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California Migration || Follow The Money

Updated: Oct 14, 2022

In his column this week, Dan Walters highlighted the work of San Francisco Chronicle journalist Susie Neilson. Her analysis of IRS data showed that, between 2019 and 2020, high earners disproportionately left San Francisco for other states, and they brought their money with them.

Turns out that it’s true for all of California as well.

The net outflow of residents from California between 2019 and 2020 was accompanied by a loss of more than $20B in aggregate Golden State income. More than half that amount ($11.3B) came from those earning more than $200K/year – the high earners that power the state’s personal income tax revenues.

IRS data show that 45 of 49 states gained income from California migration between 2019 and 2020. The only exceptions were clustered in the DC area (Maryland and the District itself) and the New York region (including New York state, New Jersey, and Connecticut).

The biggest magnets for that California income are the usual suspects: Texas, Nevada and Arizona each netted more than $2B in income from California migrants. Another five states – Florida, Washington, Idaho, Oregon, and Colorado – gained more than $1B each in income from arriving Californians.

Meanwhile, California’s income tax collections – heavily reliant on high earners – have fallen short of expectations for two consecutive months. California voters will be asked to vote this November on raising the top income tax bracket - one that is already the highest in the nation (see below). They would be wise to resist the temptation, lest we give the high earners new reason to head for the exits.

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