MECEP: IRS Data Shows Maine is Gaining Residents from So-called “Low Tax” States
Whenever there is a debate about making the wealthy pay their share, pro-business interests always argue that taxing the rich will make people flee to lower tax states. However, a recent analysis by the Maine Center for Economic Policy shows that people move for jobs, family, housing, and quality of life, not tax rates.
“If income taxes were driving people out, you’d expect a steady stream of Mainers to move to New Hampshire, which has no income or sales tax,” writes Mark Schaffer, MECEP’s tax and budget policy analysis. “But in fact, the opposite is happening. In tax years 2022-23, Maine gained a net of 623 tax filers accounting for 1,051 more individuals from New Hampshire according to new IRS data.”
The inflow of Granite Staters into Maine isn’t a new trend. Since tax year 2010-2011, more tax filers have moved from New Hampshire to Maine. Notably, some of the weakest years for in-migration came after the LePage administration’s failed economic policies — including income tax cuts in 2011 that disproportionately benefited wealthy Mainers — which led to lagging growth and prolonged the 2007-09 recession in Maine. Migration picked up as Maine’s economy recovered, not as taxes fell.
“New Hampshire isn’t the only “low tax” state with net migration to Maine. Based on rankings from the conservative Tax Foundation, Maine gained more tax filers than it lost from 7 out of the 10 “most competitive” or lowest-tax states, for a net gain of 1,289 individuals. If low taxes were the driver, we would expect to see the reverse. But low tax state residents are moving to Maine instead.