The Effect of State Income Tax Structure On Interstate Migration

Dec 01, 2002 | by
  • Description

This research paper addresses the issue of whether state income tax treatment affects the location decision of individuals. There have been some estimates of the effects of tax differences on the migration patterns of individuals, but this is a hard issue to research. Data are often not available and it is very difficult to compute all of the taxes faced by individuals. Also, taxes are not the only thing that influences people's decisions of where to live. Other amenities are important, including public services, weather, proximity to family, and employment opportunities. In fact, individuals may be compensated for higher taxes by these other amenities. For example, a high taxing state might have a terrific system of public education, which individuals are willing to support via higher taxes. Higher wages may be offered to compensate for higher taxes. Unless we try to separate these different influences, it will be very difficult to offer policy advice regarding whether or not individual's migration patterns are affected by taxes. Report #79