George Mason University research fellow Jack Salmonis a Gibbs Scholar andat the Mercatus Center at He is the author of “Reversing Ohio’s Outmigration.”
Nearly 34 million Americans moved across state lines between 2018 and 2023, reshaping the economic map of the country. As my latest research shows, Ohio ranked 31st in net interstate migration, losing almost 39,000 residents and roughly $9 billion in income, far too much for a state with lots to offer.
That loss is about more than math.
Departing residents take their spending, skills, business ideas and future tax payments with them. Over time, even modest outmigration weakens local economies and makes it harder to support public services.
This challenge is fixable. I find that interstate migration
is closely connected to taxes, economic freedom and housing supply. States that make it easier to earn, build, hire and move win the migration race.
On taxes, Ohio has made meaningful progress by reducing its flat individual income-tax rate to 2.75%, but it still ranks 39th on the Tax Foundation’s State Tax Competitiveness Index.
Ohio's tax system is too complicated
A low rate does not look especially competitive when local income taxes, which can add as much as 3 percentage points, are layered on top. There’s also the burden of administrative costs and a difficult business tax structure.
Here’s one example: Nonresidents performing work in Ohio receive a 20-day safe harbor from local income taxes, while they must pay state income taxes from day 1. Indiana and West Virginia provide statewide relief for a full 30 days.
The many Ohio employers who manage frequent traveling workers are left with a disproportionate paperwork burden, a drain of time and money that could be better spent on productive activities or another worker.
Ohio lawmakers should set their own state-level safe harbor rule of 30 days, cap or reduce local income-tax rates and simplify other types of tax compliance.
To protect small businesses, they should reconsider the Commercial Activity Tax, which is imposed on gross receipts regardless of profit. Because it applies at multiple stages of the supply chain, it can tax the same product repeatedly.
Indiana and Kentucky impose no comparable tax. Replacing it with a conventional, low-rate corporate income tax would increase Ohio’s competitiveness and be fairer to low-profit-margin businesses.
Increasing housing
Keeping Ohioans in Ohio also requires enough housing.
Ohio issues fewer housing permits per resident than West Virginia and roughly half as many as Indiana. When home construction fails to keep pace with demand, prices rise, workers leave and employers find it harder to recruit the right people.
The barriers are often regulatory.
Slow permitting, uncertain zoning rules and litigation delay housing projects and raise costs.
- Lawmakers should limit land-use appeals to cases of specific and imminent harm from new projects, and they should establish clear protections for projects that have already earned development rights.
- Next, they should reduce minimum lot-size requirements in areas already served by water, sewer and roads, making affordable starter homes on smaller lots more feasible.
- Then, they should authorize local governments to permit single-stair apartment buildings, a model used elsewhere to make housing projects more economical and family-friendly.
Opening pathways to work
Finally, it should be a little easier to work in Ohio.
The state has America’s 13th-highest occupational licensing burden, highest among the five East North Central states.
Licenses to work in genuinely risky professions can protect the public, but excessive requirements, often applied where there is no such risk, keep qualified people out of work and raise consumer prices. Every Ohio license requirement should be reviewed, especially those with rules that exceed the standard in neighboring states.
The state has an opportunity to modernize benefits for the growing number of independent workers. Nearly 1 million Ohioans already work independently, yet companies often cannot contribute to a contract or freelance worker’s benefits without thorny worker-classification legal questions.
Some states are pursuing portable-benefits legislation, which allows independent workers to build health coverage, retirement or paid leave accounts. Survey evidence shows that 80.3% of U.S. self-employed workers want to remain independent, and 80.1% want access to portable benefits.
Ohio does not need to reinvent itself. It has enormous strengths: major universities, advanced manufacturing, affordable communities and abundant infrastructure. But advantages do not guarantee growth, and competing states are making themselves more attractive to mobile workers and businesses.
The fix is as simple as reducing unnecessary tax complexity, allowing more homes to be built and opening more paths into work. Do that, and Ohio can turn outmigration into opportunity
Jack Salmon is a Gibbs Scholar and research fellow at the Mercatus Center at George Mason University. He is the author of “Reversing Ohio’s Outmigration.”
This article originally appeared on The Columbus Dispatch: 3 key areas must be addressed to stop Ohioans from fleeing state | Opinion
