In National Tax Experiment, Red States Are Winners
By Sarah Katherine Sisk
Red and blue states are moving further apart than ever before on tax policy – and new population data shows that Americans are noticing. As high-tax Democrat states continue to bleed population, low-tax Republican states are seeing a surge in growth.
A new study from The Wall Street Journal reveals just how polarized states are becoming on tax policy. “Republican-led states are racing each other to flatten, cut and eliminate individual income taxes, with 23 states lowering their top income-tax rates since 2021,” the Journal reports. “Democratic-controlled states are moving the opposite way, pushing to increase taxes on top earners to combat inequality and plug budget holes.”
Meanwhile, any middle ground – states that have moderate tax burdens – is disappearing:
“In 2006, 15 states had top income-tax rates on wage income below five percent and just one exceeded 10 percent, according to the Tax Foundation, a group that favors lower rates and fewer breaks. Now, more than half of the states have gone below five percent and five others plus the District of Columbia are in double digits.”
Currently, nine states have no state income tax. But Washington – the only Democrat-dominated state on that list – is now looking to impose a 9.9 percent tax on income over $1 million. Democrats in New York, Rhode Island, and Colorado are also pursuing higher taxes on top earners.
In an even more extreme case, California has proposed a “one-time” five percent wealth tax on billionaires that has already driven high-profile figures like Facebook founder Mark Zuckerberg, Google co-founders Larry Page and Sergey Brin, and Oracle co-founder Larry Ellison, among others, to move out of the state.
On the other end of the spectrum, Mississippi and Oklahoma have charted a course to eliminate their state income taxes altogether. South Carolina is aiming to drop its income tax to 1.99 percent, and a Missouri ballot initiative this November could phase out the income tax there as well.
Low tax winners:
• South Carolina
• Idaho
• Delaware
• Tennessee
• AlabamaHigh tax losers:
• Massachusetts
• New York
• Maryland
• California
Americans are already voting with their feet on which tax model they prefer. A new analysis from Visual Capitalist shows which states saw the biggest population gains and losses per 10,000 inhabitants in 2025, and the trend is clear: low-tax red states are booming, while high-tax blue states are struggling.
South Carolina clocked in at the number one spot in the analysis, with Idaho, Delaware, Tennessee, and Alabama rounding out the top five. Meanwhile, Massachusetts, New York, Maryland, and California saw the worst net migration losses. Of the nine states with no income tax, all except two (Alaska and Washington) saw net migration gains.
Raw population growth data from 2020 to 2025 tells a similar story. The only states to see their overall population decline over that time period were California, Illinois, Louisiana, New York, and West Virginia. The states that saw the largest percentage increase in their populations were Idaho (10.4 percent), Florida (8.9 percent), South Carolina (8.8 percent), Texas (8.8 percent), and Utah (8.2 percent).
Taken together, these reports suggest that state tax policy now marks a sharper political and economic split. Americans move for many reasons, but the migration pattern favors states with lower costs and, in many cases, lighter tax burdens.
Economist Charles Tiebout developed the idea later associated with “voting with your feet,” arguing that people reveal preferences not only through elections, but through mobility as well. By choosing where to live, they choose among different combinations of taxes and public services.
In one sense, where Americans choose to live is an even stronger indicator of what policies they prefer than individual election outcomes. People may not follow every policy debate in detail, but they know when a state taxes too much, costs too much, or just governs poorly. Americans sort themselves into states that better match their preferences, and that movement puts real pressure on state governments. High-tax states can promise more redistribution, but those promises are difficult to sustain when high earners and successful businesses leave.
New York Governor Kathy Hochul recently acknowledged this, stating that New York is “in competition with other states who have less of a tax burden on their corporations and their individuals,” then begged for “patriotic millionaires” to return and help fund the state’s “generous social programs.”
Low- or no-tax states are making a wager that lighter burdens will attract enough people, capital, and growth to support public services without squeezing their tax bases harder. The Journal’s observation that the middle ground is disappearing only makes the contrast clearer. The experiments are becoming easier to see, and so are the results.
The moving trucks are delivering a clear message: Americans are gravitating toward states that ask less, cost less, and simply get government out of the way.
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