Taxes and regulations impact your bottom line as an investor—and not always in direct or obvious ways. Unfortunately, as soon as you start talking about either one, the average person closes their mind, circling the wagons around their existing worldview and only hearing data points that support it. Look no further than this Yale study, which shows that people perform worse on math problems if the correct answers conflict with their political ideology.
I’ll get it out of the way now: I find both major political parties reprehensible and hypocritical. I’ve voted for each roughly equally over my life.
Now, let’s get back to real estate investing.
Taxes and Population Change
Population drives demand for real estate, and a shrinking population poses a major problem for real estate investors. Identifying population shifts, therefore, matters to real estate investors—a lot.
There’s been a narrative over the last few years that more Americans have started voting with their feet and leaving higher-tax states in favor of lower-tax states. Is it true?
I started by pulling raw data from the Census Bureau. I then mapped population change for all 50 states:
Investment analyst Ben Reynolds of SureDividend.com pointed out to BiggerPockets a few much-discussed examples: “Texas and Florida are two of the fastest-growing states by population. Not coincidentally, they offer a compelling mix of no state income tax and less cold climates compared to most other states.”
That raises the question of comparing population change to state taxes. Fortunately, that data is also readily available.
Tax Burden by State
Every year, WalletHub ranks every state by its total tax burden, which includes state income taxes, property taxes, and sales and excise taxes.
Surprising no one, New York took the top spot with the highest tax burden (12.02% of income for the average resident). New York also lost nearly 102,000…