It’s no surprise that more of the people who move to Texas come from California than from any other state; more of the people who move to California come from Texas than from any other state. California, Texas, Florida, and New York exchange a great many people among themselves, because they have a great many people to exchange.
What is interesting in the IRS data is this: The people moving from California to Texas have significantly higher incomes than those making the opposite trek: about $56,000 per tax return for the Texas-bound vs. about $50,000 per tax return for the California-bound. And that doesn’t even take into account the radically different cost of living in the two places: The median home in Texas sells for $128,000 vs. $383,900 in California, $124,700 in Houston vs. $470,000 in Los Angeles. The median California home costs 6.25 times the median California household income, while the median Texas home costs 2.48 times the median Texas household income. Those people moving to Texas are getting a big raise in real terms; the ones moving to California are taking a pay cut. For young people, the lifetime returns to Texas’s lower cost of living can be substantial: Even an extra $2,500 a year in savings throughout your twenties means a couple of hundred thousand more in your retirement account at 65.
Perhaps more significant, the typical person moving to California (total domestic and foreign migration) makes about $13,000 less than does the average established California household, whereas the typical Texas transplant lags the state’s average by only about $6,000. Movers tend to be younger people, earlier in their careers with lower incomes, but the ones moving to Texas will have less catching up to do. Also of interest: Foreign immigrants to California have lower incomes than the average, but foreign immigrants to Texas have substantially higher incomes than the average — nearly $12,000 more.
Bottom line: In the 2010-2011 exchange of residents between Texas and California, Texas came out $379 million ahead in AGI. It does not seem likely that that trend will be reversed when data for more recent years is available.
California: Give them your poor, your huddled masses yearning to pay the nation’s highest personal income tax, highest sales tax, second-highest gasoline tax . . .