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The Wealthiest Californians are Leaving the State, Hurting the Economy, Statistics Confirm 221

"For several years, thousands more high-earning, well-educated workers have left California than have moved in," reports the Los Angeles Times: Even though California has experienced lopsided out-migration for decades, the financial blow has been cushioned by the kinds of people moving into the state: The newcomers were generally better educated and earned more money than those who left. Not now: That long-standing trend has reversed...

The reversal, largely in response to the state's high taxes and soaring cost of living, has begun to damage California's overall economy. And, by cutting into tax revenues, has delivered punishing blows to state and local governments. State budget analysts recently projected a record $68 billion deficit in the next fiscal year because of a 25% drop in personal income tax collection in 2023. Some city, county and other local taxing authorities, particularly in the San Francisco Bay Area, have also recorded revenue declines. With investors and high-income taxpayers receiving substantial compensation in the form of stocks, last year's sluggish stock market accounted for a major share of the decline in state income tax revenues. So did layoffs and financial weakness in the tech sector. But rising unemployment in the state and the growing flight of professionals, business operators and others making good salaries were also notable contributors. And those factors will be harder to reverse, at least in the foreseeable future.

"There's a price to pay for the movement of middle- and upper-income people and corporations," said Joel Kotkin, a fellow at Chapman University who has researched the flight from California and the resulting threat to the state's fiscal outlook. "People who are leaving are taking their tax dollars with them."

The accelerating exodus from California in recent years, of both companies and people, has been well documented. The pandemic-induced rise in remote work, inflated housing prices and changing social conditions have spurred more Californians to pull up stakes... Moody's Analytics economist Mark Zandi analyzed moves in and out of California for The Times using Equifax credit data, to zero in on the age of the movers. He found that since the pandemic in early 2020, California has lost residents in every age group, but by a significant margin the biggest net out-migration came from those 35 to 44 years old. "This is probably motivated by the severe housing affordability crisis in California," Zandi said. "It's all but impossible for them to become homeowners in the state."

Eric McGhee, a senior fellow at the Public Policy Institute of California, who has written about demographic trends in migration, thinks the increased loss of higher-educated Californians to other states in recent years can be traced in significant part to the rise of remote work since the pandemic. As more employers call workers back to the office, and the share of fully remote work appears to have settled at around 10% of all employees, McGhee expects the net out-migration from California to slow...

Even if the outflow of residents reverts to pre-pandemic levels, the broader economic climate doesn't bode well for the state's budget and economic outlook, at least in the immediate future. The U.S. economy is slowing, and California's economy is decelerating faster than the nation's, with the state's unemployment rate, most recently at 4.8%, already a full point higher than nationwide.

The article clarifies that "it's not just the sheer numbers of people who have left. What's different is that in each of the prior two years, more than 250,000 Californians with at least a bachelor's degree moved out, while an average of 175,000 college graduates from other states settled in California, according to an analysis of census data by William Frey, a demographer at the Brookings Institution. In prior periods over the last two decades, that balance was about even or slightly in California's favor."

And besides billionaires, "There's been a broader exodus of ordinary Californians in the upper-income spectrum as well. In the tax filing years 2020 and 2021, the average gross income of taxpayers who had moved from California to another state was about $137,000. That was up from $75,000 in 2015 and 2016, according to migration and personal income data from the Internal Revenue Service."
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The Wealthiest Californians are Leaving the State, Hurting the Economy, Statistics Confirm

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  • hey Gavin Newsome (Score:5, Insightful)

    by FudRucker ( 866063 ) on Sunday December 31, 2023 @05:44PM (#64120193)
    you're doing it wrong
    • by Ichijo ( 607641 ) on Sunday December 31, 2023 @06:48PM (#64120357) Journal

      He should demand that the red states start paying their fair share to the federal government and stop relying on subsidies from California and the other blue states. [moneygeek.com]

      • Re: (Score:2, Informative)

        by PPH ( 736903 )

        He should demand that the red states start paying their fair share

        "From each according to his ability, to each according to his needs." - Karl Marx

        Perhaps the federal government figures that the red states need or deserve the money more. But that's what socialism will lead to. Some distant bureaucrat allocating your resources. Learn to love it.

        • Perhaps the federal government figures that the red states need or deserve the money more. But that's what socialism will lead to.

          That's what pork-barrel capitalism has led to.

          Projection is not truth.

          If all states were (the other) red states, every hog would have its place at the trough.

      • by Entrope ( 68843 )

        Most of that imbalance comes from two sources: military bases and Social Security. Both of those are due to things typically being cheaper in "red" states than in "blue" states.

        If you want the military to pay higher rent and cost-of-living payments than it needs to just to have bases in the San Francisco Bay area (or wherever), that tells us all we need to know about how serious you are.

      • Federal funds are used to help poor people nationwide. There's a shit ton of poor people in most of these red states that pull a greater share.

        So if we believe in the rich paying for poor people. Then yes, Californians should be paying for these people in red states because there's simply not enough rich money in them to counteract the poor.

        I'm not sure how much Californians and New Yorkers realize what passing progressive federal laws means to them when you factor in the destitute fly over states that they

  • by registrations_suck ( 1075251 ) on Sunday December 31, 2023 @05:48PM (#64120205)

    You would have to pay me at least $1M/year to live there.

    Another $1M/year for my wife to live there.

    • for me, that million better be exempt from state taxes.
  • by PPH ( 736903 ) on Sunday December 31, 2023 @05:53PM (#64120217)

    Perhaps California is in need of a stronger governor who can stand up to the profligate spending [turner.com] of the legislature.

    • by arbiter1 ( 1204146 ) on Sunday December 31, 2023 @05:59PM (#64120225)
      its a super majority democrat stronghold, you are proposing the impossible. The party controlled 75% of state legislature, they believe everything they have done is what voters want and will never change.
      • by PPH ( 736903 )

        they believe everything they have done is what voters want

        And they will be getting the voters that they are asking for.

      • by guruevi ( 827432 ) on Sunday December 31, 2023 @06:21PM (#64120271)

        You should read the Federalist papers on why this vicious cycle will never end. California has a direct democracy on many laws and proposals, thus they continue voting for âless taxesâ(TM) and âmore servicesâ(TM). You ask someone what they want from government, it will always be âmore money for meâ(TM). Itâ(TM)s why the European experiment has failed as well, you want more centralized government so they are empowered to give you more free stuff while taking money from the richest, then you will end up with a situation where you have no rich people left to fund your wishlist granting government.

    • by CAIMLAS ( 41445 )

      Short of shelling the statehouse while they're in session, I doubt there's much hope for CA politics.

  • by locater16 ( 2326718 ) on Sunday December 31, 2023 @06:15PM (#64120259)
    "Higher Borrowing Costs and Reduced Investment Have Cooled California’s Economy." and "State’s Economy Entered a Downturn in 2022." Explanations direct from the government document "cited" as direct evidence that it's actually "people fleeing from taxes". No mention of that.

    A lot of "news" lies directly to you constantly, because people tend to look for evidence of what they already want to believe, rather than trying to understand something they don't know about. Look at any piece of evidence a vast number of news stories or popular opinions on social media give and you'll find they didn't even bother trying to find evidence backing their claims up, they just posted a link and hoped you wouldn't click it.

    The world is full of misinformation, 99.99% of it is lazy assed shite, all you have to do to be better than it is 30 seconds of homework.
    • The lying press gives demagogues another way to get the masses to "confirm" the elites are out to fuck them. Everyone knows they are lying their asses off because they, at least occasionally, encounter reality that doesn't match the media's polyanna pro-status-quo bullshit. The cognitive dissonance that follows is significant. It's then pretty likely certain politicians are going to start rhetorically trashing the press and their credibility (ie.. "De Lugenpriess"). The press deserves this because they've
  • No but also yes. (Score:5, Insightful)

    by Gravis Zero ( 934156 ) on Sunday December 31, 2023 @06:16PM (#64120261)

    The reversal, largely in response to the state’s high taxes and soaring cost of living,

    Taxes are a minor issue compared to the real issue, the cost of living. If they want to get things under control then they need to start by addressing absurd housing costs.

    There are many things that can be done to address the housing issue but thus far they have chosen to cross their fingers and hope it goes away.

    • About 25-50% of a monthly mortgage cost in California is various taxes and the increase in cost of living is largely due to yet more taxes and regulatory fees on everything from utilities to food. People donâ(TM)t want to build more properties, because taxes and regulation increase the total cost to astronomical levels. Remove the obstacles from government and the rest fixes itself.

    • but thus far they have chosen to cross their fingers and hope it goes away.

      . . . and we all know that thoughts and prayers only work on handguns!

    • Every time they start to do this ... some group files a lawsuit based on environmental concerns. A friend of mine is a lawyer and did some digging. turns out 90% of these environmental lawsuits are from organizations propped by large Calif companies that own a bunch of apartments and rental houses. Seems like they want to keep the prices high. Oh and they bought enough politicians so it will continue. End result enough people leave Cali rental and real estate prices will eventually fall. it's called

    • Taxes on any business activity are an EXPENSE to that business; they are simply added-in to the cost of its products and/or services right along with material costs, labor costs, facilities costs, energy costs, etc and are passed-along to the consumer as higher prices. It is mind-blowingly bizarre to assert that "Taxes are a minor issue compared to the real issue, the cost of living" - the one is directly driving the other. The primary drivers of the high costs in California are [1] taxes and[2] government

  • "average gross income of taxpayers who had moved from California to another state was about $137,000"
    You can't buy much of a house in metropolitan California on an family income of 137K

  • by BigFire ( 13822 ) on Sunday December 31, 2023 @06:38PM (#64120317)

    Guess they're going to raise taxes on those that are still here, like me.

  • by rsilvergun ( 571051 ) on Sunday December 31, 2023 @07:02PM (#64120393)
    the outflow isn't because people wanted to leave, it's because several corporations moved their headquarters.

    It'll be short lived though. I can tell you every college grad in the country wants to move to CA but can't because of the high cost of housing.

    What they're doing is working in other states, getting advanced degrees and getting ready to move to the State they wanted to when they finished their bachelor's.

    California could fix this quick if they'd build affordable housing, and lord knows they have the money, but the old folk aren't gonna allow it since they're all planning to sell their homes for retirement money. So it won't happen until they're "aged out", about 8-10 years or so.

    When that happens the housing crisis will get fixed and folks will flood back in. In the meantime CA is a classic case of "nobody goes there anymore, it's too crowded".
    • the outflow isn't because people wanted to leave, it's because several corporations moved their headquarters.

      That changes basically nothing.

      What they're doing is working in other states, getting advanced degrees and getting ready to move to the State they wanted to when they finished their bachelor's.

      That's basically what's happening, and that's exactly why there's a big budget shortfall. It's essentially the exact opposite of what the status quo was four years ago. Basically you have people with high incomes leaving, and sometimes people with low incomes replacing them. I say sometimes, because usually nobody replaces them at all.

      California could fix this quick if they'd build affordable housing, and lord knows they have the money, but the old folk aren't gonna allow it since they're all planning to sell their homes for retirement money. So it won't happen until they're "aged out", about 8-10 years or so.

      I used to be in the "more housing will fix this" camp, but I really don't think that's the case. As time has gone by, our population increases b

      • What is the idea behind living in houses far too big for your uses? Wouldn't it be far easier and comfortable e.g for your mother to live in a house/apartment big enough for 1-2 people instead of 5?
  • The politicians in California are careerists.

    In the old days, this meant they'd graduate to a pinnacle of power and then rule from on high until they retired. Thanks to the incumbent advantage, they could even take some risks to accomplish longer term projects, and bank even more goodwill.

    This changed with term limits.

    Now they don't bother to do their jobs - their current job is a platform to land their next job. So it's all about what they can sell to voters instead of what they can actually do, and anyt

    • The problem isn't the taxes. It's the cost of housing. A single family home is around 800k and often times over a 1,000,000. These aren't even impressive homes either. A condo starts at about 500k here. That doesn't even account for the HOAs, which are becoming more common, even for houses that don't need HOAs.

      You essentially need two incomes of at least 80k to even consider owing a single family home. A simple search shows the MEDIAN income is only 78k. So half of all workers make LESS. That's at least hal

  • by Cyberax ( 705495 ) on Sunday December 31, 2023 @07:09PM (#64120423)
    It's not the taxes per se. It's what the taxes are used for. People in CA just don't feel that the taxes are used well. And yes, homelessness and petty crime are a major part of this. It imposes a constant low-level stress on people: you can't just leave your car with a shopping bag visible, you have to make sure it's completely spotless. Otherwise it'll get broken into.

    Transit is similar: BART went downhill, becoming a rolling homeless shelter/insane asylum. And most other transportation systems were also affected.
  • and the CA GDP keeps going up, won't that be better for the people who stay behind? If the top 10% in the US own 2/3 of the wealth, shouldn't Californians be happy they are leaving? (Submitted by an ex-Californian who did not leave due to financial reasons (but understands them)).
  • A thing called forever trusts - designed for ultra rich people - is distorting the true situation. These never-pay tax trusts are much worse than the old Delaware LLC because they are legal and in full view. That 'Old' money is flowing out and dividends also not flowing back in. This is where presidential candidates got their donations from. Anyways taxable money is going 'forever' , and smarter people are lawyering up houses etc into trusts in case they are sued or divorce. There are fewer middle class peo
    • Forgot to say, Louis Rossman has a series of videos on why NYC is loosing out, people are leaving. And that there is an app for SFO where to avoid stepping into doodoo - a JarJar Binks term.
      • doodoo - a JarJar Binks term.

        LOL wow, wow, I didn't know there were kids on slashdot so young they could think that doodoo was coined by Jarjar. What a world you live in.

        Please, never read a book, you're soooo precious, we don't want to lose your innocence to the ravages of knowledge.

    • ask a basic question: "When did the politicians get to be so incompetent that they need more money to do what previous politicians did?" There's this really odd idea that government needs an ever-increasing tax level to keep operating. It should not take more money to educate a kid now than it used to, indeed technology should have made it CHEAPER. It should not take a higher tax rate to maintain the roads and libraries etc... the taxes that provide these things should be auto-scaling since they're tied to

  • Duh?

    And I can't type a greater than and have it show up? Not prefacing with a slash or doubling it.

    • by Mal-2 ( 675116 )

      You can use raw HTML in your comments, so all less-than and greater-than signs are interpreted as markups.

  • Tedious (Score:4, Informative)

    by Ossifer ( 703813 ) on Sunday December 31, 2023 @08:44PM (#64120629)

    These daily reports of the sky falling in California are as tedious as the twice yearly daylight savings time tirades on Slashdot.

  • Moving to Texas (Score:5, Informative)

    by ZipNada ( 10152669 ) on Sunday December 31, 2023 @09:14PM (#64120713)

    I hear that a lot of people from California are moving to Texas. I can see how they would be escaping high housing costs, but housing in the Texas high-tech cities is very expensive as well.

    Another issue is taxes. Texas is "the second-most regressive tax state, behind Washington State, due to low-income taxpayers bearing a disproportionate share of the tax burden".

    "the top 1 percent of earners in Texas ($617,900 or more) pay 3.1 percent of their income in contrast to top earnings in California ($714,400 or more) who pay 12.4 percent. "

    https://www.chron.com/news/hou... [chron.com]

    • Re:Moving to Texas (Score:4, Interesting)

      by sinkskinkshrieks ( 6952954 ) on Monday January 01, 2024 @12:17PM (#64122033)
      It's not any better here. I think it's worse. The cost of living is increasing here faster than anywhere else. Property taxes are much higher than most states (2.0%+/year) and there's still a California-like sales tax. The laws, regulations, civic administration, and legal system are backwards and stupid in a lot of ways: no abortions, absurd over-prosecution of poor people and minorities, and massive homelessness. The architecture is absolute shit: most homes look like they were designed by a public housing commission. Weather is far worse than CA, including freezes, windstorms, tornados, very hot in the summer, and hurricanes near the Gulf coast. Ever see "Gasland"? Air, water, and soil pollution much more so than NY or CA because of fracking and open support for the FF industry. Many more Trump supporters with guns who can conceal carry without any permit. Finally, far too many boring, uncool, mediocre, uncultured, immature office workers migrating to the state... people who couldn't figure out SF or NYC to save their life.
  • I hope the door hits them in the ass on the way out. Rich fucks have done nothing but overpay for real estate and ruin the housing market for the rest of us. They should all move to Texas or SLC or who gives a fuck, get outta here.
    • or who gives a fuck

      Well, Oregon gives a fuck, take them back! We have high taxes too, so what the fuck?! Go the fuck back!

  • Several months ago I read articles saying how the California exodus was a mirage. But then I read how all those people who moved to Texas are returning because they regretted it. But now they're leaving again? Sure.

  • and the roads are shit, shoplifters are immune, and urban cores look like the Walking Dead. I don’t miss California.
  • Re: "This is probably motivated by the severe housing affordability crisis in California," Zandi said. "It's all but impossible for them to become homeowners in the state."

    This sounds all too familiar in countries & cities that haven't managed their housing adequately & have left it to the markets. A number of EU govts are now reconsidering their housing policies & taking a fresh look at implementing more society-oriented housing programmes.

    *Essentially, leaving housing to the market is gi

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