Estate and income tax incentives to elderly in-migrants to Oklahoma: A cost-benefit analysis

Scope and method of study. This research deals with the effects of state tax incentives on elderly migration. The primary purposes of this study are: (1) to develop a model for determining the benefits from, and costs of, these incentives from a state's perspective, and (2) to apply this model to Oklahoma. Economists frequently argue that tax incentives yield benefits less than costs to the sponsoring states. Studies have been done to determine the effects of taxes and tax incentives on elderly migration, the economic impacts of elderly in-migrants, and the costs that they impose on receiving states and communities. There are, however, no published benefit-cost analyses of tax incentives provided to the elderly.;Oklahoma policy makers are currently considering two new tax incentives for the elderly aimed at increasing the number of in-migrants: (1) a 35.7 percent reduction in the individual income tax, and (2) a 36 percent reduction in the estate tax.;This study uses county to county migration data from the 1990 Census, the tools of benefit-cost analysis, and the tax effectiveness coefficients of other researchers to evaluate these tax incentives from the state's prospective.;Findings and conclusions. We find that the state would experience large negative returns if the tax concessions uniformly impacted in-migrants at all income levels. Positive returns are possible if impacts are confined to high-income retirees who are likely to contribute volunteer labor.