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High-income people are leaving California

Many residents are leaving 'The Golden State' due to the high tax rates they have to pay. The population decline implied a 25% drop in tax revenue from 2022-2023.

Leaving California

(Christian Camacho / Voz Media)

Published by
Verónica Silveri Pazos

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California's population had a decrease of 75,423 inhabitants this year. This figure makes the Democratic state the second in the nation that suffered the biggest loss of residents (only surpassed by New York), according to data from the Census Bureau.

Despite suffering the consequences of the significant population loss, the seriousness of the matter goes beyond that. The Californian exodus has increased over the years due to - among other factors - the fracture of its economy and the failed policies implemented by Governor Gavin Newsom (The Golden State is at risk of suffering a budget deficit of $68 billion for next year).

Added to this, many of the residents leaving The Golden State are high-income people who contribute to its financial stability. According to IRS data, the population decline implied a 25% drop in total income tax collections in 2022-2023 (about 40% of the revenue California generates annually from the personal income tax).

Relationship between population decline and income reduction

The Tax Foundation's Vice President of State Projects, Jared Walczak, explained to Fox in an interview the relationship between population loss and decreased income (which in part generates the deficit).

According to Walczak, the deficit "is because increasingly the state is not only seeing a decline in population, but some of its richest and most important taxpayers are leaving the state":

California has now reached the point where they are seeing a real decline, which is extremely rare, but has long seen a net outward migration (...) It is not a coincidence that California raises some of the highest taxes in the country at a time of much greater fiscal competitiveness when 29 states have cut individual or corporate income taxes in the last three years. California is just one of the few that has actually raised taxes.

A website report from MyEListing warned a few months ago that the high rates of personal income tax that citizens must pay are "discouraging for many people with great wealth" which in turn has caused residents to move to states where taxes are lower:

The booming technology industry and world-class universities to the beautiful landscapes and cultural wealth "go unnoticed due to the high cost of living. One of the most affected markets is real estate and job creation," as these people from high income households often play an important role in business expansion and entrepreneurial activities.

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