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Americans Are Migrating to States with Lower Taxes and Less Regulation

by John Merline   red state blue state

Americans are migrating from less-free liberal states to more-free conservative states, where they are doing better economically, according to a new study published Thursday by George Mason University’s Mercatus Center.

The “Freedom in the 50 States” study measured economic and personal freedom using a wide range of criteria, including tax rates, government spending and debt, regulatory burdens, and state laws covering land use, union organizing, gun control, education choice and more.

It found that the freest states tended to be conservative “red” states, while the least free were liberal “blue” states.

The freest state overall, the researchers concluded, was North Dakota, followed by South Dakota, Tennessee, New Hampshire and Oklahoma. The least free state by far was New York, followed by California, New Jersey, Hawaii and Rhode Island.

The study also compared its measures of economic and personal freedom to population shifts and income growth, and found that freer states tend to do better on both scores than those less free.

For example, it found a strong correlation between a state’s freedom ranking and migration, which means that Americans are gravitating toward states that have less-intrusive governments.

Escape From New York and Los Angeles 

New York, for example, saw a net migration of -9.2% between 2000 and 2011, and California’s was -4.2%. In contrast, Tennessee gained 4.4%, and Oklahoma gained 1.3%.

An IBD analysis of the data found that “red” states — those voting for Republican presidential candidates in the past two elections — saw an overall net migration of 2.2%, while “blue” states saw an overall average net migration of -0.3%.

“People are voting for places with greater freedom,” said William Ruger, a political scientist at Texas State University and one of the co-authors of the study. That was true, he said, even after controlling for things like weather and amenities that might attract people to states independent of these freedom measures.

The study also found that states with more freedom tended to see stronger income growth. This was particularly true in states with more regulatory freedom.

“Adam Smith was right,” Ruger said. “If you have economic freedom, you will have economic growth.”

IBD has previously reported that red states saw stronger job growth, lower unemployment and bigger gains in per capita income than blue states during the economic recovery. For example, IBD found that in the first three years of the recovery, red states saw 1.9% job growth compared with 1.2% for blue states.

The Mercatus study also found that blue states have generally become less free over the past decade, while red states have tended to gain additional levels of freedom. The states with the biggest declines in freedom were Wyoming, Illinois, New Jersey, New York and Kansas. Those with the biggest gains were Oklahoma, North Dakota, Idaho, Utah and New Mexico.

And contrary to conventional wisdom, the researchers found that conservative states are just as likely as liberal ones to score well on measures of personal freedom, which looked at laws covering marijuana use, gambling, marriage rights, alcohol and tobacco use, gun control, victimless crimes and the like.

“Personal freedom does not relate straightforwardly to the left-right spectrum at all,” the study noted.

The study’s findings also call into question claims made repeatedly by President Obama during last year’s campaign that tax cuts and deregulation won’t produce growth and prosperity.

“They tell us,” he said in one speech, that “if we just cut more regulations and cut more taxes — especially for the wealthy — our economy will grow stronger.”

“Here’s the problem,” he said. “It doesn’t work. It has never worked.”

But if anything, the data show precisely the opposite.

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John Merline’s article was originally published in the Investor’s Business Daily