High Taxes Are Driving Pa.'s 'Brain Drain'

May 28, 2019 Tirzah Duren

If spending growth isn’t contained, and the working population declines, tax increases will be inevitable.

The TPA is a crucial first step in creating a Pennsylvania Americans drive to instead of away from.

Migration should serve as a caution sign to fix what is broken.

If life is a highway, then Pennsylvanians are using it to drive to other states.

This is especially true for young Pennsylvanians between the ages of 18 and 34. On net, almost 32,000 young adults left the Commonwealth for other states since 2012. In 2017, the “brain drain” amounted to an average of 36 college-educated individuals a day leaving to seek opportunity in other states.

Graph: 'Brain Drain' Trend Continues

No single factor causes individuals to move; rather, reasons vary, with the major ones being housing (41 percent), family (28 percent), and work-related reasons (20 percent). However, when you look at migration as a whole, trends emerge regarding where people choose to move and where they are moving from.

On a country-wide level in 2016, 24 of the 25 highest-taxed states saw a net out-migration, while 17 of the lowest-taxed states saw a net inward migration. In 2017, low-tax Florida was the most popular destination for inter-state movers, and high-tax California had the most people leaving the state. Taking an even closer look, you find high tax New York was that largest contributor to Florida’s migration, and most people leaving California moved to Texas.

As of January of this year, Pennsylvania had the third highest Corporate Net Income Tax rate at almost 10 percent. Even Gov. Wolf agrees that the high CNIT is making Pennsylvania’s business environment uncompetitive and included a plan in his budget to reduce it to 5.99 percent by 2024.

The heavy tax burden is driven by Pennsylvania’s high spending. The operating budget has hit a new high of $84 billion. If spending growth isn’t contained, and the working population declines, even more tax increases will be needed in order to make up the difference.

The Taxpayers Protection Act (TPA), offers a solution to address the looming problem. The TPA ties spending growth to the rate of inflation and the population to ensure spending keeps pace with the growth of the state without ballooning out of control.

Migration should serve as a caution sign to fix what is broken. Addressing the tax burden both through CNIT reduction and the TPA is a crucial first step in creating a Pennsylvania young Americans drive to instead of away from.

Subscribe to this feed