Before the holidays, the U.S. Census Bureau released its annual population estimates, which account for certain population trends across the country. Commonwealth Foundation, focusing specifically on the historic decline in the Keystone State’s population, noted Pennsylvania was one of only eight states to see an absolute decline in its number of residents last year. Domestic migration—or the movement of people between states—drove this decline.
Yet, Pennsylvania wasn’t the only state beset by a decline in domestic migration. In an analysis of the population trends in twenty states, we found the ten states with the greatest growth via domestic migration (“destination states”) had a lower average tax burden than the states with the greatest declines (“deserted states”). In other words, people are fleeing high tax states and moving to low tax states.
The destination states imposed an average tax burden of 8.84 percent on residents, according to data from the Tax Foundation. The deserted states imposed an average tax burden of 11 percent—more than two percentage points above the destination states’ collective tax burden.
Of course, taxes aren’t the only obstacle government throws in the way of economic opportunity. Unnecessary and burdensome regulations (licensure laws, compulsory unionism, etc.) also hinder workers trying to pursue a decent living. Together, these restrictions affect the economic freedom of a state—a concept measured by the Fraser Institute in its annual Economic Freedom of North America report.
The report assigned an economic freedom score to each of the fifty states, some of which are included in the table above. As the table indicates, the destination states have a higher average economic freedom score than the deserted states. People want, and are willing to pursue, a better quality of life. And since economic freedom is tied to improvements in the quality of life, it makes sense for people to move to freer states.
If policymakers want to draw people to their states and create an environment where residents thrive, they must do more than simply promise jobs. Lawmakers must also pass policies to reduce tax and regulatory burdens that stunt job growth and drive people across state lines to better economic climates.
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