There has been a huge, largely unheralded migration within the US over the past decade. And it’s not because of weather, or jobs or other amenities. It’s because of taxes!
Over the decade from 2007 to 2016, almost FIVE MILLION Americans relocated from high-tax states to low-tax states, according to the US Census Bureau. This is a startling revelation that has gotten next to no coverage in the mainstream media. What else is new?
The popular website Wallet Hub recently published a list of states ranked by their tax burden, based on property taxes, income taxes and sales taxes as a share of personal income.
The five states that impose the biggest tax burden on their residents are, in order: New York, Hawaii, Maine, Vermont and Minnesota.
The five states with the lowest tax rates are: Alaska, Delaware, Tennessee, Florida and New Hampshire.
While there are some similarities between the two groups of states, there are a couple of obvious differences. For example:
- None of the 10 highest-tax states has voted for a Republican president in recent elections.
- On the other hand, only three of the 10 lowest-tax states voted for Hillary Clinton
in 2016 — Delaware, Virginia and New Hampshire.
Here are some other related facts to consider:
Between 2007 and 2016, all but three of the 25 highest-tax states lost population. The five biggest losers: New York (which lost 1.3 million), California (-928,627), Illinois (-717,445), New Jersey (-516,326) and Ohio (-346,792).
At the other end of the spectrum, most of the low-tax states gained population. The biggest winners: Texas (1.4 million), Florida (845,239), North Carolina (549,148), South Carolina (361,117), Washington (313,722).
All told, the 25 high-tax states saw a net loss of 4.9 million people to states with lower tax burdens, as you can see in the chart above. The question is, how long will it take for them to figure this out?
Finally, the data also confirm that the states with the highest tax burdens are also among the worst at balancing their budgets. It turns out that almost all the high-tax states are also on the list of states in the worst fiscal condition. And vice versa.
States With the Highest & Lowest Federal Taxes
The state rankings above were based on property taxes, income taxes and sales taxes as a share of personal income. Now let’s look at the rankings based on federal taxes paid annually by adult residents of the various states.
Here are the 10 states where the average adult pays the most in federal taxes annually – based on data from the IRS and the Census Bureau:
- Connecticut — $10,861
Adults in this state pay an average of $10,861 in federal taxes, making it the only state to pay over $10,000 a year. That’s in large part because they have the highest average income at $60,327. - District of Columbia — $10,625
Since some of its most prominent residents are also responsible for spending the government’s money, it seems only fitting that they should chip in for a healthy share of the cost — with an average federal tax bill of $10,625. - Massachusetts — $9,503
- New York — $8,850
- New Jersey $8,835
- California — $7,424
- Wyoming — $7,393
- Washington — $7,112
- Illinois — $7,005
- New Hampshire — $6,977
Here are the 10 states where the average adult pays the least in federal taxes annually:
- Mississippi — $3,024
At $3,024, Mississippi’s lowest per-capita federal tax bill is less than half the national average of $6,151. This is largely a function of having the lowest per-capita income in the nation. - West Virginia — $3,208
The low average tax per adult of $3,208 is largely due to having the nation’s second-lowest per-capita income, but also because West Virginia has the lowest tax filing rate of any state in the union. - New Mexico — $3,600
- Arkansas — $3,677
- Kentucky — $3,715
- Alabama — $3,749
- South Carolina — $3,897
- Idaho — $3,900
- Maine — $4,084
- Louisiana — $4,332
If your state is not in the lists above, see the following table to find where it ranks among all 50 states and DC.
In conclusion, one way to look at all this is to conclude that poorly managed states are trying to force taxpayers to cover for their mistakes. But, taxpayers increasingly won’t stand for it.
Which strongly suggests that high-tax states need to set a new course toward lower taxes and less spending – that is, if they want to stop their population losses.
Consider all this the next time you hear someone claim that the public doesn’t care about high taxes, or argues that higher taxes will improve people’s lives.
Not so! Americans are increasingly voting with their feet.
It appears that New Hampshire is listed as a low tax state, (“The five states with the lowest tax rates are: Alaska, Delaware, Tennessee, Florida and New Hampshire”) yet it is listed as number 10 in the high tax states (“New Hampshire — $6,977”). This appears to be a contradiction.
The first section of the post compares total tax burden as a percentage of income, while the second section only looks at federal income tax amounts. New Hampshire does not have a state income tax and individual wages are comparatively higher than the rest of the nation. That makes New Hampshire’s total tax burden as a percentage of income lower than most states in the US. But because their average income is higher, New Hampshire pays more per adult in federal income tax.
Income tax rates along do not tell the story. Tennessee has no income tax but has a 9.25% sales tax. The South has historically had low pay scales for education which can be a large expense for the state. Utility expenses in the South have historically been lower than other parts of the country. So, be careful you don’t over simplify the analysis and reach a conclusion that may not hold up under close examination.
High tax states also cause businesses to move to low tax states. The net effect is that jobs become more scarce in high tax states. Even if someone would not move specifically to lower his taxes, he very likely would move, if it was necessary in order to secure a job.