Americans have always been a transient people, often searching for new careers and better opportunities for their family.
Depending on the economy of the day, we see 30 to 40 million Americans move each year. And when they move, they bring their incomes with them. Between 1995 and 2010, some $2 trillion in adjusted gross income went from one state to another.
As a result, some states brought in billions more in incomes over the past 25 years while others lost that amount and then some.
Mississippi lost $132 million in annual AGI. Looking more closely at the state, Desoto county was the big winner, gaining $1.34 billion in annual AGI, mostly all of it from across the border in Shelby county, Tennessee. Rankin ($523 million) and Madison ($912 million) counties were the other big beneficiaries of wealth transfers in the state, but that was mostly from Hinds county, which lost $1.55 billion in annual AGI.
Not surprisingly, the Delta, which is shedding population, also saw big loses in income. The five counties of Bolivar, Coahoma, Leflore, Sunflower, Washington lost between $100 million and $250 million. That wealth was generally lost to either the Jackson metro area or both sides of the Mississippi/ Tennessee state line. Throughout the state, we saw a few areas of growth (such as Lafayette county) or decline (such as Lauderdale and Lowndes counties), but most other places were more or less stagnant. Very little wealth gained, very little wealth lost. And it was usually just in-state transfers.
The only other counties to see wealth gained from out-of-state were Hancock and Pearl River counties, along the Louisiana border. They both gained between $180 and $200 million, mostly from Louisiana.
However, Louisiana stood out as having the biggest losses in the South. The state lost some $8 billion in annual AGI, with more than $500 million shifted toward Mississippi. Among other neighbors, Alabama saw a gain of $2.5 billion and Arkansas saw a gain of $2.6 billion. Tennessee gained over $14 billion – even with the big loses from Shelby county to Desoto county.
Overall, the states that did the best won’t surprise many people. Arizona gained $35 billion in annual AGI, Texas gained $47 billion, and Florida gained $156 billion. That was at the expense of many states, but three in particular lost between $50 and $100 billion each year. This includes Illinois, California, and New York, the biggest loser of all. The Empire State lost $100 billion in annual AGI.
But why? After all, it’s tough to compete with Chicago, New York, San Francisco, and Los Angeles.
Because the states that Americans are moving to, and where they bring their income along, are low and no tax states. Florida and Texas do not charge you for working, while Arizona has a relatively low individual income tax rate. Certainly better than California, though that isn’t saying much.
When New York Gov. Andrew Cuomo was being criticized from both the left and the right for offering between $1.5 and $2 billion in taxpayer incentives to Amazon, he defended the decision saying his state needs to offer incentives to compete with states that don’t have an income tax. If a governor has to say that, it should highlight the lack of competitiveness that state has, regardless of what else it has to offer.
When states have higher tax rates, that naturally allows the state to confiscate more money from taxpayers and gives them the ability to dole out money to their preferred companies. Rather than let the market work, you have selected interests who are insulated from higher taxes at the expense of everyone else.
We all seem to understand the not-so-secret, secret sauce. Low taxes and a light regulatory touch lead to job growth. Americans then move to where there is a combination of good jobs, high quality of life, and reasonable housing costs. And the state’s that are doing things right are the ones who benefit. In other words, prosperity is closely linked to freedom-based public policies. If we want to grow and provide more opportunities in Mississippi, then let’s take the path that makes it easy to start a job, open a business, earn a side income, invest capital, serve customers, compete with incumbent businesses, and keep more of what we earn.