Saturday, June 12, 2004

The Goldwater Institute has issued a report, The Tax Man and the Moving Van: Fiscal Policy and State Population Shifts, concluding that “people make rational decisions about where to work and do business, placing states into a healthy competition that gives jobs and economic strength to states with low tax burdens and favorable business climates.” Here is part of the Executive Summary:

This study examines U.S. Census data from 1995 to 2000 in an effort to determine if, and in response to which conditions, Americans take advantage of their liberty to relocate under a federalist system. Strong evidence suggests that people exercise their options by moving into states with low tax burdens and favorable business climates, and exiting states with high tax burdens, poor business climates, and higher relative costs of living.

Over the years examined, the 10 states with the lowest overall tax burdens (Alaska, New Hampshire, Delaware, Tennessee, Alabama, Texas, Florida, South Dakota, Nevada, and Colorado, respectively) enjoyed a total net gain of more than 1,300,000 residents resulting from across-state migration. The nine states and the District of Columbia with the highest total tax burdens suffered a total net loss of more than 1,700,000 residents as a result of migration.

A regression analysis of the census data reveals that tax burdens, business climate, and cost of living strongly influenced millions of household decisions to move across state lines during the late 1990s. These inflows and outflows are significant enough to profoundly impact the political and economic strength of states.

(Thanks to reader Ben Cunningham for the tip.)