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Migration study shows Americans like N.C; likely due to friendly tax climate

Photo Credit: Shutterstock
Photo Credit: Shutterstock

A recent examination by the Tax Foundation shows North Carolina’s high net migration rate may be due to its friendly tax climate.

The nonprofit, nonpartisan group annually examines migration trends, using data from United Van Lines, the largest moving company in the country. That company’s National Movers Study found that in 2020, Idaho saw the highest percentage of net migration at 70%, followed by South Carolina (64%), Oregon (63%), South Dakota, and Arizona (both 62%). North Carolina ranked sixth at 60%.

The states with the highest exodus? New Jersey, New York, Illinois, Connecticut, and California. 

The Tax Foundation’s Janelle Cammenga compared this list to her organization’s 2021 state business tax climate index, finding that those states with the higher net migrations tended to also rank high for friendly tax rates, while those who fared poorly in the United Van Lines study had the most people leaving their borders. North Carolina ranks 10th on the Tax Foundation’s 2021 list.  

She notes that while United Van Lines tracks some of the reasons people move, including jobs, retirement and family, it doesn’t specifically ask about taxes — but the trends show how taxes can affect decision-making. 

“Taxes may have limited influence on whether someone takes a job, but they can influence where jobs are available, and where a person taking a position might locate,” Cammenga said.

She notes, for example, that many people who work in Chicago live in Indiana. Taxes, particularly those on property, could be a major factor in that. 

Cammenga also points out that nine of the 10 top states for retirement-motivated moves (North Carolina ranks 10th there, too) offer one of three tax advantages: they exempt a large portion of Social Security from income taxes, they exempt Social Security completely, or they don’t implement a state income tax. She notes that retirees have more control over where they relocate, so the correlation between net migration and lower taxes is unsurprisingly stronger.  

“While certain factors are outside a state’s control, every state can foster an attractive economic landscape through wise tax policy decisions,” she said.