Since the official 2010 Census numbers were released last
week, political number crunchers have compiled all sorts of stats about
who the big winners and losers have been.
One conclusion that is basically impossible to escape is that Americans
seem to be voting with their feet when it comes to taxes. Prior to the
census results we had anecdotal evidence that this was the case in
recent years such as the miserable failure of “millionaire taxes” in
Maryland and Washington, now we have some actual numeric data which
demonstrates this conclusion.
The Gallup Organization found that all of the 10 states
which lost seats are dominated by Democrats, at least in
terms of party registration. Democrats, as we all know, generally tend
to be in favor of higher taxes compared to Republicans.
Americans for Tax Reform has some
interesting numbers showing that states losing seats in the
House of Representatives have higher marginal income tax rates, higher
average tax burdens, more spending per capita, and are much more likely
to force employees to work for a union even if they don’t want to.
Last Tuesday, my Examiner colleague Michael Barone did a good
general breakdown of income
tax rates versus population growth and found that 7 of the 9
states which have no income tax all grew higher than the national
average while the 2 that didn’t grew fastest in their regions.
The overall state tax burden is worth looking at as well, however.
That’s because many states which do not levy income taxes sometimes
have extremely high property or sales taxes. Since all the various
forms of taxation can have an effect on economic growth, let’s take a
look at the data for population growth versus overall tax burden.
I’m indebted to the Tax Foundation which calculates each
state’s per-capita tax burden and makes the data available online here.
The following embedded spreadsheet compares a state's average tax rate
from 2000 until 2008 (the latest year for which this data is available)
with its population between 2000 and 2010.
There are several interesting observations that can be made
from this data:
Three of the ten least-taxed states—Nevada, Florida, and
Texas—were among the ten-fastest growing states. None of them were among the 10 slowest growing states.
Of the 10 states with
the highest tax burden, 3 of them—New York, Rhode Island, and
Ohio—were among the 10 states that had the lowest population growth. Not one of them is among the fastest-growing states.
Of the 20 states with the lowest tax burden, 12 of them were among the
20 states that gained population the fastest. In contrast, of the 20
states with the highest tax burden, 8 of them were among the 20
There are 16 states with tax burdens of 10% or higher. Yet not all of
them are growing slowly. At first glance this may seem to contradict
the previous two points but it doesn't if you look more closely.
While California comes in at #20 on the fastest-growing list, those
days are over as that state has overspent
and over-taxed its citizens. More people have been leaving
the state than moving in since 2008. Many of these California
refugees are moving to Idaho and Utah (#3 and #4 on population growth
list), helping them to experience high growth as a percent,
especially since they had had pretty small populations to begin with.
Hawaii is the only other state with a tax burden of over 10 percent. My
guess is that if the state had a lower tax burden, it'd see red-hot
levels of out-of-state migration considering its great weather
and proximity to Asia. As it is, it's in the top 20 in terms
Another way to look at this data is via a scatter graph to help us
discern trends. As you can see from the picture above (click it to expand to bigger size), it is very arguable that there is an inverse relationship between states' tax burdens and their
The other story in the census data is Texas, which as Michael Barone pointed
out earlier this year has become America's new economic
engine, displacing California:
Texas is a different story. Texas has low taxes -- and no state income
taxes -- and a much smaller government. Its legislature meets for only
90 days every two years, compared with California's year-round
legislature. Its fiscal condition is sound. Public employee unions are
weak or nonexistent. [...]
In the meantime, Texas' economy has been booming. Unemployment rates
have been below the national average for more than a decade, as
companies small and large generate new jobs.
And Americans have been voting for Texas with their feet. From 2000 to
2009, some 848,000 people moved from other parts of the United States
to Texas, about the same number as moved in from abroad. That inflow
has continued in 2008-09, in which 143,000 Americans moved into Texas,
more than double the number in any other state, at the same time as
98,000 were moving out of California. Texas is on the way to gain four
additional House seats and electoral votes in the 2010 reapportionment.
This was not always so. In the two decades after World War II
California, with its pleasant weather, was the Golden State, a promised
land, for most Americans, while Texas seemed a provincial rural
backwater. Many saw postwar California's expansion of universities,
freeways and water systems a model for the nation. Few experts praised
Texas' low-tax, low-services government.
Now it is California's ruinously expensive and increasingly incompetent
government that seems dysfunctional, while Texas' approach has
generated more creativity and opportunity.
It's no wonder that half of all jobs created last year were
created in Texas.