People fleeing high-tax states to lower-tax states during the pandemic: Report

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FILE – In this June 14, 2006 file photo are U-Haul trucks sit on a dealer lot in Des Moines, Iowa. U-Haul has a New Year's resolution: cut down on hiring people who smoke. The moving company said that it won't hire nicotine users in the 21 states where it is legal to do so, saying that it wants to ensure a "healthier workforce." The new policy will start Feb. 1, 2020. and won't apply to those hired before then. (AP Photo/Charlie Neibergall, File) CHARLIE NEIBERGALL/AP

People fleeing high-tax states to lower-tax states during the pandemic: Report

January 05, 11:58 AM January 05, 11:58 AM

Last year saw large numbers of people migrate from blue states such as New York and California to red states such as Florida and Texas, according to research.

The Tax Foundation, a nonpartisan group that generally favors low taxes, used data from the census and commercial datasets from U-Haul and United Van Lines to compile a list of which states had the biggest population inflows and outflows. The group noted that many of the states people are leaving have higher taxes than states where people have been relocating.

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New York, which is notorious for its high taxes, was the state with the largest percentage decrease, with a drop of 1.8% from April 2020 to July 2021. Washington, D.C., experienced a whopping 2.8% loss. Other states with big losses include Illinois, California, Massachusetts, and West Virginia.

As for increased migration, Idaho clocked in with the most growth at 3.4%, followed by states such as Utah, Montana, Arizona, South Carolina, Texas, Nevada, and Florida.

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The report notes that a half dozen states in the top third for growth forgo individual income taxes, while four jurisdictions in the bottom third have double-digit income tax rates.

“The economy is changing, and if states want to remain competitive, their tax codes will have to change as well,” Jared Walczak, vice president of state projects at the Tax Foundation, told the Washington Examiner. “Workers are more mobile than ever before, and since they no longer need to live where they work, taxes will take a larger role in deciding where they call home.”

“States can either modernize their tax codes to reflect this new reality or risk finding themselves left behind,” he added in a statement.

Another major difference between a lot of the states seeing population loss and those seeing growth is political. California and New York are liberal bastions, while Florida and Texas consistently elect Republicans to statewide and national offices. Some on the Right have complained about the COVID-19 restrictions imposed in many blue states.

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Last year, MoneyGeek, a San Francisco-based personal finance technology company, found that all but one of the country’s 10 most tax-friendly states experienced gains in population from 2019 to 2020, while seven of the 10 least tax-friendly states experienced a decrease in population over the same time.

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