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Tax breaks don’t get people moving

Why do you live in Arkansas, instead of any other state? Maybe you hate cold weather, and love a state where you can set out on a hike or kayak the Buffalo River. Maybe you have always lived here, and couldn’t imagine leaving your friends and family, your job, or your hometown. If you are like most people, the state income tax rate doesn’t even make the list of why they would or wouldn’t move. Even for the very rich, new income taxes do not have a substantial impact on out-of-state moves.[i]  In fact, most people don’t leave their home state at all; 69 percent of Americans live in the state they were born in.[ii]Cutting income taxes won’t attract people to Arkansas, in fact it will hurt the programs and services like quality pre-K, higher education, and public safety that really help make our state a great place to live.

Some people do move, of course, but these interstate migrations hardly affect state population. Less than two percent of residents in the US relocate across state lines each year, and most of the time if one person leaves a state, they are replaced by another person moving in, making the net change from migration close to zero.[iii] Most of the time when people move it’s just a “swap.” According to the Center on Budget and Policy Priorities (CBPP), “from 2000 to 2009 not a single state lost population due to people moving to other states.”[iv] Arkansas actually experienced net in-migration from other states from 1993-2011, and new people had higher paying jobs (newcomers to Arkansas made about $3,000 more on average than those who left the state). [v]

The small percentage of people who do move are not generally motivated by tax structure. Recent research shows that people are just as likely, if not more likely, to move to a state with higher income taxes. For example, almost as many people moved to Arizona as Texas between 1993 and 2011, even though Texas doesn’t have an income tax and nearby Arizona does.[vi] Over half of the people who choose to change states do so because of jobs or family; climate is also a major indicator.[vii] People are more likely to move to states with better jobs, not states with lower taxes.

Deep tax cuts actually hurt the things that really make a state an appealing place to live by slashing budgets for services like public safety and education opportunities that lead to jobs. Unfortunately, proponents of tax cuts continue to harp on the false notion that citizens have their suitcases packed, just waiting to move to the next state that cuts income taxes. Most people won’t move exclusively because of income taxes, if you need proof, just think about all the reasons why you haven’t moved to Texas, or any other income tax free state.