The wealthiest Californians are fleeing the state. Why that’s very bad news for the economy
In a reversal from past decades, more college graduates and professionals are moving out of California than coming into it to escape the higher taxes and cost of living.
https://www.latimes.com/business/story/2023-12-19/the-wealthiest-californians-are-fleeing-the-state-why-thats-very-bad-news-for-the-economy
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. New state-to-state migration data show that for several years, thousands more high-earning, well-educated workers have left California than have moved in.
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.
For now, the Legislative Analyst’s Office is projecting a small improvement in income tax revenue over the next two years, but that’s cold comfort for policymakers and economists. California has $24 billion in rainy day general funds, less than half of what’s needed to cover the expected shortfall.
“It’s probably going to be some combination of cutting back spending and raising taxes,” Sung Won Sohn, an economics professor at Loyola Marymount University, said of the likely response to the budget crisis. “But if we keep raising taxes,” he added, “we’ll keep chasing people away from the state.”