Minnesotans on the Move to Lower Tax States 2016

Preview:

Newly-released Internal Revenue Service data make it possible to track households moving into and out of each state. Households’ adjusted gross incomes are reported, and beginning with calendar year 2011, the IRS has made available demographic information about the households that move into and out of a state. This IRS database is a powerful tool that allows us to analyze Minnesota’s competitiveness with other states, measured by the most significant metric: the willingness of people to move into, and out of, our state.

Analysis of IRS data yields conclusions that bear directly on Minnesota’s public policies, especially its tax policies.

Key findings from the report include:

• Between 2013 and 2014, Minnesota lost nearly $1 billion in net household income to other states.
• Between 1992 and 2014, Minnesota lost a cumulative net total of $7.6 billion in household income to other states.
• With few exceptions, Minnesota loses taxpaying families to lower-tax states.
• Most of the taxpayers who leave Minnesota for lower-tax states are in their prime earning years.
• Minnesota loses high-earning families at a much higher rate than other states.
• The exodus of citizens from Minnesota accelerated after the legislature’s 2013 tax increases.

Taken together, these IRS income migration data clearly signal the need for Minnesota to reduce taxes if the state is to have any hope of being competitive among the states, and in a global economy.

The original version of this report was released in March 2016 and used preliminary data for the 2013-14 migration period.  The IRS subsequently released final data, which is incorporated into this April 2016 update. There were no substantial changes to the domestic migration patterns between the preliminary and final data.

A full copy of the report can be viewed here.