May 25, 2011

Will People Flee States that Raise Taxes?

Probably not, according to a recent study by the Political Economy Research Institute (PERI) at UMASS Amherst, but higher taxes may influence whether people migrate to a state.

Studies have generally shown that taxes have relatively little impact on cross-state migration. Individuals and households that relocate to a different county or state cite employment, housing, and family-related reasons as the primary motivating factor.

The study’s findings suggest that taxes do not play a notable role in causing people to leave a state, but they do appear to influence the choice of which state to live in once a person has decided to move. The researchers also suggest that if states use the revenues from higher taxes to create jobs, reduce unemployment, and reduce property crime, they might mitigate the small negative impacts from the higher taxes.