Since 2007 Texas and Florida (with no income tax) have gained 1.4 million and 850,000 residents, respectively, from other states. California and New York have jointly lost more than 2.2 million residents. Our analysis of IRS data on tax returns shows that in the past three years alone, Texas and Florida have gained a net $50 billion in income and purchasing power from other states, while California and New York have surrendered a net $23 billion.Imagine how many high income individuals in the five high tax states mentioned read the WSJ daily, how many of those are wondering if they should relocate as they read this article. More than a few, we can be certain.
Now that the SALT subsidy is gone, how bad will it get for high-tax blue states? Very bad. We estimate, based on the historical relationship between tax rates and migration patterns, that both California and New York will lose on net about 800,000 residents over the next three years—roughly twice the number that left from 2014-16. Our calculations suggest that Connecticut, New Jersey and Minnesota combined will hemorrhage another roughly 500,000 people in the same period.
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I remember being headhunted by a Texas university as a professor. They offered me what I was making in CA, which I found unimpressive until they revealed I'd pay no state income tax.
A quick mental calculation translated that into a 10% raise, which wasn't big enough to tempt me. Add in the lower housing costs and they have a recruiting edge that often works, if not on me, on others.
