Inmigration in Western N.D. Counties Boosts Taxable Income

From 2006 through 2007, 10 counties in North Dakota reported a net gain in taxable income due to migration. Nine of the counties are in the western part of the state.

“Migration in this region has been fueled by recent energy development activity,” says Richard Rathge, North Dakota State Data Center director at North Dakota State University. “Losses in the remaining 42 counties, however, combined to produce a net loss of $53 million in taxable income in North Dakota due to migration alone.”

This month’s “Economic Brief,” a monthly publication from the North Dakota State Data Center, focuses on the analysis of federal individual income tax returns from the past 15 years as released by the Internal Revenue Service. These records reveal that North Dakota has experienced a continued net loss of taxable income as a direct result of migration.

North Dakota’s general trend of out-migration has produced long-term economic consequences. Since 1993, North Dakota has lost $1.1 billion in net taxable income as a direct result of migration. From 1993 through 2007, people moving to North Dakota brought with them $6.7 billion in taxable income, while people moving out of the state took with them $7.8 billion.

Grand Forks County showed the largest loss in taxable income due to migration. The county had a net outflow of $297 million in taxable income. Much of this loss is attributed to the devastation caused by the 1997 flood and losses at the Grand Forks Air Force Base because of a missile wing closure. Ward County, also home to an Air Force base, had the second largest net outflow at $189 million.

Three counties in the state experienced a net gain in taxable income due to migration during the past 15 years. Burleigh County had a net increase of $38 million in taxable income, Morton County $12 million and Bottineau County $3 million.

The IRS data have important limitations, such as the need to match returns between years and misreporting because of address changes. However, these data offer one way to document the economic consequences of migration.

The economic impact of migration can be significant, even in areas that have a net increase in tax filers or net in-migration. During the past 15 years, Cass County, the state’s largest population center, had a net growth of 6,626 tax filers. However, those tax filers leaving the county had higher incomes than those arriving. Therefore, even though Cass County gained tax filers, it lost $62 million in taxable income due to migration.

However, this trend may be reversing. For the period of 2006 through 2007, Cass County reported a net gain of 634 tax filers and a net gain in taxable income of $10 million.

For information on methodology and limitations of these data, along with further discussion and additional tables, visit http://www.ndsu.edu/sdc/publications/research.htm#migration.

NDSU Agriculture Communication