According to the latest IRS migration data, Arizona was among the top recipients of wealth migration and new taxpayers in 2013. That year, the state gained over 16,500 new residents, and along with them, $1.49 billion in adjusted gross income (AGI).
In 2013 Arizona had the largest net population gains from:
- California 5,366 ($317 million)
- Illinois 3,701 ($238 million)
- Washington 1,538 ($82 million)
- New Mexico 1,304 ($50 million)
- New York 1,251 ($96 million)
When comparing Arizona to nearby states, it does better than New Mexico, Utah, Nevada, California, and Colorado. The runner up in the region is Nevada with an increase in $1.2 billion in AGI. Colorado comes in third with about $1 billion in net AGI.
In his 2014 campaign for Governor, Doug Ducey laid out a “Roadmap to Opportunity and Freedom” where he addressed the advantage Arizona had over states like California and Illinois. He explained, “The 8th-largest economy in the world is right next door in California and it’s busy taxing and regulating employers and small businesses to death. Illinois is so bad that we’re practically already Chicago’s favorite suburb!”
He was right. The corporate rate is scheduled to decrease from 6 percent this year to 4.9 percent in 2017, providing an even larger incentive for businesses and their employees to move to the Grand Canyon State. With an 8.84 percent top corporate income tax rate in California, it is not hard to see why 4.9 percent would be more appealing. Illinois with 9.5 percent in 2013 was the fourth highest top corporate income tax rate.
California’s top income tax is the largest in the country at 13.3 percent. Current Governor Doug Ducey also plans to progressively eliminate the state income tax depending on the growth of the economy in Arizona. In 2013 Arizona’s top personal income tax was 4.54 percent.
While states like New York, Illinois, and California were 2013’s biggest losers, Arizona stands out as a top recipient of taxpayers fleeing to friendlier states.