United Van Lines Migration Data Shows Taxes Matter
Mar 05, 2017
Obviously, we love data here at Key Policy Data. Before the internet age, most data come from the official bean counters at the Census Bureau, the Bureau of Economic Analysis or dozens of other federal and state agencies. Today, however, many private companies are making public use of their data such as the 2016 United Van Lines Migration study.
According to their press release and table below:
The top inbound states of 2016 were:
1. South Dakota
5. South Carolina
7. District of Columbia
8. North Carolina
South Dakota is the most popular moving destination of 2016 with nearly 68 percent of moves to and from the state being inbound. The state has continued to climb the ranks, increasing inbound migration by 23 percent over the past five years. New to the 2016 top inbound list are South Dakota at No. 1 and Arizona at No. 10 with 68 and 57 percent inbound moves, respectively.
The top outbound states for 2016 were:
1. New Jersey
3. New York
7. West Virginia
In addition to the Northeast, Illinois (63 percent) moved up one spot on the outbound list, to no. 2, ranking in the top five for the last eight years.
New additions to the 2016 top outbound list include Kentucky (58 percent), Utah (56 percent) and Pennsylvania (56 percent).
Of course, this begs the question as to WHY these folks are packing up the moving van and moving to another state. Our friends at the Mackinac Center in Michigan have extensively used the United Van Lines migration data and have found it to be both reliable and insightful:
Before critics dismiss UVL data as an unrepresentative sample, consider that the Mackinac Center has done a statistical analysis comparing years of the company data to actual migration statistics published by the United States Census Bureau and found the two to be highly correlated.
Migration is important because people move to places where there is opportunity. Ball State University Business Economist and Mackinac Center Adjunct Scholar Michael Hicks in 2010 used a model to find out what may be driving people between states. His conclusion was that people were moving to states with more flexible labor climates, more days of sunshine and lower taxes.
Specifically, Hicks found that for every 10 percent increase in personal taxes, Michigan loses 4,900 people each year afterward. In other words, the 11.5 percent personal income tax increase imposed on the Great Lake State in 2007 may have already chased away more than 35,000 of our fellow residents.
As such, Mackinac’s analysis finds that policymakers do have control over one major determinant of migration—taxes! So let’s look at this more deeply.
Using data from our Tax Burden app, Chart 1 shows the tax burden, as a percent of personal income, of all the top INBOUND states relative to the U.S. average. As you can see all the states but one, Vermont, have a tax burden lower than the U.S. average. Also, only 4 of those states are “warm” so perhaps weather is a bit over-rated.
On the flip side, Chart 2 shows the tax burden, as a percent of personal income, of the top OUTBOUND states relative to the U.S. average. All but 4 states, Kansas, Kentucky, Ohio, and Utah, have a tax burden that is higher than the U.S. average.
The United Van Lines study goes on to state that many people are moving for retirement, company relocations, and to be closer to family. Our analysis and others find that policymakers can “bend the curve” in their state’s favor by having a below average tax burden.
Finally, check out this cool slideshow of all the United Van Lines results from 1978 to 2016. This helps you see if how your state has fared over the years.
J. Scott Moody
J. Scott Moody has over 18 years as a public policy economist with a specialty in tax policy and has over 180 publications. He has worked for numerous national and state-based think tanks such as Federalism In Action, Tax Foundation, Heritage Foundation, and The Maine Heritage Policy Center.