A new study examining the migration of wealthy millennials in the United States shows there’s more fleeing Michigan that coming in to the state.
The personal finance website SmartAsset examined Internal Revenue Service data from 2021 and 2022 and honed in on “high earners” with adjusted gross incomes of $200,000 or more aged 26 to 45.
“The inflows of qualifying households in each state were compared with the outflows to determine the net migration of high-earning households,” according to the report. “The average AGI for a state’s wealthy Millennials households was also considered.”
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The results show Michigan ranked ninth among the “Top 10 States Wealthy Millennials Are Moving Out Of” with 2,175 leaving the Great Lakes State and 1,986 coming in, for a net out migration of 189.
SmartAsset counted 60,457 total millennial tax returns with an income of $200,000 or more, with an average adjusted gross household income of $418,757. The data suggests the percent of wealthy millennial households in Michigan is 18.1%.
Only two other Midwest states fared worse: Illinois with a net loss of 3,163 wealthy millennials, and Minnesota with a loss of 365.
Unsurprisingly, five of the top 10 states attracting wealthy millennials have no or very low personal income tax rates, including Florida in first, Texas in second, Tennessee in fifth, South Carolina in sixth, and Nevada in tenth. North Carolina in third, Georgia in seventh, Arizona in eighth also have sub 5% rates, while Idaho in ninth was the only state in the top 10 with a rate eclipsing 5% at 5.8%.
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The top 10 states wealthy millennials are fleeing are mostly high tax states, including California in first, New York in second, Illinois in third, Massachusetts in fourth, Minnesota in sixth, and Washington in eighth. Pennsylvania in fifth has a sky-high corporate tax rate of 8.99%, while Louisiana in seventh has the nation’s highest sales taxes. Michigan and Missouri in tenth have middle of the road tax rates.
Overall, 26 states showed net gains of wealthy millennial households, 23 showed losses, and Indiana broke even.
The findings align with other research on broader migration patterns in the U.S. that show Americans are flocking to opportunities and jobs in places with affordable living.
“We are continuing to see the trend that Americans are moving to more affordable, lower-density areas across the country, with many heading to Southern states,” United Van Lines Vice President of Corporate Communications Eily Cummings said. “Movers are also becoming more strategic with their planning, as relocation continues to be driven by factors such as the price of housing, regional climates, urban planning and job growth.”
United Van Lines’ 47th Annual National Movers Study ranked Michigan fifth among states for outbound moves in 2023, joining other top outbound states including New Jersey, Illinois, New York, California and Massachusetts.
Census data shows four out of five of mid-Michigan’s largest cities had less residents in 2023 than in 2020, while other studies have highlighted the reasons why.
Michigan slid from 41st overall in U.S. News & World Report’s “Best States” ranking last year to 42nd for 2024, based on eight different metrics that measure everything from crime and corrections, to the economy, to opportunity for residents.
Michigan ranked in the bottom half of every category measured in the report, which showed Michigan students have below average math test scores, are less likely to graduate high school, and leave college with more debt, when compared to the national average.
Other metrics show Michigan under Democratic Gov. Gretchen Whitmer has a higher poverty rate, lower median household income, more industrial toxins, more drinking water violations, less renewable energy usage, worse roads, and higher rates of incarceration and violent crime than most states.
Many of those issues were highlighted in a report from Whitmer’s Growing Michigan Together Council in December that found the state is “lagging in median income, educational outcomes, and attainment and have fallen behind faster-growing peer states in key measures of infrastructure, community well-being, and job opportunities.
“We are losing more young residents than we’re attracting, and our population is aging faster than those of our neighbors,” the report read.
Policy experts including Morey Fiscal Policy Institute Senior Director Michael LaFaive point to policies from Whitmer and her Democratic allies who control the Legislature for driving the problem, such as repealing the state’s right-to-work law and many others.
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“Outbound migration will continue to be an issue, and I suspect accelerate unless our state makes an about-face in its policy choices,” LaFaive told The Midwesterner. “Economics 101 tells us if you raise the price of anything less will be demanded of it. So, if lawmakers raise the cost of living, working, and creating jobs, we’ll get less living in Michigan, fewer jobs, and less wealth too.”