How Money Walks is a project that tracks the migration of income between all 50 states. Using IRS data, How Money Walks shows which states have seen the largest gain or loss of wealth between 1992 and 2016. These data provide an opportunity to consider how tax policy affects where people choose to live.
Texas had the second largest gain in wealth, with $47 billion in annual adjusted gross income moving into the state. Texas gained the most wealth from California, which has the highest income tax rate in the country at 13.3 percent. California has lost $58.63 billion in annual adjusted gross income from wealth migration–$9.32 billion of that to Texas. Texas consistently ranks in the top 15 states for its overall tax climate for business. According to the Tax Foundation’s 2019 State Business Tax Climate Index, Texas ranked 15th while California ranked 49th. Texas also ranks high (14th) in Rich States, Poor States, which ranks each state on its economic competitiveness; California ranks near the bottom at 47th.
Oklahoma’s total tax burden as a percentage of income is not much higher than Texas’s tax burden, but Texas has grown much faster than Oklahoma. That is likely because the mix of taxes that make up each state’s tax burden is different. Texas has no income tax while Oklahoma penalizes productivity at a top rate of 5 percent. While Texas has gained wealth, Oklahoma has lost $1.22 billion since 1992. Oklahoma has lost $1.54 billion to its no income tax neighbor. That is nearly $1 billion more than Oklahoma has lost to any other state. Florida, also without an income tax, happens to be the next highest state Oklahomans have been moving to with $574 million of wealth moving into Florida.
|Net Wealth Migration (1992-2016)||Gain of $46.99 billion||Loss of $1.22 billion|
|Income Tax Rate||0%||5%|
|State Business Tax Climate Index Ranking||15th||26th|
|Rich States, Poor States Ranking||14th||16th|
|State and Local Tax Per Capita||$3,104||$3,060|
|Tax Burden as a Percentage of Income||7.93%||8.73%|