Determining state-to-state migration with tax returns
The IRS has released Migration Data for 2015-2016. These data look at year-to-year address changes reported on individual income tax returns. These data track state and county level in and out flows of tax returns along with providing aggregate Adjusted Gross Income (AGI). A net-migration number for states and counties can be calculated looking at the difference between the inflows and outflows.
Even though AGI is provided, it cannot be used to calculate income losses or gains. These back-of-the-envelope calculations can lead to inaccurate claims about what is happening and what these data actually tell us.
Three Reasons you cannot assume Adjusted Gross Income (AGI) follows a person:
Most people cannot take their income with them – when people move due to a change in employment, the job (and wages) remain in the stateand just the person moves. The job then gets filled by another person and the wages remain in the state – therefore not necessarily a loss of overall AGI to the state.
Some income may transfer to other people in the state – for example, if a small business owner leaves Connecticut, another small business owner in the state may gain customers – increasing income within the state that won’t be captured in the IRS migration data.
Not all income is lost if a person moves – some people move their physical location but some people leave a state but continue to work there. Yes it is true that some income does follow a person such as –Social Security, investment earnings, and pensions.
The income that is ‘lost’ when people move typically goes to two groups:
People moving into the state replace the majority of the income of people moving out
People entering the state’s labor force receive most of the rest of the income previously earned by those who left - these people aren’t necessarily migrating
According to these data, Connecticut tax return inflow and outflow trends have been steady for the past two years:
Connecticut gains more tax returns (households) from New York than it loses to New York.
But more tax returns (households) leave to go to Massachusetts and Florida than migrate in to Connecticut from those states.
Connecticut gained a total of 36,244 returns in 2015-2016, compared to 27,588 in 2014-2015, however it lost 48,944 in 2015-2016, and 36,505 in 2014-2015.
The graphics below show the top ten places for in and out migration for Connecticut based on address changes on federal tax returns for both 2014-2015 and 2015-2016; hover over each state to see the number of returns. ‘Foreign’ represents filings outside of the US. Notice how the list of states don't change too much from one year to another.
In and Out Connecticut Migration (2015-2016)
In and Out Connecticut Migration (2014-2015)
Here’s the break down of the migration of returns to and from Connecticut in 2015-2016. 'Other' includes all states not included in the top 10, combined.
| Origin State | In | Destination State | Out | |
|---|---|---|---|---|
| ---- | ||||
| New York | 10,795 | New York | 8,202 | |
| Other | 7,992 | Other | 12,224 | |
| Massachusetts | 4,274 | Massachusetts | 5,071 | |
| Florida | 2,949 | Florida | 7,944 | |
| New Jersey | 1,751 | New Jersey | 1,798 | |
| California | 1,730 | California | 2,928 | |
| Pennsylvania | 1,280 | Pennsylvania | 1,455 | |
| Texas | 1,273 | Texas | 1,883 | |
| Rhode Island | 1,175 | Rhode Island | 1,220 | |
| Virginia | 1,020 | Virginia | 1,419 | |
| North Carolina | 853 | North Carolina | 2,283 | |
| Foreign | 647 | Foreign | 1,093 | |
| South Carolina | 505 | South Carolina | 1,424 | |
| ---- | ||||
| Total | 36,244 | Total | 48,944 |
We've also observed similar net losses in other Eastern states: New York, New Jersey, Massachusetts and Rhode Island. In 2015-2016, all four states experienced a net loss in tax returns. When you look at the inflows and outflows as percentages of the total state tax returns, they all see a decline of less than 4%. Rhode Island sees the largest percentage loss among these states in 2015-2016 with a 3.6% loss.
Total number of tax returns for each state is calculated by summing the total number of tax returns leaving a state, plus the total number of returns of those who moved, but remained in the state, plus the total number of non-migrants.
| State | In | % Total (In) | Out | % Total (Out) | Net | |
|---|---|---|---|---|---|---|
| Rhode Island | 13,744 | 3.2% | 15,702 | 3.6% | -1,958 | |
| Connecticut | 36,244 | 2.5% | 48,944 | 3.4% | -12,700 | |
| New Jersey | 82,629 | 2.3% | 109,569 | 3.1% | -26,940 | |
| Massachusetts | 66,581 | 2.4% | 81,828 | 2.9% | -15,247 | |
| New York | 146,432 | 1.8% | 226,806 | 2.8% | -80,374 |
We've shared a lot of great information regarding migration data, check out some of our previous posts to learn more: