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California’s Outbound Migration Continues, With Some In-State Diversions

The states with no income taxes gained the greatest wealth, while the states with the highest income taxes lost the most

By Katy Grimes, June 9, 2020 2:30 am

With Antifa and Black Lives Matter riots breaking out across California, some city dwellers are longing for safer neighborhoods, and safer towns. Following the death of George Floyd in Minneapolis by a police officer, radicals in BLM and Antifa – which ironically stands for “anti-Fascist” – used Floyd’s death as an opportunity and excuse to wreak havoc.

For many Californians, the final straw came sooner, as more than 691,145 Californians left the state in 2018. Texas nabbed 86,164 former Californians that year, according to an Orange County Register report. “Census Bureau migration data for 2018 shows in raw terms of people moving, the top spot for Californians is Texas, which got 86,164 Californians in 2018. Next came Arizona (68,516), Washington (55,467), Nevada (50,707), and Oregon (43,058). All told, California had the most exits among the state and that wave grew by 4% in a year.”

The California Legislative Analyst also reported that for many years, more Californians have left for other states than move here. According to data from the American Community Survey, from 2007 to 2016, about 5 million people moved to California from other states, while about 6 million left California. On net, the state lost 1 million residents to domestic migration—about 2.5 percent of its total population.

Now we are starting to see outbound migration from California’s big cities to smaller cities and towns, and to the state’s rural counties – if they even choose to stay in California.

Real Estate agents regularly report trends, and Carol Butler, who owns 50Cabins.com and is a Resort & Second Home Specialist, says that now that people realize that they can work from home, many are choosing to make their primary home in a beautiful place outside of a big city. “I’m selling more primary homes in Tahoe and El Dorado County, and I’m a Resort & Second Home Specialist!” Butler said. “It’s as busy as ever; I just wish we had more inventory! The economy here is surprisingly strong for the Tahoe and surrounding area market.”

Butler said the other benefit is the “perceived safety” outside of big cities. The riots did not make it to El Dorado County, although she said there were a few BLM protesters in South Lake Tahoe – but no violence or destruction.

Butler noted that the cabins and mountain homes she usually sells to second home buyers, are being purchased by primary home buyers now. “And those sellers are leaving California!”

We know why California companies leave for other states: Chief Executive Magazine reports year after year that when CEOs across the country are surveyed, they name California as the worst state in the country in which to have to do business. California has the highest-in-the-nation taxes, one of the highest business tax climates, with the Tax Foundation ranking California at No. 49 – the second worst in the nation, ahead only of New Jersey.

California’s 13.3% income tax rate is the highest marginal tax rate in the nation. And when you add in up to 37% federal taxes, living in California is expensive right off the top, and especially now that we cannot deduct state taxes against the federal.

Sacramento real estate agent Stephen G. reports he is seeing more and more home sellers leaving for other states. Initially the reasons were primarily due to the high cost of living in California. After the statewide lockdown, with schools and businesses closed for months, and then the riots the last two weeks, he said he expects to see more people reaching a tipping point, making the decision to move out of state.

Relocation specialist Joe Vranich, who used to live in California, for years has documented the outbound migration of businesses. “Business-flight appears to have gotten worse since I issued my recent report, ‘Why Companies Leave California’, which found that at least 13,000 companies moved out of state during the 2008-2016 period (the latest available figures),” Vranich wrote for Fox and Hounds last year. “The cost: $76.7 billion in capital was diverted out of California along with 275,000 Jobs – and companies acquired at least 133 million square feet of space elsewhere. All of those findings are greatly understated because relevant information often went unreported in source materials.”

Vranich knows how and why businesses leave California:

“California’s current crop of politicians point to the occasional economic development ‘win’ with pride while ignoring the overall business migration to other states. Let’s be candid about who they are – business-hostile Democrats who’ve never run a business, never raised capital, never built a building, never met a payroll, never arranged for employee health-care policies, never sold a product or service, never competed with lower-priced foreign competitors, and never paid any of the countless taxes and fees imposed by various levels of government.”

“Between 1995 and 2010, millions of Americans moved between the states, taking with them over $2 trillion in adjusted gross incomes,” author Travis Brown says in “How Money Walks: How $2 Trillion Moved Between the States, and Why It Matters.”

“Two trillion dollars is equivalent to the GDP of California, the ninth largest in the world. It’s a lot of money. Some states, like Florida, saw tremendous gains ($86.4 billion), while others, like New York, experienced massive losses ($58.6 billion). People moved, and they took their working wealth with them.”

“Money—and people—moved from high-tax states to low-tax ones. And the tax that seemed to matter the most? The personal income tax. The states with no income taxes gained the greatest wealth, while the states with the highest income taxes lost the most. Why does this matter? Because the robust presence of working wealth is the leading indicator of economic health.”

According to “How Money Walks,” California lost $58.63 billion in annual adjusted gross income.

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11 thoughts on “California’s Outbound Migration Continues, With Some In-State Diversions

  1. California is ruled by a democrat super majority led by a Governor (who probably imagines himself as the next JFK) are abject politicians/social engineers. My profession allows me to remotely work and just about everyday I contemplate leaving California for many of the facts stated in this article.

  2. I’ll be going on a “vacation” in 1.5 weeks out of state to find a rental to hopefully move in NLT Aug. 1. I’m fortunate enough to not have to sell my place in CA, but I hope the housing market doesn’t crash here. When you have children and realize that CA is just going to attract more and more criminals because of CA’s policies, it’s all about safety. Maybe in a couple years I’ll come back IF we feel it’s safe.

  3. We LEFT two years ago and boy are we happy we got out ahead of the rush. The home sold for a pretty penny and we got a new one that’s huge for half price of then old one in Marin.. Newsom fancies himself as the head of a emerging nation or some such crap. In reality, he’s president of the new Mogadishu and tribal warfare.. Get out folks. Its turning into mad max / Thunderdome. Now the crazies are talking about closing ALL state prisons..

  4. I left Long Beach after 19 years because twice I was in an apartment that was sold and we were all evicted. SoCal was weird and mostly fun until speculators started buying up properties after 2008 and things got aggressively greedy and angry. I say this being completely against anything marxist. Everyone in every direction started to lose their minds. I’m glad I’m now in a nice and quiet area on the east coast.

  5. We left CA at 3:20pm on June 20, 2018 and moved to Colorado Springs. Colorado is a purple state, but COS is about as red as it gets. We moved into a new neighborhood and at least 25% of the homeowners are from CA. All left for the same reasons: Better quality of life, lower taxes, and to escape the bat-sh#t politics of CA. What we didn’t expect however was how nice our new neighbors are. We all know each other, get together regularly, etc. I lived in same neighborhood near Sacramento for 27 years and couldn’t name the people two doors down.

  6. We purchased a ranch property in Montana a couple of years ago with an intent to retire there. Due to the insanity of this state, we have opened a construction company in Montana and are in the process of closing down the CA. construction business, (12 full time employees). We will sell our CA. ranch and get of CA. before Prop 13 is repealed.

  7. I would be happy to just get out of Sacramento. We spent the last two weekends going up to Placer and Amador counties. It was so clean, friendly, and beautiful. As soon as we hit the Sacramento County line we saw garbage everywhere and felt the negative energy. Maybe the state of Jefferson isn’t so far off, we can only hope.

  8. “Butler said the other benefit is the “perceived safety” outside of big cities. The riots did not make it to El Dorado County, although she said there were a few BLM protesters in South Lake Tahoe – but no violence or destruction.”
    That’s true of many smaller cities, as well, particularly here in the Central Valley. Merced has had a few organized, peaceful protests, but no looting or thuggery.
    As to the migrations out of state, that is worrisome for those of us who have chosen to stay for a variety of reasons. Unfortunately, most of the people coming *into* the state currently are of the Looting Class, and take out much more than they contribute. That’s not sustainable in the long run, and the current “leaders” in Sacramento seem either ignorant or uncaring about it.

  9. We left CA a year ago for all the above reasons. We took our businesses with us. It was particularly hard for me as my ancestors came there over 250 years ago. It was sad leaving all that family history behind, but I’m glad we did, and wish we had done it sooner. No state tax here in NV, less expensive cost of living, waaaay less traffic, and no insane politicians! Now we watch CA destroy itself from afar. Sad, but not my problem anymore.

  10. And yet California’s economy continues to grow with a record $3.2 trillion GDP. All those taxes to the universities are paying huge dividends.

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