In a blow to the Golden State, California’s mass exodus has reportedly led to the most substantial tax revenue loss across the U.S., as a new study reveals. This troubling trend further intensifies the state’s fiscal woes amidst a daunting $32 billion deficit.
The study, carried out by the real estate platform MyEListing.com, indicates that the state lost an estimated $343.2 million in tax revenue due to migration in 2021. This puts California in an unenviable lead, with New York losing $299.6 million and Illinois losing $141.7 million, ranking second and third respectively.
The U.S. Census Bureau corroborates these findings, detailing an estimated net outflow of 218,000 residents between July 2021 and July 2022. Los Angeles County bore the brunt, witnessing a population reduction exceeding 90,000. Overall, since 2020, California’s population has shrunk by about half a million.
A key driver behind this mass departure appears to be high-earning individuals seeking greener pastures. They are enticed by states with lower taxes and a more affordable cost of living. The MyEListing study warns that should this trend persist, California could face an escalating “wealth migration.”
Meanwhile, the fiscal health of California deteriorates. Lawmakers recently approved a budget with a $32 billion deficit, putting a strain on the state’s economy and tarnishing the political reputation of Governor Gavin Newsom, a figure often speculated to have White House ambitions.
On the flip side, Florida emerges as the prime beneficiary of this exodus. The state reportedly netted a colossal $12.4 billion in tax revenue due to migration, with a substantial $3.5 billion influx from former Californians. Texas and Arizona trail Florida, gaining $10.7 billion and $9.4 billion in tax revenue respectively.
Further cementing Florida’s status as a haven for high-income earners and families, the state experienced a net growth of over 200,000 residents in 2021, placing it first in terms of population growth.
Among the high-profile Californians making a beeline for Florida is actor Scott Baio, known for his role in “Happy Days,” citing escalating crime rates and a burgeoning homeless population. Similarly, Tesla CEO Elon Musk also made headlines last year by moving his company’s headquarters to Texas, followed by energy giant Chevron’s pivot to Houston.
The migration of such influential figures and corporations exacerbates California’s fiscal challenges. As the state grapples with its mounting deficit, the loss of such substantial tax revenue might push its financial struggles into a dire state, a worrying sign for the residents and lawmakers of California.
