How Money Walks is a project that tracks the migration of income between all 50 states. By using data from the IRS, How Money Walks shows which states have gained or lost the most wealth between 1992 and 2016. People decide to relocate for all kinds of reasons, but over time trends appear. One of these trends is that tax policy affects where people choose to live.
Florida has had the largest increase in wealth, according to How Money Walks, with a net gain of $156 billion moving into the state. With no personal income tax and a low overall tax burden, Florida is a haven for individuals leaving high-tax states. Florida has gained the most wealth from New York, which has a high income tax rate of 12.70 percent. The Empire State has seen $99 billion move out.
Florida also has an immense advantage on its overall tax climate for business. According to the Tax Foundation’s 2019 State Business Tax Climate Index, Florida ranked fourth while New York ranked 48th. Florida also has a high rank in Rich States, Poor States, a publication that ranks each state on its economic competitiveness. Florida ranks sixth overall while New York is dead last.
Oklahoma has not had the same losses as New York—only $1.22 billion has left the Sooner state since 1992. But we still have much to learn from Florida. Oklahoma ranks 26th in the State Business Tax Climate Index and 16th in Rich States, Poor States.
|Net Wealth Migration||Gain of $156.10 billion||Loss of $1.22 billion|
|Income Tax Rate||0%||5%|
|State Business Tax Climate Index Ranking||4th||26th|
|Rich States, Poor States Ranking||6th||16th|
States have always been an area for experimentation and innovation in public policy. Policy at the state level gives us a chance to see what does and doesn’t work. When it comes to tax policy, taxpayers have been voting with their feet in favor of lower income tax burdens. If Oklahoma wants to compete with states like Florida, it must look at how its tax policy, specifically the income tax, affects people’s decision to call Oklahoma home.