Exodus: People Are Fleeing High Tax States For Greener Grass

This reminds me of the fight we had some two centuries ago.

There comes a certain point where the government takes too much of a person’s wages. Through income taxes, property taxes, sales taxes, gas taxes, etc., when the majority of a person’s earnings is going to the government, they’re going to wise-up and look for greener grass somewhere else. As the high-tax states are learning, that’s exactly what’s happening.

The three highest-taxed states in the union are New York, California, and Illinois. It's no coincidence that each of these has consistently experienced a large drop in population over the past several years. In 2016 and 2017, all three lost nearly 450,000 people.

Census data shows that New York lost 190,000 between July 1, 2016, and July 1, 2017 (I was one of them!). New York has lost about 1 million residents since 2010 alone, according to the Empire Center. The introduction of new government programs like “free college” for New York residents is bound to only exacerbate the problem, as more taxes will need to be collected to pay for it.

California lost 138,000 in that same time frame. Between 1990 and 2012, California has lost about 3.4 million of its residents, and that number has only risen since. As the state continues to expand the scope of its government’s programs, more taxes inevitably have to be taken in. That means less money for the folks who live there.

Illinois is also one of the worst hit states for outbound migration. Between July 2016 and July 2017, over 115,000 Illinoisans left the state. Since 2010, 650,000 have packed up their things and hit the road, looking for a better place to live. One of the biggest reasons for leaving? Property taxes.

Pardess Mitchell of Ingleside, Ill., shared her story with the Illinois Policy think tank. She described how just in the past five years, the constant increases in property taxes have made it all but impossible to afford living in her home state.

“I was born and raised in Illinois. We’ve been living here in Lake County for 16 years, my husband and I.

But our property taxes have gone up $5,000 over the past four years. The property taxes are now more than our mortgage – we’re paying more than $15,000 a year on a home we bought for $227,000.

It’s getting to the point where not only my family but our neighbors have to make a decision: Can we afford to have our kids play football? To do swim club? I put money aside each month for college for my kids and we’re having to dip into that.

They’re taxing us out of the neighborhood. They’re pushing us out. They’re pushing us out of our homes and communities.

If it continues this way we’ll have to leave. We’re in desperate need here to get our local government spending under control, especially in our schools.”

Where are these folks going? The states that experienced the most population growth often have no income taxes, and/or have much lower property tax rates than the aforementioned states.

The Census Bureau noted that the states with the largest growth rates in 2017 were Idaho, Nevada, Utah, Washington, and Florida. Three of those states, Nevada, Washington, and Florida, do not have any state income tax. With lower tax burdens, and often lower overall cost of living, it’s certainly an attractive alternative for those living in states that are taxing themselves into oblivion.

Similar to the fight for independence more than 200 years ago, we’re seeing a massive movement to flee a life that is over-taxed. Many American colonists resented the fact that parliament was taxing them without representation, and they went as far as starting a war over it (among other reasons).

It doesn’t seem that residents of these high-tax states are planning on insurrection any time soon, but they’re certainly engaging in a movement of their own, a movement that leaves their over-taxed lives behind, with the hopes of something better in another place.

Fortunately, unlike under British rule, Americans are able to take advantage of our decentralized system, and move to places that work the best if they so choose. If New York, California, and Illinois engage in reckless financial policies, residents are free to move to states that have things under control.

What does your state tax burden look like? Is it causing you to consider moving?

Comments
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sconnell1791
sconnell1791

Editor

For a state like Texas, which has experienced the largest numeric population growth, the state seems to be faring well with their growing population. Texas' economy is very strong, driven by their oil and gas reserves. People have been moving their in hopes of finding work, and they have. The boom in the oil and gas industry has also helped propel other industries forward as well, like information technology, manufacturing, and biomedicine.

With more people being there now, there is more human capital to develop their economy. The key for them will be to make sure that the state government maintains proper control of its finances, unlike the states from which many of these people are fleeing.

TPOH
TPOH

Editor

Interesting @sconnell1791 do you know how those low tax states are faring with the additional population?