Are Americans flocking to low-tax states?

The Republican National Committee recently sent a tweet suggesting that Americans are voting with their feet by relocating to states with fiscally conservative policies. The RNC tweeted, "Is it a coincidence that Americans are fleeing tax-and-spend states like CA for states that spend money responsibly? #jobs."

This has become a popular talking point in various states, particularly among Republicans.

Earlier this year, Florida House Speaker Will Weatherford said, "Today almost 1,000 people a day are moving to the state of Florida. Do you know why they're coming here? Because they are more free here than they are in some other states." PolitiFact Florida rated that Mostly False. And in 2011, New Jersey state Senate Minority Leader Tom Kean Jr. said, "The state’s tax burden has, according to census figures released today, cost our state another 190,000 residents in 2009." PolitiFact New Jersey rated that False.

We decided to explore this meme. The RNC didn’t return an inquiry for this article, but we think the simplest and most appropriate proxy is to gauge each state by how low their level of taxation is and whether people are moving in or out. The tweet also mentions spending, but since most states require balanced budgets, tax revenues typically determine how much money the state can spend.

A look at the data

We turned to two data sets. The first comes from the Internal Revenue Service, showing migration flows from state to state. This data comes from changes in state residencies listed on tax filings from year to year. The data shows inflows and outflows from each state to every other state, but for simplicity, we looked at each individual state’s total net migration from all states. (Net migration is inflows minus outflows.) We used data for changes between 2009 and 2010, which is the most recent data available at the website of the Tax Foundation, a business-backed group that studies tax policy.

The second data set also comes from the Tax Foundation. It gauges how heavy each state’s tax burden was in 2010.

We mashed up the data between the two lists to see if low tax burden states tended to have high inflows, and if high tax burden states tended to have large outflows. To eliminate a bias toward big states, we ranked states by net migration as a percentage of total population. We then took the 20 states with the biggest rate of out-migration and the 20 states with the biggest rate of in-migration and checked how they ranked on tax burden.

The results, it turns out, are pretty mixed.

On the list of the top 20 states for out-migration, six had rankings for the two measurements that were five or fewer slots apart -- Rhode Island, New York, Maine, Minnesota, Hawaii and Vermont. In other words, those rankings could support the contention that high-tax states have high out-migration.

But seven had rankings that differed by six to 10 points, and another seven had rankings that were widely divergent -- 11 points or more. These divergent states included Nevada (third in out-migration but 42nd in tax burden), Wyoming (13th in out-migration but 46th in tax burden) and New Hampshire (14th in out-migration but 44th in tax burden).

The picture is much the same for the top 20 states for in-migration. Five states had a strong connection between high in-migration and low tax burden (Alaska, Texas, South Carolina, Delaware and Washington state), eight states had a moderate connection, and seven states had a divergence of at least 11 ranking slots, including West Virginia, North Carolina and Arkansas.

For the record, California -- the one state specifically  mentioned in the RNC’s tweet -- ranked fourth in tax burden but only 16th in out-migration. (Using raw numbers rather than a percentage of statewide population, California’s number of out-migrants ranked it third behind New York and Michigan. But California’s sheer size skews those figures.)

Overall, then, there is some correlation between a low tax burden and in-migration (or, conversely, between a high tax burden and out-migration). But it’s pretty modest.

People who make claims like the RNC’s "tend to cherry-pick the big states," said Nick Kasprak, an analyst with the Tax Foundation. "That makes the claim sound true, but if you look rigorously, I don’t think it’s a very strong correlation."

What about causation?

Even less clear is the degree to which tax levels are the reason, or a major reason, why people are moving from one state to another.

Consider the list of top out-migration states. In 2010, Michigan (which ranked first in out-migration) and Ohio (which ranked sixth) were experiencing large, structural shifts in manufacturing -- changes that are difficult to reverse by changes in tax policy alone. Nevada (third in out-migration) was still recovering from the recession that had crippled the twin pillars of its economy, tourism and real estate. And nine out of the top 10 states for out-migration are in the north, a pattern that could just as easily reflect a decades-old population shift towards the sunbelt rather than tax policy. Meanwhile, the third-biggest gainer, North Dakota, is at the epicenter of an oil and gas boom that emerged due to a variety of factors beyond tax policy.

It’s also worth noting that the net number of people who moved to or from a state in 2010 was quite small. The biggest gainer (Alaska) and biggest loser (Michigan) both gained or lost around one-half of one percent of their population in 2010. The other states saw less than that, sometimes quite  a bit less.

In other words, upwards of 99.5 percent of every state’s population was happy enough with state tax policy (or with any other factor, including the weather) to stay put.

This is not to say that the RNC’s claim is irrelevant, because any role for tax policy in helping or hurting the economy would have ripple effects that would magnify over the years, said Joel Kotkin, who has written numerous books on urban policy and is now a fellow at Chapman University in Orange, Calif. At any given time, he said, "net migrants are a small percentage of population, but the numbers over time can be big." Patterns of migration by foreign-born residents can bolster these trends, Kotkin said.

Kotkin added that the issue is "complex" and does not break down neatly along partisan or ideological lines. While the RNC tweet is aimed at claiming the mantle of high in-migration for the GOP, that overlooks some nuances. "Washington state and Colorado are purplish-blue states that have done well and receive migrants," he said. The people who are fleeing California aren’t just going to Texas, he says; they’re also going to Denver and Seattle.