Policy prescriptions may be defied by younger Americans in interstate migration, though believing tax regulations are irrelevant would be a mistake, a new report says.
Young people are going “where jobs are available and housing is affordable,” says the National Taxpayers Union Foundation in a report obtained by The Center Square on Wednesday. Analysis authored by Andrew Wilford, director of the Interstate Commerce Initiative at the foundation, says the under-35 age bracket’s trends are “entirely different than those of other age brackets.” Yet, “tax-happy states like Hawaii, New York, California, Massachusetts, Illinois and Maryland are some of the biggest proportional losers of young Americans to interstate migration because tax-and-spend policies have led to diminishing economic opportunities and skyrocketing costs of living, thing to which young people are quite sensitive.”
Data from the Internal Revenue Service analyzed by the foundation says Texas, Florida and North Carolina gained the most “young Americans” through interstate migration and California, New York and Illinois lost the most. Per capita, the winners were Montana, South Carolina and Tennessee and the losers were Hawaii, Louisiana and Massachusetts.
“Most people understand that taxes are a significant – likely the most significant – reason why Americans decide to move to other states,” the report says. “But ask someone to picture someone moving for tax-related reasons, and they will likely think first of a retired couple whose children have moved out of the house.”
Indeed, the foundation’s report released a week ago says among the wealthiest, tax policy is reflected in which states the majorities are moving. Young people, Wednesday’s report says, have different reasons but ultimately even Florida – stereotypical retiree destination – had a gain of almost 10,000 under the age of 35.
Housing and tax environment, the latter meaning outside of traditional state income tax structure, are key drivers, the report said.
For example, “Colorado has been steadily accumulating new ‘fees’ that are functionally taxes as legislators seek to raise revenue while avoiding the state’s constitutional requirement that tax increases be approved by referendums,” the report says. “Additionally, Colorado’s status as a home rule state means that some local jurisdictions levy additional income and sales taxes.”
Colorado ranked fourth in the report per capita overall, despite negative marks for the age brackets of 35-54, 55-64 and 65+. It was the only state of the top 13 overall to have a negative mark for any age category; for under 35, it was a positive 1.16%.
“Smart tax policy,” the report concludes, “that encourages and enables economic dynamism and does not drive away newer industries with short-sighted and heavy-handed tax enforcement might not attract young people on their own, but the impact it has on the economy certainly will.”
