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State Taxes, Tax Exemptions, and Elderly Migration

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  • Onder, Ali Sina
  • Schlunk, Herwig

Abstract

We use 1995-2000 interstate migration data for the elderly population in the U.S. to test how taxes and specific tax exemptions affect migration decisions. We show that the elderly prefer to migrate to states with low inheritance taxes, high property taxes, low amounts of federal revenue transfers, low cost of living, and higher average temperatures. The preference for high property taxes in destination states may be an indication that the elderly prefer loca-tions where local amenities are capitalized into property values, since the elderly tend to be empty-nesters and presumably own properties that are on average smaller and less valuable. We show that exempting pension payments from income tax affects elderly out-migration negatively and significantly, while exempting prescription drug sales from sales tax affects el-derly in-migration positively and significantly. As in the case of the preference for higher property taxes, free-riding behavior may be an explanation for these preferences.

Suggested Citation

  • Onder, Ali Sina & Schlunk, Herwig, 2015. "State Taxes, Tax Exemptions, and Elderly Migration," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 45(1).
    • Handle: RePEc:ags:jrapmc:243979
    DOI: 10.22004/ag.econ.243979
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    References listed on IDEAS

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    Cited by:

    1. Margit Schratzenstaller, 2023. "Behavioral Responses to Inheritance Taxation. A Review of the Empirical Literature," WIFO Working Papers 668, WIFO.
    2. Peter Karpestam, 2018. "Who Benefits from More Housing? A Panel Data Study on the Role of Housing in the Intermunicipal Migration of Different Age Cohorts in Sweden," The Review of Regional Studies, Southern Regional Science Association, vol. 48(3), pages 401-425, Winter.
    3. Richard J. Cebula, 2024. "The Tiebout-Tullock hypothesis re-examined using tax freedom measures: the case of post-Great Recession state-level gross in-migration," Public Choice, Springer, vol. 199(1), pages 65-81, April.

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