Forty-three million Americans moved from one state to another between 1995 and 2010 – about one-seventh of Americans.
It’s good that we can move! Moving provides one of the few limits on the megalomania of state bureaucrats.
Americans have moved away from high-taxed, heavily regulated states to lower-taxed, less-regulated states. Most don’t think of it as a political decision. They just go where opportunities are, and that usually means where there’s less government.
They’re leaving my state, New York, in droves. California, despite its great weather, also lost people and wealth. Other biggest losers were Illinois, New Jersey and Ohio.
Travis Brown, author of “Money Walks,” tracked the movements using IRS data. On my TV show, he revealed that Florida was the state that gained the most: “You’re seeing a massive amount of people and their income coming in: $86 billion.”
Arizona and Texas also gained, which made me wonder if Americans just move to states where it’s warm. “No,” said Darcy Olsen, president of Arizona’s Goldwater Institute. “Weather explains just 5 percent of the migration … the Census Bureau asks, and they say, ‘to find a job.’”
People move where jobs are, and the states gaining the most – which also include North Carolina and Nevada – follow what she calls “the magic formula. Lower taxes and good labor policy, which means, to a business, being free to hire and fire the people you want. (In) the most successful states you see both – no income tax or low taxes coupled with right-to-work laws.”
This competition between states makes it possible for states to learn from each other’s successes.
T.W. Shannon, speaker of the Oklahoma House of Representatives, told me what he’s learned. His state, where the economy had long been sluggish, finally figured out they could spur growth with tax cuts.
“We are moving to reduce our state income tax rate. … Every time we have done it in the past, we have seen increased revenues and growth.” Shannon adds, “Capital won’t flow to a hostile environment.”
No, it won’t. You’d think politicians would figure that out. But they rarely do. Brown’s income data show that capital flows to friendly environments: “States like (Texas, without a state income tax) gained $146 billion, whereas the reverse, the states with the highest among personal income-tax rates, lost over $120 billion.”
The owners of the basketball team the Houston Rockets give prospective players pamphlets that detail how many Rolex watches and Bentleys they could buy just from tax money they’d save if they move to Texas.
These data don’t stop a prominent pundit in my state, the New York Times’ Paul Krugman, from writing that the Texas economic miracle is “a myth” because Texas still has high poverty rates, a high high-school dropout rate and a low percentage of people with health insurance.
Behind this clash is the larger disagreement about how to handle the economy – promote growth by shrinking government or boost public services for the poor. The state-by-state contrast keeps getting sharper. Crudely put, blue states keep getting bluer, and red states keep getting redder. Krugman looks at Texas and sees policies – and Republican politicians – he doesn’t like.
But people don’t just vote at the ballot box or by their choice of newspaper subscriptions. They vote with their feet. And by that measure, the state that publishes Krugman’s columns – New York – and the state where he’s a college professor – New Jersey – are losing big-time.
Ironically, one reason Texas continues to have problems with poverty, despite its population growth, is that people don’t just move between states. They also move from other countries in search of opportunity. For about a million people, that meant moving across the border from Mexico to Texas. They start low on the economic ladder but do tend to move upward over time.
For some reason, politicians most sympathetic to those immigrants are clueless about why U.S. citizens move from state to state.
Let people live where they can be free, and get rich.