Walter Wriston, former chairman and CEO of Citicorp and considered by many to be the single-most influential commercial banker of his generation, famously said: “Capital goes where it’s welcome and stays where it’s well treated.”
The latest data from the Internal Revenue Service (IRS) — which tracks the migration of people through their income tax returns — proves it. Wirepoints, an independent research company in Illinois, parsed the IRS data and reported last Friday that the biggest losers of both people and wealth — “exit states” — were Illinois, New York, and California.
The biggest winners — which this writer calls “welcome states” — were Texas and Florida.
From Wirepoints:
Illinois, New York, and California continued their streak as the nation’s biggest losers of residents and their wealth to other states, according to a Wirepoints analysis of newly-released Internal Revenue Service migration data.
Texas and Florida continued to be the nation’s big winners.
The latest IRS state-by-state migration data is based on tax returns filed in 2020 and 2021, covering taxpayers (tax filers and their dependents) who moved from one state to another between 2019 and 2020.
Florida enjoyed the most from the “exit” states, gaining not only 256,000 new residents in 2021 but the $39 billion they reported (as adjusted gross incomes) on their tax returns.
Texas was second, adding 175,000 new residents who brought with them almost $11 billion.
California, on the other hand, lost 332,000 residents, who took with them more than $29 billion in incomes. New York came in at Loser Position No. 2 behind California, suffering an exit of 262,000 residents with reported incomes of $24.5 billion.
And Illinois came in third, losing 105,000 taxpayers along with their incomes of $10.9 billion.
Wirepoints, though trying to remain nonpolitical (“We try to stick to policy, facts and numbers, not politics”), nevertheless made it clear why the “exit” states are shrinking while the “welcome” states are growing:
The IRS data shows for yet another year Americans chose better managed, less expensive areas over larger, government-centric, high-cost cities and states.
And it provides a glimpse of a demographic future in which states that prioritize an affordable, less intrusive government will dominate those that over-tax and over-regulate the lives and businesses of their residents.
That second points bears elaboration: As the blue/liberal/Marxist-run states lose people, they lose their taxes and their political influence in elections as well. Texas and Florida are gaining representation in the House of Representatives, while Illinois, California, and New York are losing it. And those gains are being built on previous years’ gains, continuing a forward momentum that blue states are losing.
For instance, for the first time in 40 years total employment in Florida now exceeds that of New York. And Florida is now running a budget surplus of $22 billion, while California is suffering from a budget deficit of nearly $30 billion.
The analysis by Wirepoints on the latest data from the IRS comes on the heels of one the group did on data released by the Census Bureau last December:
The red states of Texas and Florida grew their populations by more than 400,000 in 2022. Their pro-growth, pro-business, pro-taxpayer policies remain a magnet for both Americans and foreigners alike.
In contrast, blue states New York, California, and Illinois each had their populations fall by 100,000 or more in 2022. Americans continue to flee those same three states, year after year.
Texas enjoyed the largest influx of individuals in 2022, growing by nearly half a million and making Texas the second state in the nation with a population of over 30 million people.
As noted, the impact of the great migration from “exit” states to “welcome” states isn’t just economic — it’s political. As the Wirepoints authors noted: “You can’t help but wonder what impact these population [changes] will have on the next presidential election — and what they mean for the prospects of the [states’] governors who end up running [in 2024].”
For Wriston, it’s confirmation: People and their money will move to where they are better treated, and will stay there.
