CTData Forum: Migration in CT September 19, 2016 Moderated by: Thomas Cooke, Geography, UConn Michelle Riordan-Nold, CT Data

Agenda Welcome and introductions Role of CTData Goals of this forum What do we already know nationally and in Connecticut? Identify areas for exploration and partnership

Role of CTData Convener Data aggregator CTData Migration Database Data disseminator through data stories

Goals of this forum Identify key questions that need to be answered Identify existing national and local trends Identify opportunities/partnership further research

The “Courant” Narrative

4 points: 1) Most discussions have focused just on domestic migration, 2) always important to recognize that while it seems like a lot of people are leaving (because we know them!), and that this signals that things are not good in CT - at least for them - (otherwise they wouldn’t be leaving), that there are always people moving in (who are they? Why are they moving here? How do they contribute to the state?), 3) net migration is actually quite small And 4) this is NOT an exodos!

The Bigger Picture Also need to place CT migration issues within the broader context of national demographic and migration trends, along with what we know about why and how people move For example, migration rates in US are declining and CT has experienced a similar decline in both out- and in-migration One of the reasons for this decline is the rise of dual-earner/career couples (co-location) Interestingly, CT has one of the highest rates of working-age dual-earner couples in the country, which limits the out-migration that might occur (life course: not just economy) My own recent published research suggests that areas with large numbers of dual-career couples benefit economically: Not all is bad in terms of CT Demography!

Background and Context

Ages 20-59

Main areas of further exploration Does CT have a “Brain Drain” of Skilled (Young) Workers? Are High Income Residents Leaving the State? How have Tax Increases affected Migration in Connecticut?

1. Does CT have a “Brain Drain” of Skilled (Young) Workers? This is a question that has been discussed for decades Indeed, it was a primary reason for the multi-billion dollar investment in the University of Connecticut Data Basics through the ACS P20 WIN Is this the right question? Or is it, What kind of labor force do we want?

2. Are High Income Residents Leaving CT? While there is research that uses IRS data to track “income migration”, this approach is actually very problematic for a number of reasons For example, an individual with a high income before a move may not have kept their high income had they stayed Hence, it is unwise to compare the incomes of movers and stayers An alternative approach might be to examine “wealth migration” ACS IRS DRS

3. How have Tax Increases affected Migration in CT? Widespread perception that increases in state taxes cause out-migration Some good academic studies show the effect is very weak and - in comparison to other drivers of migration - taxes are just not that significant of an issue These studies are either focused on other states or all states Need to investigate the CT situation

Opportunities for partnership...

Next steps Next two-three months Identify data and research that already exists Determine gaps in the research Proposal and method for completing the research Determine the resources needed to do this work Reconvene larger group and pursue the research

Let’s talk... Michelle Riordan-Nold, Executive Director Connecticut Data Collaborative mrn@ctdata.org Thomas Cooke UConn Department of Geography thomas.cooke@uconn.edu

Appendix

Data Sources Internal Revenue Service (IRS) American Community Survey (ACS) Integrated Public Use Microdata Series (IPUMS) Panel Study of Income Dynamics (PSID)

Caution when using IRS data We cannot assume Adjusted Gross Income (AGI) follows a person We cannot compare to previous years because the Data Changed Assuming all income is ‘lost’ when people move also exaggerates the actual amount Census Data does not support the claim of ‘lost’ income Source: http://ctdata.org/news/income-leaving-ct-not-really-understanding-irs-migration-data/ 3 Reasons you cannot assume Adjusted Gross Income (AGI) follows a person Most people cannot take their income with them – when people move due to a change in employment, the job (and wages) remain in the state and just the person moves. The job then gets filled by another person and the wages remain in the state – therefore not necessarily a loss of overall AGI to the state. Some income may transfer to other people in the state – for example, if a small business owner leaves Connecticut, another small business owner in the state may gain customers – increasing income within the state that won’t be captured in the IRS migration data. Not all income is lost if a person moves – some people move their physical location but some people leave a state but continue to work there. Yes it is true that some income does follow a person such as –Social Security, investment earnings, and pensions. Another Problem: Cannot compare to previous years because the Data Changed Assuming all income is ‘lost’ when people move also exaggerates the actual amount Counting all the income of people who are retiring as ‘lost income’ is inaccurate because their wages would be ‘lost’ even if they didn’t move When people leave a state after being laid off, the state economy does not ‘lose income’ because they migrated; they migrated because they and the state lost income. There is no requirement that the address on a federal tax return be that of the taxpayer’s legal state of residence under state law. However, this dataset counts a change of address as a move. Census Data does not support the claim of ‘lost’ income when I looked at the distribution of household income as reported by the Census, I actually found that the percent of households in the highest income bracket increased as a percentage of all households in Connecticut – challenging the idea that the wealthy are leaving.

The myth of Millionaire Migration Key findings from the paper: Millionaire migration is responsive to top income tax rates BUT the magnitude of the migration is small and has little effect on the millionaire tax base Evidence for tax flight is only found in migration to Florida and not to other low-tax states No evidence that millionaires cluster on low-tax side of state borders Millionaires are embedded in the regions where they achieve success and have limited interest in moving to procure tax advantages Source: “Millionaire Migration and Taxation of the Elite: Evidence from Administrative Data” by Young et al.