Allied Van Lines recently released its 42nd Annual Magnet States Report, which tracks where people are relocating within the United States. Texas remained the top destination for people moving between states. Texas’ net relocation gain was almost 2,000 in 2009, higher than the 1,900 gained in 2008. According to Allied, the movers are singles and families from various backgrounds. Not surprisingly, Allied also did a lot of corporate relocations for some very large companies based in Texas.

A large reason for Texas’ appeal is its favorable tax climate. Texas has no income tax, and holds a competitive advantage over most states due to its minimal tax burden on dividends, capital gains, and corporate income. As Bill Hammond, president of the Texas Association of Business stated, “Texas remains the best place in America to live, work, and raise a family.”

For those wondering why states like Pennsylvania, which was the third highest in net relocation losses, continue to lose so many people, the answer lies in their policies. Last year, Pennsylvania spent more on economic development programs than any other state in the nation. Their “economic development” spending was upwards of $754 million. As a direct result of this flurry of government spending, 2,591 people left on Allied Van Lines alone. This result is not surprising.

As pointed out in “Competitive States: Economic Growth Prospects for the 21st Century,” poor economic policies lead to poor economic outcomes. In order to spend money, the government must first take it from the private sector, either through taxes or borrowing. Often, the contribution of the government expenditures to the economy is less than the value of the money to the economy prior to its removal from the private sector. When comparing economic growth in the 10 states with the lowest total state and local taxes per $1,000 of personal income against the 10 states with the highest total state and local taxes per $1,000 of personal income, overall economic growth has been significantly higher in the low-tax states.

When faced with high taxes and job loss, it is no wonder people are moving out of states with large “economic development” packages and into states where they can spend their own money how they choose. If the tax climate in Texas remains the same, we should be on top for a long time to come.

– Ryan Brannan