Over at The American Interest they are discussing income flight – the growing trend of taxpayers disembarking high tax and regulation states for the greener pastures of low tax and regulation states. This is a topic that Chuck DeVore has dissected in detail in his authoritative book The Texas Model. Distilling data from the Tax Foundation, the folks at The American Interest came to largely the same conclusions as Devore. Texas, of course, is a major beneficiary of income flight at the expense of such formerly desirable locations as New York, California, and Illinois.
Blue states like California and Illinois are struggling meeting obligations for their own public pension funds, so they certainly don’t need this latest bit of news—their tax bases are shrinking drastically. A new study on state-by-state income migration from the Tax Foundation (h/t WSJ), found that New York, California, and Illinois—the largest blue states in the country—led the country in income flight during the last decade. New York was hit particularly hard, losing $46 billion dollars of taxable income to people leaving the state over the past ten years. And these states were not alone: blue stalwarts like Maryland, New Jersey, and Massachusetts were not far behind.
Red and purple destinations like Florida, Texas, Arizona and North Carolina led the pack of states benefiting from this migration, each gaining over $10 billion in taxable income due to new migrants from other states.