![]() The Census data shows population gains and losses, but not cross-border migration. Meanwhile, New York and the District of Columbia actually raised income taxes in 2021, the only places to do so. Only two states in the bottom third did so, and in one (Louisiana), commensurate base broadening, while good policy, made the reform essentially revenue neutral. ![]() Not content to rest on their laurels, nine states in the top third either implemented or enacted individual or corporate income tax cuts in 2021. Five states in the bottom third have local income taxes none in the top third do. Among the bottom third, four jurisdictions-California, New Jersey, New York, and the District of Columbia-have double-digit income tax rates, and the lowest rate is in Pennsylvania, where a low state rate of 3.07 percent is paired with some of the highest local income tax rates in the country. Six states in the top third forgo individual income taxes (Florida, Tennessee, Texas, Nevada, New Hampshire, and South Dakota) and the highest top rate is Maine’s 7.15 percent. If we include the District of Columbia, then in the top one-third of states for population growth since the start of the pandemic (April 2020 to July 2021 data), the average combined top marginal state and local income tax rate is 3.5 percent, while in the bottom third of states, it is about 7.3 percent. The individual income tax is only one component of overall tax burdens, but it is often highly salient, and is illustrative here. The picture painted by this population shift is a clear one of people leaving high-tax, high-cost states for lower-tax, lower-cost alternatives. ![]() This, however, belies state-level and regional differences. Whereas the District of Columbia’s population shrunk by 2.8 percent between April 2020 (roughly the start of the pandemic) to July 2021, New York lost 1.8 percent of its population, and Illinois, Hawaii, and California rounded out the top five jurisdictions for population loss, Idaho was gaining 3.4 percent, while Utah, Montana, Arizona, South Carolina, Delaware, Texas, Nevada, Florida, and North Carolina all saw population gains of 1 percent or more. Pandemic-induced excess deaths, virtually nonexistent international in-migration, and an already-declining birth rate yielded an almost flat population trend nationwide. population only grew by 0.1 percent between July 2020 and July 2021, the lowest rate since the nation’s founding. Census Bureau population data, along with commercial datasets released this week by U-Haul and United Van Lines. Americans were on the move in 2021, and they chose low-tax states over high-tax ones. ![]()
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