Highly taxed people will vote with their feet — and they are moving away from Connecticut.
According to a March report by the Heritage Foundation, If You Tax Them, They Will Run: Millions of Americans Flee from California and New York, Connecticut had a net loss of more than 21,000 people leaving for low tax states, primarily Florida, between April 1, 2020, and July 1, 2023.
California and New York fared worse with both losing nearly a combined 2 million; Connecticut, meanwhile, was the 14th worst out of all 50 states and Washington, D.C. Other New England states that experienced a net loss migration were Massachusetts (-149,466) and Rhode Island (-8,144). Conversely, Florida and Texas were the largest benefactors, with more than 818,000 and 656,000 people moving into the states, respectively.
But the net loss could have been worse had not New Yorkers moved into Connecticut, which had a state-to-state net change of 35,689 people.
In total, nearly 2.8 million Americans moved out of high-tax states than moved to high-tax states with the report’s timeframe. States with high individual income taxes and high corporate income taxes experienced more outmigration than states with high sales taxes did; and those making $200,000 or more were the most likely to flee high-tax states in favor of low-tax states, but, according to Heritage, this pattern was true of all income groups.
The new survey echoes previous reports — such as last year’s IRS Tax Migration data — which revealed that the Constitution State lost 6,467 people and $1.06 million on net to 40 other states between 2021 and 2022. Moreover, between 1991 and 2020, more than 548,000 people left Connecticut for other states than moved here, as reported by Yankee Institute in the 2022 study CT’s Growing Problem: Population Trends in the Constitution State.
Evidently, Connecticut has had a hard time convincing people to ‘make it here,’ despite Gov. Ned Lamont and policymakers’ marketing campaign to do otherwise. As the governor stated in a June 2024 press release, he hopes Connecticut will become “not only a wonderful place to live and play, but also a thriving ecosystem for innovation and creativity.”
However, the out migration should come as no surprise as Connecticut suffers from lackluster economic indicators. For the past decade, Connecticut has ranked 47th as one of the most burdensome tax climates in the nation, according to the Tax Foundation, a nonpartisan tax policy nonprofit. The state was also among the worst states to start a business and has the third-highest property taxes in the United States, as reported by WalletHub. Worse, Connecticut has the highest electricity costs in the country, according to LendingTree. Moreover, corporations like General Electric, Aetna, Alexion and others moved their headquarters out of Connecticut, hurting not only the local economy but also state revenues.
Residents — or former residents — could no longer afford Connecticut’s high cost-of-living. But what is driving the Constitution State’s high tax climate? One of the main albatrosses of the state’s economic and tax woes stems from the overburdensome pension debt, which amounts to $80 billion.
In 2022, Connecticut’s bonded debt ranked first among states at nearly $8,000 per person, more than four times than national average, as reported by CT Mirror’s Keith Phaneuf. While the state has paid down $10 billion in pension debt, Connecticut lawmakers are currently debating whether to alter the 2017 spending reforms, known as the fiscal guardrails, to increase funding for new programs. However, the fiscal guardrails have reversed Connecticut’s financial trajectory, saving $170 million annually in pension debt payments, while improving the state’s creditworthiness. Additionally, if maintained, the guardrails could save $7 billion over 25 years, according to a September 2024 joint report by Reason Foundation and Yankee Institute.
Altering the guardrails, which includes a spending cap, would worsen the state’s fortunes — and, more than likely, lead to higher taxes as lawmakers search for additional revenue to fund new projects.
In the end, if Connecticut hopes to attract more people to call the state ‘home,’ then it needs to rethink its taxing and spending policies. Otherwise, it’s doomed to repeat the past, shooing people away from making the state a place where they can stay, grow, and thrive.
