Across the nation, people are fleeing states like Illinois and New York for greener pastures. In the last year alone, the Northeast lost around 300,000 people due to migration while the Southern states gained around a million residents. Apart from looking for a better climate, high taxes have caused many Americans to consider moving. Now, as the 2020 census approaches, many states will lose federal funding and a congressional seat, something that will hopefully be the wakeup call legislators need to realize how disastrous high taxes really are.
Over the past decade, people have been moving to low tax states in hopes of having more money in their pocketbooks. States like Idaho, Texas, Florida, and Arizona have all seen explosive growth rates in the past decade and are expected to continue growing. Although most of these states have warmer climates than their northeast counterparts, it doesn’t explain the whole picture as California had a net loss of 200,000 people last year alone, despite having one of the most temperate climates in the world.
But what is causing this exodus? Unsurprisingly, finances are a major influence on people’s decision to relocate. A Berkeley IGS Poll found that 58 percent of Californians cited high taxes as a reason for why they would want to leave their state, and other research confirms it.
The Cato Institute found a negative linear relationship with states that had a tax burden less than 8.5 percent had a positive migration rate while states that had a tax burden higher than 8.5 percent had a negative migration rate. This should come as no surprise, as a Newark family earning less than $75,000 could save around $6,000 annually in taxes if they moved to Houston, Texas, as the study suggests.
Not only has cheaper cost of living attracted many to the sunbelt, but those that are staying in high tax states are seeing worsening conditions. The Illinois Policy Institute shows that as Illinois’s population decreased, it has started to cause real problems for the pension system in the state. Because the pension liabilities are fixed regardless of population, the remaining residents are seeing higher taxes as a result to fund the system.
On top of this looming issue, and as people continue to flee these high tax states, businesses as well are forced to find better opportunities elsewhere. In 2016, high taxes caused1,800 businesses to flee the Golden State along with 275,000 jobs. Coincidentally, California currently ranks 48th for the worst business tax climate in the nation.
With such a myriad of issues looming for these states, perhaps the only thing that will force legislators to re-examine their policies is the upcoming census. The census, which decides where a whopping $880 billion in federal funds is allocated, is quickly becoming the most expensive one yet.
To encourage participation in the Federal Census, New York recently added an additional $10 million to its budget while California alone has allotted $187 million to theirs (in 2010 they only spent $10 million). As states spend unheard of amounts of money to encourage residents to participate in the census, it ultimately comes at the cost of the taxpayer as these funds would’ve gone to education or health care services instead.
Indeed, instead of massive spending going towards the census, states should pass policies that do not force people to leave in the first place. Yet, it’s not just funding that states will lose.
Currently, New York is on track to lose one or two congressional seats, while California is in danger of losing a seat for the first time ever. As these state’s number of representatives are reduced as a result of population loss, so too will be their influence in Congress.
Despite the strong economic growth continuing to soar nationwide, some have felt that the price they pay to live in their state has become too outrageous. As people continue to flee high tax states like California, New York and Illinois, they take with them federal funding and congressional seats as well.
Hopefully, these migration patterns will be a wakeup call to legislators that the cost of high taxes might be a congressional seat.
Janson Q. Prieb is a policy analyst at the American Consumer Institute, an education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.