State taxes, tax exemptions, and elderly migration

Ali Onder, Herwig Schlunk

Research output: Contribution to journalArticlepeer-review

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 locations 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 elderly 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.

Original languageEnglish
Pages (from-to)47-67
Number of pages21
JournalJournal of Regional Analysis and Policy
Volume45
Issue number1
Publication statusPublished - 2015

Fingerprint

Dive into the research topics of 'State taxes, tax exemptions, and elderly migration'. Together they form a unique fingerprint.

Cite this