A study says that having no income tax doesn’t influence many to move to Tennessee.
High points of a report from the Center on Budget Policy and Priorities shoots a few holes in the philosophies behind no income tax, which The Washington Post picked up and reported here. Some points aimed at Tennessee’s lack of income tax from the CBPP study:
Tennessee attracted far fewer migrants than did neighboring North Carolina. Net in-migration of households to North Carolina was more than double that of its neighboring state of Tennessee — this despite the fact that North Carolina levied the highest income tax rates in the Southeast throughout the period. Tennessee also lost almost 4,900 households to income-tax-levying Georgia.
Rich people don’t seem to care about income tax …
Texas’ and Tennessee’s experiences are inconsistent with the claim that the lack of an income tax is a major draw for the wealthy. In two no-income-tax states with high net in-migration during the 1993-2011 period — Texas and Tennessee — there is virtually no difference in the average income levels of in-movers and out-movers. With respect to these two states, in other words, there is essentially no evidence that their lack of an income tax is serving as a draw to affluent residents of income tax-levying states. And if the lack of an income tax isn’t drawing high earners, it is even less likely to be a draw for households with more modest incomes.
… but the weather here is nice …
The IRS data reveal a very strong Snowbelt-to-Sunbelt migration pattern that is substantially independent of the taxes in effect in either the origin or destination state. This suggests that a warm (or at least largely snow-free) climate may be more important than low or no income taxes in driving migration to states such as Florida, Nevada, Tennessee, and Texas
… and retirees move to a place regardless of income tax policy:
As it turns out, other states that are common destinations for older migrants seem to draw them regardless of whether they have an income tax. Retirement-age migrants make up approximately the same share of Californians moving to income-tax levying Oregon and Arizona as they make up of retirement-age migrants to no-income-tax Nevada and Washington. The same is true with respect to migrants from Michigan to income-tax levying North Carolina and no-income-tax Tennessee.