Fleeing Greater Density for Lower Taxes

Make your money in New York City—and then hit the road.
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Make your money in New York City—and then hit the road.
Manhattan's Little Italy, Lower East Side, circa 1900. (PHOTO: LIBRARY OF CONGRESS)

Manhattan's Little Italy, Lower East Side, circa 1900. (PHOTO: LIBRARY OF CONGRESS)

As Mayor Michael Bloomberg enjoys his victory lap for a job well done, New York City continues to hemorrhage people. Out-migrants vote with their feet. Many of America's biggest cities are too dense:

Overall, domestic migrants tend to be moving away from these denser metropolitan areas. Between 2000 and 2010, a net 1.9 million people left New York, 1.3 million left Los Angeles, 340,000 left San Francisco, while 230,000 left San Jose and Boston. In contrast, some of the largest in-migration has taken place over the past decade, as well as since 2010, in relatively sprawling cities, including Houston, Dallas, Ft. Worth, Tampa-St. Petersburg and Nashville.

Emphasis added. That's net domestic migration, which means a lot more than 1.9 million people left New York. What does Bloomberg have to celebrate? The egress of the Creative Class and subsequent urban decline?

Not only is the rent too damn high, so are the taxes. Using IRS data, one can track the adjusted gross income of domestic migrants. Analysis from the Tax Foundation proves that wealth is fleeing high tax states in search of fiscal relief:

Florida benefited the most—interstate migrants brought a net $67.3 billion dollars in annual income into the state between 2000 and 2010. The next two highest gainers were Arizona ($17.7 billion) and Texas ($17.6 billion). New York, on the other hand, lost the most income ($-45.6 billion), and is followed by California ($-29.4 billion) and Illinois ($-20.4 billion).

Go ahead and replace New York State, California, and Illinois with New York City, Los Angeles, and Chicago. Those three cities are the biggest domestic migration losers in the United States. By comparison, they make Detroit look downright attractive. Drive-by data analysis will do that.

I'll start with net migration. Even with negative numbers, millions of tax filers are moving to New York, Los Angeles, and Chicago every year. Millions of people are moving to higher density and taxes. Why? Are they soft in the head?

No, they aren't soft in the head. You move to Big City to make money. Not a better place on the planet to do that than New York:

The notion of American class mobility is deeply rooted in the ability to make more money. But class mobility can also be measured in the ability to actually move. Using IRS migration data from the 2009-2010 period — which measures the inflow and outflow of citizens who file taxes from county to county — Eric Rodenbeck and his team at San Francisco-based design firm Stamen created a map of America that is as extreme as ever. By using the IRS figures and mapping them out on U.S. highways with open-source technology provided by OpenStreetMap, they've created a roadmap of the parts of America that are losing and gaining, and the results are surprising. "We realized that if you look at the biggest 'losers,' essentially what you're looking at are the biggest cities in the U.S.," Migurski says. One of those losers: New York county, which lost $1,306,548,000 and 15,100 people. "But does that actually mean New York is a big loser?" Migurski asks. "One of our ideas was that, you're not a loser if you're losing money. You're an exporter." The sort of exporter, he says, that boosts the rest of the U.S. economy. Traditional Sun Belt retirement areas comprise the gainers; areas like South Florida and Southern California in particular, create what Migurski calls "money sinks." But between the two is a middle that doesn't move, that actually exists in the middle: King and Loving counties in Texas remained unchanged. The rural areas between coasts show movement not from coast to coast, but off the beaten path, within state lines. Stamen presents an America that is in both a state of unrest, and unable — or unwilling — to move at all.

Even if the net migration for NYC were positive, the city or metro could still show a large loss of income because those who leave make a lot more than those arriving. Unwittingly, the Tax Foundation is making a case for higher taxes. Unintentionally, Joel Kotkin is arguing for greater density. Take a bow, Mayor Bloomberg. Your city is the biggest loser.

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