The American Legislative Exchange Council (ALEC) has now responded to our recent paper on interstate migration, in which we found that interstate differences in tax levels have a negligible impact on whether Americans move from one state to another and where they go.
ALEC didn’t much contest that conclusion. Instead, its main criticism is that we did not acknowledge that low-tax states, because they are low-tax states, have stronger economies that create more jobs, thereby indirectly attracting more migrants from (allegedly) poorly performing states with income taxes. We explicitly declined to analyze that claim in our paper, but we pointed to three separate
that we could cite, to show that it’s false.
When, for instance, states were ranked according to their top personal income tax rates in 2007, there was no correlation between that ranking and their ranking among states in 2007-2011 growth in economic output, jobs, per capita income, median family income, or median annual wages, as economist Peter Fisher explained in one such recent study.
In our paper, we concentrated on whether a conscious desire to pay lower taxes has driven people’s interstate migration decisions and whether that’s a significant reason that some states without income taxes, like Florida, Nevada, and Texas, have experienced significant in-migration in recent years. We found that a careful examination of the data undermines the claim that taxes have a significant impact on migration decisions. Instead, the data upholds the conclusion of a broad spectrum of researchers that jobs, family, housing, and climate are all more important reasons why Americans move from state to state.