The sorting of America into red and blue zones is one of the most important developments of our time, about which we have often written. People are leaving blue states for red states, in part in search of lower taxes. But that is actually half, or less, of the story. Richard Vedder and Nicholas Jadwisienczak of the Committee to Unleash Prosperity have analyzed growth in personal income from 2000 to 2024 in red and blue states, and show the results in this simple chart:
People are moving to red states for lower taxes, certainly, but more fundamentally, for better job opportunities. Those job opportunities are reflected in total personal income growing much faster in red states than blue states. Also, these numbers are pre-tax, so the disparity is even greater with respect to after-tax incomes.
And, finally, personal income numbers include three sources of income: wages and salaries, return on capital, and government transfer payments. Unless the Committee’s analysis backs out government transfer payments, which in blue states are probably the largest source of growth in personal income, the gap is even wider than it looks here.
