October 2, 2003

 

Tax Records Indicate Migration Costs North Dakota $778 Million

Analysis of Federal individual income tax returns over the past nine years reveals a consistent loss of revenue to North Dakota as a direct result of migration.

According to the recent Economic Brief released from the North Dakota State Data Center at North Dakota State University, between 1993 ( the first year that IRS records were made available for county flow analysis) and 2002 (the most current data available), people moving to North Dakota brought with them $4 billion in taxable income. People moving out of the state took with them $4.7 billion. Thus, over the last decade, the net loss of taxable income to North Dakota, as a result of the net exchange of movers totaled $778 million. "These data provide us one way of quantifying the economic cost of population loss," said Richard Rathge, director of the State Data Center.

As North Dakota residents continue to leave the state, the economic consequences continue to add up. Millions of dollars in consumer spending and tax revenue are lost each year as a result of migration. Between 1993-94 and 2001-02, Grand Forks was hardest hit in terms of lost revenue due to migration with a net out-flow of $219 million in taxable income. "Much of this loss can be attributed to the devastation due to the 1997 flood and the losses at the Grand Forks Air Force Base with the missile wing closure," said Rathge.

Ward County had the second largest net out-flow of $118 million. Only two counties in the state experienced a net increase in taxable income due to migration during the past nine years: Bottineau County had a net increase of $532,000 in taxable income due to migration and Burleigh County had a net increase of $4.5 million.

The economic impact of migration can be significant even in areas that have a net increase in tax filers, or net in-migration. Over the past nine years, Cass County, the state’s largest population center, had a net growth of 3,579 tax filers. However, those tax filers leaving the county had higher incomes than those arriving during that time. Therefore, even though Cass gained tax filers it lost more than $40 million in taxable income during that period due to the net exchange of movers.

"Although the overall net loss of income over the past nine years has been substantial, especially after the flooding in 1997, the most recent data reflect a less dramatic loss. This may signal an improving economic climate for the state," said Rathge.

For information on methodology and limitations of these data, along with further discussion and additional tables, visit the following Web site to obtain "North Dakota County Migration Flows: 1998-99 to 2000-01", a North Dakota State Data Center report in PDF format: http://www.ndsu.nodak.edu/sdc/publications/reports.htm

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Source: Richard Rathge, (701) 231-8621, richard.rathge@ndsu.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsuext.nodak.edu

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