Report: People Fleeing High-Tax States for Low-Tax Alternatives

By Rudy Takala | April 8, 2015 | 9:38am EDT

A new report finds that millions of people left highly-taxed states for low-tax states between 2003 and 2013. (AP File Photo)

( – Utah, Texas, and North Dakota, where taxes are low, are the most economically vibrant states in the country, according to a new report. The high-tax states of New York and Michigan rank at the bottom.

Additionally, the report found, millions of people left highly-taxed states for low-tax states between 2003 and 2013.

The 8th edition of Rich States Poor States, an annual report released by the American Legislative Exchange Council (ALEC) on Wednesday, found that 1.5 million people left New York between 2003 and 2013, the largest exodus of any state. California came in second by that indicator, with 1.4 million leaving the state. Illinois placed third, with 647,000 leaving; while Michigan placed fourth, with 628,000 moving out.

On the plus side, Texas placed first for population growth, with 1.2 million people moving in. Florida placed second, with 960,000 moving to the state, followed by North Carolina (655,000) and  Arizona (584,000).

In addition to population growth and loss, the report ranks states on two different scales. One is economic outlook, which is based on 15 policy variables, nine of which are related to taxes.

The second category is economic performance, which is a “backward-looking measure” based on three variables: GDP, state migration, and non-farm payrolls. Data is drawn from a ten-year period, 2003-2013.

Texas placed first for past performance. Between 2003 and 2013, the state saw GDP increase by 81.7 percent, while non-farm payrolls grew by 20.5 percent. Texas placed 11th in the forward-looking economic outlook.

Michigan placed last for economic performance, with GDP growth of 14.4 percent and a decrease of 6.4 percent in non-farm payrolls. More optimistically, it placed 24th for economic outlook.

Utah placed first in economic outlook. Among other factors, it fared well because it does not levy an estate tax; it has no income tax progressivity; and there is a low marginal corporate income tax rate. Utah also scored well for being a right-to-work state. It placed third for past economic performance.

New York placed last for economic outlook, largely due to taxes. The state has a top marginal personal income tax rate of 12.70 percent, the second highest in the country; a 17.16 percent top marginal corporate income tax rate, the highest in the country; the fifth highest property tax burden in the country; and the 20th highest sales tax burden.

North Dakota, meanwhile, placed the second highest in both economic categories. It placed first in the nation for state GDP growth, with a ten-year increase of 149.4 percent; and first for non-farm payrolls, with growth of 35.0 percent. It also has some of the lowest taxes in the nation.

The report is authored by former Reagan economist Art Laffer; Heritage Foundation economist Stephen Moore; and Jonathan Williams, vice president of the Center for State Fiscal Reform at ALEC.

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