah is a right to work state.

North Dakota was ranked second, followed by Indiana, North Carolina, and Arizona.

New York was 50th due mostly to its high personal and corporate tax rates, plus a high property tax burden and high sales taxes.

Other states in the bottom five, in ascending order, are Vermont, Minnesota, Connecticut, and New Jersey.

As for the economic performance rating over the 10-year period, which is based on a state's GDP, migration, and non-farm payrolls, Texas finished in the top position. Its GDP grew by 81.7 percent during that period, and non-farm payrolls grew by 20.5 percent.

North Dakota was second, followed by Utah, Oklahoma, and Wyoming.

Michigan was last at No. 50, after seeing a 6.4 percent decrease in non-farm payrolls.

Others in the bottom five are Ohio, New Jersey, Rhode Island, and Illinois.

The ALEC report was written by former Reagan economist Arthur B. Laffer, Heritage Foundation economist Stephen Moore, and Jonathan Williams, vice president of the Center for State Fiscal Reform at ALEC.

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