Ten counties in North Dakota reported a net gain in taxable income due to migration from 2007 to 2008. Nine of the counties are in the western part of the state.

However, losses in the remaining 43 counties combined to produce a net loss of $58 million in taxable income due to migration.

This month’s “Economic Brief,” a monthly publication from the North Dakota State Data Center at North Dakota State University, focuses on the analysis of federal individual income tax returns of tax filers moving to and from North Dakota during the past 15 tax 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.

“The effect of this net exchange of taxable income as a result of migration is best illustrated by contrasting the income of movers,” says Richard Rathge, State Data Center director. “Between 2007 and 2008, the median income of a tax filer who left North Dakota was $22,197, so half of those who left had incomes above that amount and half had incomes below. The median income of those moving into North Dakota during that same time was $20,899.”

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 2008, people moving to North Dakota brought with them $7.4 billion in taxable income, while people moving out of the state took with them $8.5 billion.

Grand Forks and Ward counties showed the largest losses in taxable income due to migration, with net outflows of $314 million and $202 million in taxable income, respectively. Three counties in the state experienced a net gain in taxable income due to migration during the past 16 years. Burleigh County had a net increase of $42 million in taxable income due to migration, Morton County had an $18 million increase and Bottineau County had a net increase of $2 million.

Keep in mind that the IRS data has limitations, such as the need to match returns between years and misreporting due to 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 tax years, Cass County, the state’s largest population center, had a net growth of 7,533 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 $57 million in taxable income during that period due to migration.

However, this trend may be reversing. From 2006 to 2007, Cass County reported net gains in tax filers and taxable income.

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

NDSU Agriculture Communication