Reversing the Southward Migration

Warm weather places like Naples are soaking up more than vacation budgets as Ohioans continue to flock south – only this time for good. Governor Kasich and the Ohio legislature have made great strides to make Ohio economically attractive, but much more needs to be done to compete with states without an income tax, such as Florida and Texas.

Warm weather places like Naples are soaking up more than vacation budgets as Ohioans continue to flock south – only this time for good. Governor Kasich and the Ohio legislature have made great strides to make Ohio economically attractive, but much more needs to be done to compete with states without an income tax, such as Florida and Texas.

Keeping more income is an attractive incentive and many people are giving states like Florida and Texas a serious look. In fact, according to numbers released by the U.S. Census Bureau Texas led the nation in domestic movers last year recording a net gain of 113,528 residents. Florida was number two in movers from state to state, adding 91,484 residents.

Comparing this growth to other states, between 1970 and 2010, New York increased in population from 18 million to 19 million. In that same period, the population of Texas increased from 11 million to 25 million. Meanwhile, as a whole, the nation grew 52 percent.
At the urban level, the New York metropolitan area, including counties in New Jersey and Connecticut, increased from 17.8 million in 1970 to 19.2 million in 2010 – an 8 percent increase. The four big metro areas in Texas – Dallas, Houston, San Antonio, Austin – grew from 6 million to 15.6 million, a 160 percent increase.

So why do people leave? Because it’s not the warmer weather. For example, California, the most populous state in the nation, had one of the biggest population deficits during 2012 to 2013. It also happens to have the highest tax rate in the country. California’s top income tax rate is 12.3 percent for up to $1 million in income, and then jumps to 13.3 percent.

Florida and Texas offer a sharp contrast to California’s high taxes. With no personal income tax, inheritance tax or estate tax, retirees and millionaires have good reason to flock to Florida. And with a $1.2 billion budget surplus, thanks in part to increased sales tax revenue, Governor Rick Scott has purposed to cut $500 million in taxes and fees. Texas is able to lure new businesses, jobs and residents with its no corporate income tax rate. The state funds itself through a sales tax, taxes on motor vehicle sales and fuel, and taxes and royalties on oil and natural-gas production.

Instead of an income tax, the seven total states without an income tax raise revenue through other means, namely sales taxes, property taxes, and other fees.

Ohio, on the other hand, was hit disproportionately hard by the economic recession. Ohio’s goods and services fell 8 percent compared to the national rates. With massive job losses, debt, and budget deficits, Ohio’s population fell flat, until it grew 2.2 percent from 2009-2012.

Today, under new leadership, Ohio is a different place. Instead of a budget shortfalls and job loss, Ohio now enjoys a balanced budget, a $1.5 billion surplus, and 250,000 new-private sector jobs. Governor John Kasich worked together with the General Assembly to cut Ohioans’ taxes more than $3 billion. Reducing personal income taxes by 10 percent, creating a new Earned Income Tax Credit, cutting small business taxes in half, and eliminating the death tax, are all policies that make Ohio competitive.

However, despite the great strides made by Governor Kasich and the General Assembly, there is still more work to do. If Ohio’s elected leaders continue to make sound, growth-oriented fiscal policies, Ohio’s economy can realize additional growth and job creation. Lowering marginal tax rates would lead to net migration into Ohio and attract more employers, offering up Ohio as a sharp contrast to states with super-high tax rates.  Lowering Ohio’s tax rates even further will open the door and entice people with mid-level skills looking to raise a family, and escape states with toxic high-tax rates like California.

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