In recent years, Republican-led states have instituted a slew of taxpayer and business friendly tax reform policies. Combined with the draconian COVID-19 lockdowns that swept Democratic-led states in 2020, millions of people and billions of dollars’ worth of business revenue have migrated in the past few years to taxpayer friendly states.
Since 2020, the 15 most taxpayer friendly states have experienced a 2.2% population increase, while the 15 highest tax states have experienced a 1% population decline. These changes are equivalent to a 2.3 million population gain, and a 1.2 million population loss. The two largest high tax states, California, and New York, and the two lowest rate states, Texas, and Florida, contributed to most of these changes.
Comparing population changes by state partisanship, the 15 most Republican states had a 1.1% population increase, while the 15 most Democratic states lost 1% of their population. While these correlations are slightly less pronounced than when based on tax policy, they do clearly show that taxpayer friendly and Republican states, often synonymous, have attracted millions of new residents in just the past few years.
Included in these trends are changes where high-income earners reside. Before 2020, the most affluent zip-codes resided in New York. Now, Florida boasts 9 out of the top 12 most affluent zip codes, with Miami’s Star Island is now the most expensive neighborhood in the United States.
Florida Atlantic University Professor Ken Johnson said:
“From what I hear on the ground, people come to Florida because it’s prospering,” he said. “It used to be the sunshine. Now it’s the sunshine and the economy.”
Economic prosperity and low taxes have been the primary drivers of migration from red states to blue states. Crime, education, and pandemic response have also been top drivers of why people have moved out of state. UCLA professor Paul Ong said:
“While salaries in other regions and states are lower, the cost of housing is even lower,” he said. “This means that they have a higher standard of living because of more disposable income and/or high chance of owning.”
Taxpayer and business friendly policies have been clearly demonstrated to attract new residents and high-income job creators. As population growth continues to favor of taxpayer friendly and red states, and the policies they implement continue to show positive results for their economies, perhaps high tax states will reconsider their tax burdens, and follow the lead of Texas and Florida.