By Adam Pagnucco.

In Part Three, we saw that MoCo’s problem of taxpayer flight is shared by most jurisdictions in the Washington region.  But what happens when we look at MoCo’s taxpayer inflows and outflows to and from each of its large neighbors?  From whom does MoCo gain income on net?  And to whom does MoCo lose income on net?

We looked at net gains and losses between MoCo and nine other local jurisdictions plus two states.  Let’s start with the two jurisdictions from which MoCo has net gains of taxpayer income: D.C. and Prince George’s.

District of Columbia

Net change in tax returns, 2006-2016: +1,070 (inflow)

Net change in adjusted gross income ($2016), 2006-2016: +$417 million (inflow)

Adjusted gross income of in-migrants ($2016), 2006-2016: $94,696

Adjusted gross income of out-migrants ($2016), 2006-2016: $83,038

Migrant income gap: In-migrants earned 12% more than out-migrants

MoCo almost always drains tens of millions of dollars in taxpayer income each year from D.C.  That’s because it gets more in-migrants from D.C. than out-migrants and the in-migrants make more.  This fits a pattern of young people living in D.C. and then moving to the suburbs as their incomes grow and they are ready to have kids.  However, as D.C.’s economy has improved since the 1990s, the District’s net income flow to MoCo has diminished over time.  In 2015, D.C. even netted a gain of $40 million from MoCo, the first time the District ended up on the plus side of this ledger since this data series began in 1993.

Prince George’s County

Net change in tax returns, 2006-2016: +834 (inflow)

Net change in adjusted gross income ($2016), 2006-2016: +$39 million (inflow)

Adjusted gross income of in-migrants ($2016), 2006-2016: $42,894

Adjusted gross income of out-migrants ($2016), 2006-2016: $42,802

Migrant income gap: In-migrants earned about the same as out-migrants

In the 1990s, MoCo consistently enjoyed positive income inflows from Prince George’s, but that began to change in the 2000s.  In the last fifteen years, MoCo lost money to Prince George’s seven times.  MoCo may still have a slight advantage but it’s very tenuous and could slip away.

Alexandria City

Net change in tax returns, 2006-2016: -346 (outflow)

Net change in adjusted gross income ($2016), 2006-2016: -$7 million (outflow)

Adjusted gross income of in-migrants ($2016), 2006-2016: $78,961

Adjusted gross income of out-migrants ($2016), 2006-2016: $73,304

Migrant income gap: In-migrants earned 7% more than out-migrants

There’s not a ton of migration between MoCo and Alexandria and the two jurisdictions roughly break even, although MoCo’s balance has deteriorated a bit in recent years.

Arlington County

Net change in tax returns, 2006-2016: -1,103 (outflow)

Net change in adjusted gross income ($2016), 2006-2016: -$8 million (outflow)

Adjusted gross income of in-migrants ($2016), 2006-2016: $85,154

Adjusted gross income of out-migrants ($2016), 2006-2016: $72,852

Migrant income gap: Out-migrants earned 14% more than in-migrants

As with Alexandria, MoCo roughly breaks even with Arlington.  Again, MoCo’s balance has gotten slightly worse in recent years.

Prince William County

Net change in tax returns, 2006-2016: -289 (outflow)

Net change in adjusted gross income ($2016), 2006-2016: -$33 million (outflow)

Adjusted gross income of in-migrants ($2016), 2006-2016: $50,076

Adjusted gross income of out-migrants ($2016), 2006-2016: $57,436

Migrant income gap: Out-migrants earned 15% more than in-migrants

Prince William has received small inflows of income from MoCo that have diminished in recent years.  Most people moving between the two counties fall in the lower end of the region’s income distribution.

We will conclude tomorrow.

By Adam Pagnucco.

In Part Two, we detailed how MoCo has experienced an exodus of taxpayer income since 1993.  But MoCo is not alone: many large jurisdictions in the Washington region have suffered from taxpayer flight over the last decade.

Below is a chart showing the net change in tax returns for the ten largest jurisdictions in the region.  We show net change for two time periods: the last five years (2011-2016), which include the recovery from the Great Recession, and the last ten years (2006-2016), which include the pre-recession peak, the recession itself and the recovery afterwards.  MoCo ranks nine out of ten in both periods with only Fairfax faring worse.  Loudoun is the only jurisdiction showing significant in-migration in the last five years while D.C. was comparable to Loudoun over the last ten years.

Next, we show the net change in adjusted gross income (AGI), measured in 2016 dollars, over the two periods.  Once again, MoCo is the second-worst jurisdiction in the region with only Fairfax trailing.  Notably, only Loudoun had a net inflow in the last five years and Loudoun, Prince William and Frederick had net inflows in the last ten years.

Finally, we show the average AGI of in-migrants vs the average AGI of out-migrants over the two periods.  In every jurisdiction except Loudoun (during the 2006-2016 period), in-migrant AGI was lower than out-migrant AGI.  MoCo’s gap was the third largest.

This is a bad picture for MoCo and not a very good one for the region as a whole.  What is going on here?

First, as has been previously noted by George Mason Professor Stephen Fuller, the entire Washington region’s economy has slowed down since the Great Recession.  That is reflected in the deterioration of the numbers above between the last five years and the last ten years.  The “new normal” has not been kind to anyone in this area and that includes MoCo.

Second, Fairfax has been affected by taxpayer income losses even more than MoCo.  Like MoCo, Fairfax is a huge county with huge bills to pay and nightmarish traffic congestion.  But Fairfax also shares a long land border with Loudoun, which has grown dramatically in past decades and is currently the nation’s wealthiest county.  Of the $5.9 billion that Fairfax lost to taxpayer flight in the last decade, $2.5 billion went to Loudoun.

Third, in addition to the number of taxpayers leaving on net, MoCo’s problem is the big gap in income between those coming in and those leaving.  One would expect to see such a gap in places like D.C. and Arlington, the two jurisdictions with the biggest income gaps shown above.  That’s because both places attract lots of young people who work in and near downtown D.C. and then move out when they earn more and have kids.  That explanation does not work well for MoCo, which has a much lower percentage of young people in its population than D.C. or Arlington.  And yet MoCo’s gap, which is third in the region, has been significantly bigger than the gaps in Fairfax and Howard, two jurisdictions of similar wealth, in the last five years.

We have seen how MoCo compares to its large neighbors in tax migration overall.  But what about direct inflow and outflow relationships?  To whom does MoCo lose income?  And from whom does MoCo gain income?  We will begin examining that in Part Four.