Tennessee’s zero-percent personal income tax makes the state almost as appealing as its moon pies. Thousands of heavily taxed Californians, Michiganders and Illinoisans moved there between 1992 and 2014, contributing to an $12.36 billion gain in annual adjusted gross income (AGI) for the state.
But not all counties profited equally. Shelby, Davidson, and Anderson were among 11 counties that lost more wealth than they gained, even as their populations increased.
A map of Internal Revenue Service and U.S. Census Bureau data published by Travis Brown, author of “How Money Walks: How $2 Trillion Moved Between the States, and Why It Matters,” shows how people—and consequently, their incomes—migrated across the country over the past two decades. Income-tax-free Florida and Texas gained the most in annual AGI, while New York, Illinois and California headed the 23 states that lost. Tennessee came in at No. 10, thanks in part to a nearly 400,000-person population increase.
Most of the 11 counties that lost wealth experienced their greatest blows from other counties within the state. Nashville’s Davidson County gained 25,064 new residents but lost $1.68 billion in wealth, largely due to migration to the suburbs. Shelby County, which lost $3.56 billion—the most of any county in Tennessee—saw $941.55 million cross its border to Mississippi.
“We’re seeing a difference in how Shelby County regulates compared to their counterparts across the border,” says State Director Jim Brown, who notes Tennessee’s franchise & excise tax process is a problem NFIB is working to fix. “We’ve heard from NFIB members that the local governments in Mississippi are very friendly to businesses. There’s less red tape over there and their corporate tax structure is better than Tennessee’s, at least at the moment.”
As a whole, though, Tennessee is growing steadily, and its positive tax climate may be the reason.
“The phase out of the death tax will be completed in January,” Brown says. “When people who are in business in Illinois or California see that along with no income tax, they’re like, ‘Pack your bags!’”