Tax Structure Helps Tennessee Increase Population
Image Credit: Marco Verch / CC
The Center Square [By J.D. Davidson] –
Tennessee’s continued population growth could be linked to the state’s low tax burden, a national tax organization says.
The Volunteer State is one of the top fastest growing states in the country, according to the U.S. Census Bureau, and the Tax Foundation, a national independent tax policy organization, believes the state’s tax policy plays a role in population movement.
“The latest IRS and Census data show that people and businesses favor states with low and structurally sound tax systems, which can impact the state’s economic growth and governmental coffers,” the foundation’s Katherine Loughead said in a report.
Using 2019-20 IRS migration data, the report shows a strong positive relationship between what it called state tax competitiveness and inbound migration. Overall, it said, states with lower taxes and “sound tax structures” saw more inbound migration than states with higher taxes.
Of the 10 states with the largest gains in income taxpayers, five – including Tennessee – do not have individual income taxes on wage or salary income at all. Two others had top rates between the national median.
Nine of the top 10 states either forgo individual income taxes on wage and salary income, have a flat income tax, or are moving to a flat income tax.
According to the IRS data, Tennessee saw the sixth-highest inbound migration numbers during the time period, ranking behind Florida, Texas, Arizona, North Carolina and South Carolina.
As previously reported by The Center Square, Tennessee had its largest population increase since 2007 in 2022 and was one of the 10 fastest growing states in the country in population data released in December by the U.S. Census Bureau.
The Tennessee State Data Center said there was a nearly 83,000 gain from 2021 to 2022, a 1.2% population increase.
That means that Tennessee surpassed an estimated 7 million residents at 7,051,339.
At the same time, Tennessee ranked sixth as a growth state in U-Haul’s annual index, moving down from its No. 3 ranking a year ago.
The index looks at one-way moves using U-Haul from state to state. The 2022 numbers showed that move-ins dropped by 7% while one-way trucks out of South Carolina decreased 6%.
People using U-Haul to move into the state accounted for 50.3% of all one-way U-Haul truck traffic in and out of Tennessee. Tennessee was No. 1 in the growth rankings in 2020.