Americans continue to vote with their feet towards low-tax states

With the 2020 census just around the corner, elected officials and demographers eagerly await the results from this once in a decade process of counting the U.S. population. The new count will not affect electoral votes for the 2020 presidential election. But its implications for the 2022 congressional midterms, state political clout and future presidential elections are significant.

Before we get the official count from the 2020 census, the best clues we have come from the 2019 estimates released by the United States Census Bureau in its annual state-by-state population estimates. Beyond the political, the results tell us a great deal about the relative economic health of the 50 states. Americans continue to move, or “vote with their feet,” toward states that have lower tax burdens and value economic competitiveness. For more than a decade, our work in Rich States, Poor States has revealed that states with lower taxes, especially those that avoid personal income taxes, have seen significantly better rates of in-migration than states with high income tax rates. 

For example, the two biggest winners from the 2019 population estimates are Texas, which gained 367,215 new residents on net, and Florida, which gained 233,420. Neither the Lone Star State nor the Sunshine State have a personal income tax. The two states with the largest population losses in 2019 were New York, with a net loss of 76,790 residents and Illinois, which lost 51,250. New York and Illinois have some of the highest tax burdens in America, and their policy mistakes are costing them dearly. Moving away from the large states, a quartet of low tax states – Idaho, Nevada, Arizona and Utah – led the way this past year in terms of overall population growth as a percentage of their population.

State population changes will affect the official apportionment of the 435 U.S. House of Representatives seats across the 50 states after the completion of the 2020 census. Election Data Services outlines the likely winners and losers from the 2020 census. The big winners in terms of congressional seats include growth states Texas, which is slated to gain three seats (from 36 to 39) and Florida, which is set to gain two seats (from 27 to 29). Other states that are likely to gain a seat include; Arizona +1 (from 9 to 10), Colorado +1 (from 7 to 8), Montana +1 (from 1 to 2), North Carolina +1 (from 13 to 14), and Oregon +1 (from 5 to 6).

States that are likely to lose seats in 2020 include; Alabama -1 (from 7 to 6), California -1 (from 53 to 52), Illinois -1 (from 18 to 17), Michigan -1 (from 14 to 13), Minnesota -1 (from 8 to 7), New York -1 (from 27 to 26), Ohio -1 (from 16 to 15), Pennsylvania -1 (from 18 to 17), Rhode Island -1 (from 2 to 1), and West Virginia -1 (from 3 to 2).

One of the most shocking results now projected for 2020 comes from California. Since statehood in 1850, the Golden State gained congressional seats after every decennial census due to massive population gains. But the cost of living, driven by sky-high taxes and onerous regulations, started to take a toll by 2010 when California failed to gain a new seat. Based on the 2019 estimates it is likely that California will actually lose its first congressional seat since 1850 due to residents leaving the state.

It is important to note that population changes driving the congressional seat projections above are made up of several components. Total population includes natural growth (birth rates and death rates), as well as migration (international and domestic). For policy analysis, using net domestic migration data is helpful since it focuses on decisions Americans consciously make as they move across state lines. For net domestic migration, the big winners in 2019 include Florida (+133,910), Texas (+125,660) and Arizona (+91,017). The states with the largest net-domestic outmigration were California (-203,414), New York (-180,649) and Illinois (-104,986).

Of the nine states with no personal income tax on wages, seven experienced positive domestic migration in the past year, totaling a net gain of 371,201 in 2019 alone. The nine states with the highest income tax rates suffered a net loss of -438,326 in the past year. Apart from the straightforward exercise above, there is an abundance of academic research supporting the idea that taxes and economic policies drive migration across states.

Before we know it, the 2020 census will be in the books and states will know their fates for congressional reapportionment and the electoral college map. In the meantime, these population and domestic migration data points illustrate some important lessons for state policymakers on how to enhance economic prosperity. Put simply, you want to be a state that keeps tax burdens low, while growing economic opportunity.

Jonathan Williams is the executive vice president of policy and chief economist at the American Legislative Exchange Council. Follow him on Twitter @taxeconomist.