Regular readers of Tax Foundation reports know that we publish estimates of the distributional impact of federal tax changes: that is, we estimate how a tax reform might affect the after-tax incomes of taxpayers at...
- The Real Value of $100 in Metropolitan Areas
The Real Value of $100 in Metropolitan Areas
Last week, we published a map showing how far $100 would take you in different states. For example, in states with low costs of living, like Mississippi, $100 had the same sort of purchasing power that $115.74 would have in an average state.
But what about the differences in purchasing power within a single state? Do people in Austin have the same purchasing power as those in Dallas? And of course, how does upstate New York fare against New York City?
To answer these questions, we’re following up with a new map of purchasing power that separates out cities from non-metropolitan areas. Fortunately, that data is available from the BEA’s interactive tables, and we have created an interactive map of purchasing power down to the city level.
Full data for this map available on GitHub.
The yellowest colors on the map, signifying the place where your $100 buys you the least, are in the largest cities in the northeast and California. While cities are almost uniformly more expensive than rural areas due to the higher price of land, some cities – particularly those with relaxed zoning restrictions and a lot of flat land to build on – are cheaper than others.
With MSA-level data, we can see price differences are even larger than the ones on our previous map; in some cases, they can be well over forty percent. We are interested in this issue because it has important implications for state tax policy, federal tax policy, and interstate migration. A lot of policies are based on income, like progressive taxes and means-tested federal benefits. If real incomes vary from place to place due to purchasing power, this matters for those policies.
It’s important to note that price differences do persist across states, even in non-metropolitan areas. $100 still doesn’t go nearly as far in rural California ($102.56) as it does in rural Texas ($114.03). It doesn’t even go as far as it does in San Antonio ($106.27). This suggests that policy – not just geography and urbanization – may play a role in these price differences.
See all of our maps here.
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