For years, people and businesses have been streaming across the borders of highly taxed California and New York to freedom-friendly states like Texas and Florida. So great was the exodus that by the time the 2020 census was released, both California and New York had lost enough populations to cost a seat in Congress. In contrast, Texas won two seats and Florida one.
The pandemic slowed the typical summer moving season in 2020, but according to North American Moving Services, California and New York continued to be among the states with the greatest outflow of residents over the past year, while Texas and Florida were among the states with the greatest outgrowth in immigration.
This trend seems to continue given the current rental rates for moving trucks. A recent review shows that it would cost $ 1,469 to rent a standard 26-foot U-Haul truck in Dallas and drop it off in Los Angeles. Taking one from LA to Dallas costs three and a half times more ($ 5,154).
That higher price likely reflects the far greater demand for rental vehicles from people moving out of LA than from people in Dallas moving to LA. Taking a truck from Dallas to LA is so much cheaper, perhaps because U-Haul needed those trucks, returned to LA to meet that increased demand. Similar patterns exist for other city pairs in our four largest states.
While there are many factors that determine a decision to move, it is difficult to ignore the stark contrast in public policy approaches between these two great pairs of states. Texas and Florida are two of the eight states that do not have state personal income taxes, while California and New York have two of the highest personal income taxes, with peak rates of 13.3% (the highest) and 8.8% (fifth highest). ) or. That’s a sizeable portion of the paycheck bill that people get to keep when they move to Texas or Florida.
The Fraser Institute’s most recent annual report on North American Economic Freedom ranks Texas fourth and Florida second. California was 47th and New York was the last, as it has been for 11 of the last 12 years. The Tax Foundation’s State Business Tax Climate Index showed a similar contrast: Texas was ranked 11th and Florida ranked 4th, while California ranked 49th and New York ranked 48th. There is a fairly clear difference in approach between the high taxes and regulatory burdens of the latter two and the low taxes and regulatory burdens of the former two.
These differences in population migration and public policies can only be a coincidence. However, recent research in the Southern Economic Journal suggests otherwise. Co-authors Imran Arif, Adam Hoffer, Donald Lacombe and I have been researching statistical data from metropolitan regions on population migration and economic freedom for over 20 years. After reviewing other factors influencing population migration, we found that MSAs with greater economic freedom had higher net population immigration.
More specifically, a 10% increase in relative economic freedom was associated with a 27% increase in net immigration. On average, this means an increase in net immigration of 22 people per year from the other statistical metropolitan areas (and there are almost 400 MSAs). Our results are consistent with similar results in several scientific papers that use state-level data.
Much has changed since the pandemic began. When it comes to moving, however, Americans continue to vote with their feet for economic freedom, leaving states with high taxes and regulatory burdens like California, New York, Illinois, and New Jersey states with low taxes and regulatory burdens like Texas, Florida, North Carolina and Tennessee.
While there is still plenty of room for improvement in government policies, even in Texas, this pattern bodes well for the health of the Texan economy in the years to come.
Dean Stansel is an associate professor at the Bridwell Institute for Economic Freedom at Southern Methodist University and lead author of the Fraser Institute’s annual Economic Freedom of North America report. He wrote this column for the Dallas Morning News.
Do you have an opinion on this subject? Send a letter to the editor and you might get published.
[ad_1]