State Tax Exodus?

map of us multi colored statesAre people moving away from high-tax states to places where the state tax burden is lower?

Recently, Forbes magazine highlighted the most recent United Van Lines survey, which collects data on 125,000 families moving from one state to another. The focus was on the ten states that were losing the most residents as a percentage of total population. Then a writer looked to see if those states happen to be among those with the highest tax rates. Here’s the list of states with the most ex-residents, with their ranking as a high-tax environment in parenthesis:

1. New Jersey – 3,925 exits (2)
2. Illinois – 5,931 exits (11)
3. West Virginia – 418 exits (19)
4. New York – 5,441 exits (1)
5. New Mexico – 1,313 exits (39)
6. Michigan – 3,123 exits (18)
7. Connecticut – 1,991 exits (3)
8. Maine – 634 exits (9)
9. Kentucky – 1,886 exits (26)
10. Wisconsin – 2,405 exits (5)

The correlation is suggestive if not definitive; the three highest-tax states are on the list, and five of the top ten. Of the states on the list, only Kentucky and New Mexico fall in the bottom half of the state tax rankings.

At the same time, you might also notice that many of the states on the list have one other thing in common: rugged Winter weather, recently highlighted by the major snowstorm blowing across New York and New England. It is possible that at least some of those exiting the states on the list were retirees looking for both sunshine AND a lighter burden on their retirement distributions.


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One Response to State Tax Exodus?

  1. Jerry February 12, 2013 at 12:04 pm #

    The study may be a ‘reach’. Without listing California in the top ten, suspect study is flawed.