Submitted by CARPE DIEM

The chart above shows graphically the negative relationship between state population growth using Census data available from the WSJ here, and state tax burden data available from The Tax Foundation here, both for 2007.

The OLS regression results above further verify that the negative relationship between state population growth and state tax burden is statistically significant at the 1% level (highest level generally reported).

Implication of the OLS Results: Based on the negative regression coefficient of -0.232, we could say that as the state tax burden increases by 1%, population growth decreases by about .23%. Alternatively, we could also say that for every one percent decrease in state tax burden, state population growth would increase by .23%.

Bottom Line: States with lower tax burdens attract more businesses, workers and people, and states with higher tax burdens lose businesses, workers and people. In other words, these results confirm the theory that if you tax something, you’ll get less of it.

Thanks to Ben Cunningham for supplying the data. See First Trust Portfolio’s similar analysis “Voting With Our Feet” here using the same data.

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