Tax Foundation: Taxation plays a direct and indirect role in population displacement in 2021 | national

(The Center Square) — As more Americans move to lower-taxed Republican-led states, a new report from the Tax Foundation indicates that tax levels play a direct and indirect role as factors contributing to migration patterns.

Taxes “often play an indirect role in contributing to an overall favorable economic environment. And sometimes, of course, they play little or no role,” writes Jared Walczak, vice president of the Tax Foundation, in a To analyse 2021 US Census Bureau data and in-migration and out-migration data published by U Haul and United Van Lines.

“Census data and these industry studies can’t tell us exactly why each person moved, but it’s undeniable that there is a very strong correlation between low-tax, low-cost states and population growth,” he wrote. “With many states responding to strong revenues and increased interstate competition by cutting taxes, these trends are only set to amplify.”

While the overall population of the United States grew by only 0.1% last year, the lowest rate since the founding of the country, regional differences show that the population has increased in certain parts of the country where taxes are lower, and areas with higher tax rates have experienced population decline.

The South accounted for the largest percentage of population growth last year of 38.3%, with most southern states with low costs of living reporting increases in population. The northeastern states recorded the lowest percentage population growth last year and saw the largest exodus of residents.

Six top-tier states reporting population increases levy no personal income taxes: Florida, Nevada, New Hampshire, South Dakota, Tennessee and Texas.

The states with the highest overall taxes experienced the largest population declines: New York, Illinois and California.

Nine states that saw the most population increases last year implemented or enacted personal or corporate income tax cuts in 2021. New York, which reported population loss and is a top emigration state, was the only state to raise its income tax last year.

“The picture painted by this population displacement is clear, of people leaving high-tax, high-cost states for low-tax, lower-cost alternatives,” Walczak wrote. “Personal income tax is only one element of the overall tax burden, but it is often very salient and illustrative here.”

In the top third of states reporting population growth from April 2020 to July 2021, he noted, “the combined average top marginal rate of state and local income tax is 3 .5%, while in the bottom third of the states it is around 7.3%.”

Census Bureau data revealed that “between 2020 and 2021, 33 states saw population increases and 17 states and the District of Columbia lost population, 11 of which lost more than 10,000 people, a historically high number. states to lose population in a year. .”

The states with the largest percentage increase in population were Idaho, Utah, Montana, Arizona, South Carolina, Delaware, Texas, Nevada, Florida, and North Carolina. reported the Census Bureau.

The states with the largest percentage decrease were New York, Illinois, Hawaii, California, Louisiana, Massachusetts, West Virginia, North Dakota, Mississippi and Pennsylvania.

United Van Lines ranked New Jersey as the top emigration state for the fourth straight year last year, and Vermont as its top inbound state for movers. U-Haul ranked California as its top emigration state and Texas as its top immigration state for movers last year.

The six counties with the highest median property tax bills in fiscal year 2019 were in New York and New Jersey, states that led the nation in outbound migration.

All six levy property taxes that exceed $10,000 a year: Bergen, Essex and Union counties in New Jersey and Nassau, Rockland and Westchester counties in New York, according to a tax foundation To analyse data from fiscal year 2019.

Even though more people moved from California to Texas in recent years, and California reported a decline in population relative to Texas’ 2020 population increase, in fiscal year 2019, the highest median property taxes in Texas were higher than those in California.

In the Midwest, Lake County, Illinois had the highest median property taxes, averaging more than $7,500 a year, with several adjacent counties not far behind, the analysis found.

The New England states of Connecticut, New Hampshire and Massachusetts also had some of the highest median property taxes in the country.

And although more and more people move or live in the South and pay lower property taxes than residents of northern states, they pay some of the highest local and state sales tax rates in the United States. United.

In July 2021, four of the five states with the highest combined state and local sales tax rates were in the south: Louisiana (9.55%), Tennessee (9.547%), Arkansas (9.48%), Washington (9.29%), and Alabama (9.22%), according to another Tax Foundation To analyse.

Alaska (1.76%), Hawaii (4.44%), Wyoming (5.39%), Wisconsin (5.43%) and Maine (5.50%), according to the analysis, were the five states with the lowest combined local and state sales tax rates.

Last year, five states had no statewide sales tax: Alaska, Delaware, Montana, New Hampshire and Oregon. Alaska allows localities to charge local sales taxes.

California has the highest state sales tax rate at 7.25%. Four states are not so far behind with a rate of 7%: Indiana, Mississippi, Rhode Island and Tennessee. Colorado has the lowest state-level sales tax of 2.9%.

The states with the highest average local sales taxes last year were Alabama (5.22%), Louisiana (5.10%), Colorado (4.82%), New York (4. 52%) and Oklahoma (4.45%).

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