The old saying "I wasn't born in Texas but I got here as fast as I could" appears to be holding true. Since 2000, Texas has gained $17.6 billion in net income from people moving here from other states, according to a new study by the Tax Foundation. That ranks Texas third behind Florida and Arizona for net income gained over that period. The study analyzed federal tax returns from 2000 to 2010 to find which states are gaining people and money and which are losing. While low-tax states like Florida, Arizona and Texas were at the top, the three biggest losers of net income were New York, California and Illinois, all high-tax states.
The results are not surprising to Scott Drenkard, economist from the Tax Foundation. "Certainly a favorable tax code is one of those things that incentivizes businesses to move to the state, and businesses traditionally attract more of a workforce," he tells KTRH. That increased workforce is what drives overall growth in the economy. "If you have more input you get more output, and if you think of people as an input into the labor pool, it's going to produce economic growth within the state." Even though Texas is doing well in jobs and economic growth, Drenkard says it only ranked ninth on the Tax Foundation's Business Tax Climate Index. "Texas is one of just four states that has a tax on gross receipts," he explains. "Fortunately Texas cut (that tax) last year, but it's one of those elements that could still stand to be improved."
There are other factors that drive people to relocate to different states, such as climate, real estate, schools, family ties, etc., but jobs and financial interests still tend to play the largest role when it comes to where people live. According to Drenkard, that all comes back to tax policy. "Taxes do affect economic growth," he says. "That's going to affect business location decisions, and that tends to be one of the main reasons people move from place to place."