Wealthy Americans are moving to particular counties in large numbers, according to a Forbes magazine analysis of IRS data.
The study examined income tax returns and length of residence. In particular, the study tabbed Collier County, Florida as the hottest destination. IRS data indicated that 15,150 people moved to Collier County with the average income for the group coming in at $76,161 per person. For residents leaving the county, the average income was much lower, $26,128.
Forbes found that most of the migrants moved from other parts of Florida. Generally-speaking, wealthier migrants left higher-taxed counties for those with lower taxes. The trend not only applied within states, but also nationally, with counties near or home to major cities (such as Chicago and Detroit) sending migrants to warmer climates with lower taxes. Cook County, IL and Oakland County, MI each sent more than 100 residents to Collier County, FL alone.
Florida and Texas were overrepresented at the top of the Forbes list. Both states are known for their warm weather and lack of income taxes.
The DaytonExaminer recently studied population shifts in the Dayton area. Montgomery County (home to Dayton) lost population over the past decade while neighboring counties like Greene and Warren gained. Both Greene and Warren have decidedly lower tax burdens than Montgomery.
While these trends do not necessarily point to taxes as the cause—and the climate is no different in neighboring counties in the Dayton area—they are consistent with the trends reported in the Forbes piece.
As a state, Ohio has also lost population over the past decade, resulting in the loss of two Congressional seats.
The Tax Foundation, which rates states and localities on tax burden, has consistently given the State of Ohio poor ratings. Currently, Ohio’s state and local tax burdens are slightly below average, with an estimated 9.7% of income, good enough for a ranking of #18. However, the business tax climate is very poor, coming in at #46.
Ohio’s income tax system also receives low ratings. The state is ranked #28 currently, but the Tax Foundation chides the state’s income tax system as “one of the nation’s most complex.”
Taken together, the state’s population loss and tax climate are consistent with the Forbes analysis. It paints a picture of wealthy Buckeyes taking their earning power and wealth out of Ohio for better weather and friendlier tax rates. Ohio is left behind with fewer workers and lower incomes to tax for revenue, resulting in budget difficulties.