Deciding If Taxes Make You Move

The U-Haul indicator might be the new way to gauge where Americans are moving.

If you relocate from your one bedroom apartment in Dallas, TX to Los Angeles, CA, a 10-foot U-Haul rental will cost you $864. But, for the same truck and the same trip in the opposite direction, it’s $1800.

$864 or $1800 for the same trip?

Supply and demand are telling us that net migration is out of California and into Texas. Based on their U-Haul rentals, people are moving to the following top seven states and leaving the bottom group:

And where are we going? To the reasons we move.

State Preferences

Where?

Data from United Van Lines confirm some of what U-Haul rentals tell us. However, their top inbound states were Vermont, Oregon, and Idaho. At the other end, Illinois, New Jersey and New York were the top outbound states:

Why?

When we ask why people migrate, the answer from the Census Bureau is housing, family, and jobs:

There is a group, though, that says a big reason for leaving a state is taxes. They claim that high earners respond with their feet when government asks for more. So, do compare these high and low tax states with the United Van Lines map (above) and you will see pretty much of a correlation.

No income tax:

• Alaska
• Florida
• Nevada
• South Dakota
• Texas
• Washington
• Wyoming

Highest tax states (income, sales, property):

• New York
• Connecticut
• New Jersey
• Wisconsin
• Illinois
• California
• Maryland

Our Bottom Line: A National Market

As economists we can say that no matter why you move, it is crucial that you can move.

Looking back to the 19th century, we had a transportation infrastructure of roads, canals and then railroads that moved people and goods. With midwestern farming, southern cotton and northeastern manufacturing, each of us could do what we did best and then trade. Because each section of the country was producing what it was most suited to, we enjoyed the benefits of comparative advantage.

Now again we continue to enjoy the positive externalities of state-to-state migration. Being able to move freely across the vast expanse of the U.S. (in our U-Haul or United Van Lines truck) is an economic plus.

My sources and more: These U-Haul and United Van Lines moving facts provide some insight as does The Hill with its summary. Meanwhile, for tax facts, the Tax Foundation is a handy resource. But what I really found interesting was these recent opinion columns that claim a tax/migration connection. To ponder them, do look at Investor’s Business Daily (“Higher Taxes, Fewer People”) and WSJ (“So Long California, Sayonara, New York”).

Please note that parts of Our Bottom Line were in a previous econlife post.