A report released today by the Center on Budget and Policy Priorities shows that this argument is wrong. Major findings of the report include:

• Migration between states is rare. Between 2001 and 2010, just 1.7 percent of U.S. residents moved from one state to another per year, and only about 30 percent of Americans change states over their entire lifetime.  The ties of a job, family, and friends keep most people from leaving their community.
• Increasing taxes on high earners can provide a substantial revenue boost for states. An extensive study of New Jersey’s 2004 tax increase on filers with incomes exceeding $500,000 found that migration of this group after the tax increase was no different from that of filers with incomes between $200,000 and $500,000.  The study estimates that at most, 70 tax filers might have left New Jersey between 2004 and 2007 because of the tax increase. This migration cost the state an estimated $16.4 million, but the revenue gain from the tax increase during that same time was about $3.77 billion, a gain that was 235 times greater than the amount lost.
• The migration that does occur is much more likely to be driven by cheaper housing than by lower taxes. The difference in housing costs between states is many times greater than the difference in taxes. The report shows that net migration in Florida and California (which are often cited as examples of states gaining or losing population because of their tax policy) is vastly more affected by changes in housing prices than tax rates.

Below is an illustration prepared by OK Policy showing net household migration to and from Oklahoma between 2004 and 2009 based on IRS tax return data. Overall, Oklahoma had a net gain of 15,226 households due to domestic migration, along with a net gain of 4,362 households from foreign migration. Oklahoma had a net gain of households from 36 states, shown in brown on the map, and a net loss to 13 states, show in blue. Click the image to see an interactive version at ManyEyes:

The illustration shows that Oklahoma gained the most households from California and lost the most to Texas. This can be explained by the sheer size of both states, our proximity to Texas, and historical ties with California with resulting family connections that contribute to migration. Texas also has low housing prices and large urban centers to attract job-seekers.

Looking beyond those two states, there are no clear connections between state tax rates and net migration to or from Oklahoma. For example, Oklahoma gained households from Nevada and New Hampshire, which have some of the lowest average tax rates, as well as Florida, which has no state income tax. In the same period, we saw a small net loss of households to New York and Massachusetts, which have some of the highest state taxes.

Since Oklahoma already has relatively cheap housing and cost of living, the evidence suggests that we have much more to gain by improving public services and infrastructure than by cutting taxes. In other words, it is already inexpensive to live here, so paying a little more in taxes to improve the quality of life would help us achieve the best of both worlds.

share this post

Since 2000, Oklahoma’s population has grown at an average annual rate of 0.67 percent, 27th fastest among the states but somewhat below the national average of 0.94 percent. During this period, Nevada has experienced the greatest population growth at an average annual rate of 3.24 percent. Louisiana is the only state to have lost population since 2000, due to Hurricane Katerina and its aftermath, while Rhode Island, North Dakota, West Virginia and Michigan have all grown less than 0.1 percent per year.

New data released last week showed population changes at the city level. Fairmont in Garfield County (+7.0 percent) and Collinsville in Tulsa County (+6.9 percent) were the state’s fastest growing cities in 2008. Oklahoma City’s population increased 1.2 percent in 2008 to 551,789 residents, while Tulsa grew 0.5 percent to 385,635.

At the state level, Oklahoma’s population growth this decade has been primarily due to growth in the state’s Hispanic population.  Hispanics account for a full 52 percent of the state’s total population growth between 2000 and 2008. The Hispanic population grew by 55.4 percent in this period, while the number of non-Hispanics increased by just 2.8 percent. The growing Hispanic population reflects a combination of migration and a young population of child-bearing age.

Both  international and domestic migration have played a role in Oklahoma’s recent population growth. While the former has captured a great deal of attention, it is also the case that in recent years, more people are moving into Oklahoma from other states than are moving out. The June Oklahoma Data Center newsletter of the Department of Commerce examines data from the American Community Survey from 2005 to 2007 and finds that Oklahoma experienced a net population gain of 21,000 people moving from other states. Among the report’s findings:

• In state-to-state comparisons, Oklahoma showed a net gain from all but 11 states.
• Oklahoma’s largest net population gain came from California, with some 6,000 more Californians heading to Oklahoma than those moving in the opposite direction. Oklahoma also enjoyed sizable net migration gains from new Mexico, Florida, Arizona, and Ohio but lost residents to Alabama, Oregon, Kentucky and the Carolinas.
• Those moving to Oklahoma were largely young, with 50 percent between the ages if 18 and 39 and a median age of just 26.4. Less than 5 percent of transplants were over age 65.

While Oklahoma’s recent population growth is good news in a number of ways, the state is not expected to regain its sixth Congressional seat lost after the 2000 Census. According to projections by Election Data Services, 8 or 9 states are likely to gain one or more seats in the 2010 Congressional reapportionment, while 10-12 states are likely to lose at least one seat;  Oklahoma is virtually guaranteed to hold steady with five seats in the House of Representatives.

share this post