The Sconi

Wisconsin is hardly a taxpayer’s paradise unless compared to its neighboring states to the south and west. People are leaving Illinois, Minnesota, and Iowa, and according to a new study by the Tax Foundation, the loss of state revenue and population migration are closely tied to punitive tax structures in those states.

The three states ranked in the lowest third nationally in a ranking determined by a combined loss of residents, income tax filers, and adjusted gross income based on migration between 2021 and 2022, according to the study.

In that year, Illinois lost 87,311 residents, 45,460 income tax filers, and $9.84 billion in adjusted gross income, ranking 47 out of 50 states and the District of Columbia in the study of taxes and interstate migration. At the same time, Illinois ranked 37th in the Tax Foundation’s most recent State Business Tax Climate Index because while it has low individual income taxes, its corporate, sales, and property taxes are all very high.

By comparison, Wisconsin had a gain of 817 residents but a loss of 1,019 income tax filers and a net loss of $310 million in adjusted gross income during the same period. The state ranks 24th on the Tax Climate Index.

“Overall, states with lower taxes and sound tax structures experienced stronger inbound migration than states with higher taxes and more burdensome tax structures,” senior policy analyst Andrey Yushkov said in his report. “It is clear from the 2021-2022 IRS migration data that there is a strong positive relationship between state tax competitiveness and net migration.”

Minnesota and Iowa ranked 38th and 37th respectively in the new study but are moving in different directions. Minnesota lost 13,455 people, 8,278 income tax filers, and $2.19 billion adjusted gross income while Iowa lost 5,444 people, 4,948 income tax filers,and $520 million in adjusted gross income.

This year Iowa — presently 33rd on the State Business Tax Index — dropped its top marginal income tax rate to six percent from eight-point-five-three percent (8.53%), reduced its top corporate income tax rate to eight-point-four percent (8.4%) from nine-point-eight percent (9.8%),and streamlined its tax rate schedule from nine brackets to four.

Contrast Iowa with Minnesota under Gov.Tim Walz; one of the few states raising taxes despite a $17.6 billion surplus padded by billions in federal COVID handouts according to an early August analysis by The Tax Foundation.Minnesota ranks44th on The Tax Foundation State Business Tax Climate partly due to very high corporate & individual incomes

“A year from now I would expect Iowa doing much better heading into future” Yushkov told Badger Institute “I’d also expect that Minnesota will be worse continuing losing residents; Wisconsin benefiting”

Yushkov made clear that TheTaxFoundation studies without political component noting progressive Democrats governing less favorable climates like Illinois & Minnesota while Republican-led Iowas' improvement benefits

Nationally out10 highest-gaining eight no-individual-income-tax wage/salary or flat-tax transitioning flat-tax per-study Of26-net-increase-filers16-top-marginal-below-national-median17/25 gained during-period Conversely18 bottom25 lost-filings

Florida led gains125551 Texas88216 North Carolina43653 California’s net-loss144203 followed New York108586 Illinois45460 unsurprisingly these three led losses Californias'23point8billion NY14point1billion IL9point8billion; unattractive-destinations$200k+adjusted-gross-incomes Two steep-progressive-tax-codes indicator-population movement States structuring consistently lose higher-income residents/tax-revenue entrepreneurial activity Study suggests greater importance placed favorable climate high-income-earners

“States prioritizing structurally sound policies reap economic benefits creating attractive fiscal landscapes where individuals businesses thrive” concluded-study Mark Lisheron Managing Editor Badger Institute Permission granted proper citation author/institute

---