People Are Fleeing Blue Strongholds That Cost Too Much
Residents of high-tax states are voting with their feet, moving south and west to the states with lower levies
More than half a million Californians have moved to other states since 2010. Every day since then, an average of 386 people moved from New York to other states.
And Illinois lost so many people in 2016 that it actually fell one spot in the population rankings, losing its place to Pennsylvania — which itself has watched more people leave than come.
Increasingly, Americans are fleeing high-tax, deep blue states long governed by Democrats. And some experts believe the new tax law that takes effect this year will accelerate that trend, as upper-income taxpayers in such states will no longer be able to write off the full amount of their state and local taxes on their federal returns.
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“For some, it will be the straw that breaks their backs … [For] some people, it will be the final factor,” said Pete Sepp, president of the National Taxpayers Union, a conservative taxpayers advocacy group based in the Washington, D.C., area. “It’s not that difficult to vote with your feet — particularly these days.”
Estimates released last month by the Census Bureau show 10 states lost at least 98,000 more residents to other states than they gained between the 2010 census and July 2017. The top four losers — New York, Illinois, California, and New Jersey — are solidly Democratic. Deep blue Connecticut, Maryland and Massachusetts also are among the top 10.
The other three states — Ohio, Pennsylvania and Michigan — generally are considered battleground states and voted for President Donald Trump in 2016.
Only people moving from other countries prevented New York, New Jersey, Michigan, Pennsylvania, Ohio, and Connecticut from losing population overall.
And Illinois, during that time span, actually did experience an overall population decline — of 29,542 — despite immigration from foreign countries.
“We are hemorrhaging people like those other states,” said Austin Berg, director of content strategy at the Illinois Policy Institute, an independent group that promotes personal freedom and prosperity solutions. “What makes Illinois unique is that we’ve had our fourth consecutive year of population decline. That’s where things get hairy, because you cannot balance budgets with declining population.”
People cite high taxes. The institute, with offices in Chicago and Springfield, notes that Illinois lost a resident to another state every 4.6 seconds from mid-2016 to mid-2017. Berg pointed to a 2016 poll by Southern Illinois University’s Paul Simon Public Policy Institute indicating that 47 percent of the state’s residents would like to move to another state.
The figure was even higher among millennials — 57 percent — and 84 percent of respondents overall said the state was headed in the wrong direction. The top reason cited by people wanting to leave? High taxes.
[lz_table title=”Voting with Their Feet” source=”U.S.Census Bureau”]States with biggest net loss from domestic migration
|State,Loss since 2010
New York,-1 million
Berg said Illinois politicians used to deny the state even had a problem with population decline. Now, he said, they have begun to acknowledge the issue. But instead of moving to cut taxes, he said, the political class — mostly but not entirely Democrat — has moved in the opposite direction.
Illinois has a flat tax — currently 4.95 percent — under the state’s constitution. Berg said some politicians have called for amending that constitution to allow a progressive tax system. That way, the argument goes, legislators in Springfield can jack up the rate on high earners and cut taxes for the middle class.
“The solution is a hike,” he said. “I don’t think they’re getting the message.”
Berg said raising taxes on upper-income earners hits people who are the most mobile, who easily can move a business to a low-tax alternative.
“Illinois needs as many millionaires as we can get,” he said.
The beneficiaries of those fleeing residents mostly have been red states in the South and West. While New York has lost more than a million residents since the census, Florida has gained about as many new residents from other states.
The 10 states with the biggest net gains from domestic migration include solidly red Texas, South Carolina, Tennessee and Georgia. Swing states North Carolina, Arizona and Colorado — all of which voted for Trump except Colorado — also made the top 10.
Only Washington and Oregon among the top 10 gainers consistently vote Democratic.
Democrats are in ‘denial.’ Stephen Moore, an economist who advised Trump during the 2016 campaign, said the explanation is simple. “The red states are cutting their taxes, and the blue states are not,” he said.
But Democratic politicians are slow to acknowledge it, Moore said.
“A lot of them are in denial. They pretend it’s not happening. But it is happening … It has become the new religion of the Left — taxes don’t matter.”
“A lot of them are in denial,” he said. “They pretend it’s not happening. But it is happening … It has become the new religion of the Left — taxes don’t matter.”
Moore said tax-raising politicians in the Northeast and upper Midwest have scapegoated weather, arguing that people are leaving their states in search of sun and warmth in places like Florida. But he said that does not explain California.
“Nobody’s moving out of California for the weather,” he said.
State and local governments in high-tax states also are more likely to be grappling with long-term debt from unfunded pensions. A report last year by the nonprofit group Truth in Accounting indicated Democratic-run states had 12 times as much debt as those with Republican governors and legislatures. A separate report this month by the same organization rated New York City, Chicago, Philadelphia, and San Francisco as “sinkhole cities” because of debt.
Berg said it is not just Chicago that struggles with debt. He noted the state government and many smaller cities also have unfunded liabilities. Some local governments have begun assessing special fees on residents to make up the difference, making neighboring states an alluring alternative — particularly for residents near the boundaries.
“Who’s going to stick around to pay that bill when the Indiana border is two minutes away?” he said.
Berg said the Illinois Policy Center supported the federal tax reform plan. But he said the provision trimming the state and local tax deduction will sting Illinois.
“That being changed just makes us even more unattractive,” he said.
That change could, of course, prompt those states to cut their taxes to make them more competitive. But Moore said he doubts it will happen.
“Now, the consequences of living in New York and California are magnified,” he said.