NCPA - National Center for Policy Analysis

Tax Exodus: Five States that Residents Are Fleeing

December 4, 2012

Cash-strapped states are finding it increasingly difficult to find new sources of revenue. Many states have turned to tax increases to sustain current levels of spending rather than making cuts in various programs. As a result, people have begun to move to different states to avoid the taxation, resulting in a net loss of revenue, says the Fiscal Times.

Five states top the list for shrinking populations according to migratory patterns:

  • Illinois.
  • New York.
  • California.
  • New Jersey.
  • Ohio.

Some states have had a constant stream of people moving out of the state, like Ohio; yet the fact that Illinois has so many people moving out surprises many. However, the state has experienced an income tax increase of almost 67 percent, which has residents opting to leave the state.

Some local economies benefit from the increase of new residents as employers expand their consumer base and attract new talent. Low tax incentives have helped states like Texas and Florida develop better tax bases.

However, states with a declining population must worry about the long-term implications. For example,  a dwindling population may create a negative feedback in which local governments respond to it by increasing taxes to make up for lost revenue, which, in turn, would lead to more people leaving the state.

Source: "Tax Exodus: 5 States that Residents Are Fleeing," Fiscal Times, November 28, 2012.


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