We’re #1! We’re #1!
Oh, New Jersey]. I got a kick out of seeing many of my friends in social media posting about New Jersey’s most recent “honor”: Forbes recently reported that the state was tops in terms of exits. No, not those kinds of exits that Springsteen and Bon Jovi refer to… But exits from the state. For good.
Forbes pulled its data from a study by moving company United Van Lines, which analyzed customer moves across the 48 continental states in 2012. Trends indicated, in particular, that folks tend to be moving away from the northeast and towards the southeast. What the study couldn’t do is determine, with certainty, the actual cause of the behavior. There are any number of reasons why people move: loss of jobs, high cost of living, and, let’s face it, in the case of New Jersey, the unfortunate series of weather disasters in 2012 (and now, the blizzard of 2013) cannot have helped.
But what about tax burdens? It’s no secret that the tax burden in New Jersey is high. Although Gov. Chris Christie (R) has indicated that tax relief as a top priority in his administration, taxes remain high in the Garden State. Of course, the counter to that argument is that services are generally plentiful in the state, too: the schools, for example, consistently place in the top tier in national rankings and the boasts one of the highest state graduation rates in the country.
But what about those other states? For fun, I thought I’d compare Forbes’ lists of top “exit states” with their respective tax burden rankings. The findings put an interesting spin on the list.
First, here’s the list as reported by Forbes:
- New Jersey
- Illinois
- West Virginia
- New York
- New Mexico
- Michigan
- Connecticut
- Maine
- Kentucky
- Wisconsin
You can check out the slideshow here for details about those rankings.
Compare that list to this one which compares state and local individual tax burdens:
- New York
- New Jersey
- Connecticut
- California
- Wisconsin
- Rhode Island
- Minnesota
- Massachusetts
- Maine
- Pennsylvania
You can check out the full list of 50 states – over the past 35 years or so – on the Tax Foundation’s excellent web site (Editor’s caution: the stats are incredibly addictive and you could find yourself clicking for hours).
Clearly, there is not a one-to-one correlation. And to be fair, I didn’t expect there to be. But there’s a lot of overlap. In fact, half of the top ten exit states also appear in the top ten tax burdened states (New York, New Jersey, Connecticut, Wisconsin, and Maine). Three of those that didn’t make the top ten don’t fall far behind: Illinois ranks 11th; West Virginia ranks 19th; and Michigan ranks 18th. Of those on the list, only Kentucky and New Mexico fall into the bottom half of the nation in terms of tax burden: they rank 26th and 39th, respectively.
It’s even more interesting, however, when you look at the bottom (not the top) of “business-friendly” states in terms of taxes. For 2013, the Tax Foundation found these states to be the least business-friendly, for tax purposes:
- New York
- New Jersey
- California
- Vermont
- Rhode Island
- Minnesota
- North Carolina
- Wisconsin
- Iowa
- Maryland
* I didn’t count D.C. in this list to keep things consistent.
Three of the ten exit states (New York, New Jersey, and Wisconsin) appear – again – on the list. Not one of the top ten exit states made the list of business-friendly states. Illinois, New Mexico, Connecticut, and Maine all landed in the bottom half; only West Virginia and Michigan were in the top 50% of business-friendly states.
I’m not suggesting that taxes alone have caused residents to flee. I understand that the choices people make are much more complex and take into account a host of factors. But taxes do play a part – witness the hubbub in France after actor Gerard Depardieu gave up his passport over increased tax rates – and Phil Mickelson’s dramatic statements. And these statistics do paint an interesting picture, don’t they? And it makes me wonder: would you/have you moved for tax reasons?
