Millions of Americans have relocated from states with high tax burdens and restrictive regulations to those offering lower taxes, more accessible housing, and freer labor markets, according to an analysis of IRS records from 2018 to 2023.
The study, which examined taxpayer migration across the United States, found that states like New York, California, and Illinois experienced significant population losses, while Florida, Idaho, South Carolina, Delaware, and Montana saw notable gains.
Economist Steve Moore, contributing to the analysis, stated that the primary drivers for these moves are not weather or partisan leanings, but rather economic factors. "People go where it's simpler and easier to earn a living, buy a home and build a career," Moore explained. "It’s that easy."
The research highlights that states with lower tax rates and fewer government barriers to employment and business growth are more successful at retaining residents. For example, a married couple earning $100,000 in New York City incurs approximately $6,668 more in annual income taxes than they would in a state without an income tax. This figure rises to $11,338 for those earning $150,000.
Beyond tax policies, the availability of affordable housing emerged as a critical factor. States that streamline the process for new home construction, often characterized by fewer zoning restrictions and quicker permitting, have attracted more residents. Conversely, states that impose significant hurdles on builders, such as New York and California, experience rising home prices and resident departures.
Freedom to work and start a business also plays a role. States that facilitate hiring, licensing, and entrepreneurship have seen stronger population growth. The analysis pointed to Virginia's extensive occupational licensing requirements, which mandate an average of 580 days of education and experience for certain professions, compared to North Carolina's 228 days. Such requirements can deter workers who may already possess the necessary skills.
The findings suggest a clear economic principle: states that allow residents greater freedom to work, build, and earn are more likely to retain the families and workers who drive their economies. The movement of people is not random but a response to tangible financial considerations, including paychecks and housing costs that are more attainable in certain states.