High state tax rates are clearly a deal-breaker for American citizens, according to a recent CATO Institute study, which found that citizens are migrating away from tax-punishing states and toward states with low taxes such as Arizona. The Grand Canyon State’s business-friendly climate has also resulted in Arizona besting Texas for the second year in a row for net in-migration.
Texas, which has had either the highest or second-highest number of domestic in-migrants for the past decade, fell to eighth place in the rankings. Moreover, Arizona had thousands more in-migrants than Texas in 2016 and 2017 according to recent Census Bureau data.
In 2016, Arizona followed Florida, Washington, North Carolina, and Colorado with the fifth highest number of net in-migrants in the nation. That is, over 24,000 more people moved into the state than out of the state. In fact, the majority of the fifty states have more people moving out rather than into their state.
It is no coincidence that Arizona has one of the lowest tax rates in the nation. Personal property taxes are in the lowest third of the country, and the state’s income tax rate – 4.9 percent – is the fourth lowest in the States. It’s no wonder people are leaving their states for Arizona.
The allure of Arizona stretches far past taxes, though, for both businesses and residents. A spokesperson from the Arizona Commerce Authority explains the appealing aspects of our business climate. “Our state’s pro-business environment and streamlined regulatory system, affordable operating costs, access to top talent, and thriving innovation ecosystem are very attractive to businesses,” the spokesperson said.
The state presents attractive qualities for potential residents, as well. The ACA also highlighted the state’s affordability of living as one of the best in the nation. “Arizona’s quality of life is a significant attribute in attracting new residents,” the spokesperson said. “Our state has an affordable cost of living, particularly when compared with other major U.S. cities; its cities have lower housing costs than cities of comparable size.”
For all of the opportunities the state offers in-migrants, those movers also help Arizona to flourish. Senior economist Jim Rounds describes the economic impact of migrants. “Population is a result of opportunity and allows for further opportunity to happen,” Rounds said. “When you have all the cylinders running at all times, the economy works. And right now, we’re running on all cylinders.”
The ACA spokesperson points out that although the total effect of migration on wages and employment is challenging to calculate, the increase in demand for goods and services for more available workers will lead to increased economic activity and higher employment levels.
The Office of Economic Opportunity Employment Projections Report released recently showed that Arizona will add over 165 thousand jobs by the end of next year. Strong migration into the state plays an important role in these projections.