Taxpayers Fleeing California Bring $ 8.8 Billion in Gross Revenue to Other States
California, with its relatively large tax burden compared to other states, has seen an exodus of taxpayers in recent years and, with it, billions in gross taxable income.
Recently released state-to-state migration data from the Internal Revenue Service (IRS) shows California has lost about 70,534 net households – or 165,355 taxpayers and their dependents – over the years 2017-18, those who flee taking an estimated $ 8.8 billion net. gross income adjusted with them.
Interstate migration flows are influenced by a number of factors, including retirement, employment opportunities and housing costs. Brandon Ristoff, political analyst at the California Policy Center, told Center Square that the billions of dollars leaked from California is due to “bad state policies on economics, education and more.”
âCalifornia was a place where everyone wanted to live, but now California has become a place where people want to go,â he told the outlet.
The three main beneficiaries of the California exodus were Texas, Arizona and Nevada. The bulk of early Californians filed their taxes in Texas, with the Republican-led state recording a net inflow of 72,306 taxpayers and their dependents, and an increase in gross income of about $ 3.4 billion. dollars.
An estimated 53,476 Californians moved to Arizona, bringing with them approximately $ 2.2 billion in gross income. Nevada was home to 49,745 California taxpayers and their dependents, as well as gross income of $ 2.3 billion.
There is little agreement among experts on the important role that taxes play in migration from one state to another.
Routine Census Bureau survey asks people who travel any distance the main reason for their decision to move, including employment, housing, going to college, crime, or to join a loved one . The most popular choices in 2019-2020 (xls), ranked by popularity, were ‘newer / better / larger house or apartment’, followed by ‘new job or job transfer’, ‘to establish own household “,” other family reason “,” wanted to own, not rent “and” wanted cheaper accommodation “.
The least popular were ânatural disasterâ, âclimate changeâ and âforeclosure or evictionâ.
But while taxes were not part of the Census Bureau’s survey, a 2018 Cato Institute analysis argued that taxes influence migration, and said tax motivations could be inferred from some of the responses. Census Bureau survey.
âThe Census Bureau does not ask movers about taxes. But some of the 19 choices may reflect the influence of taxes. For example, people who move for housing reasons may take into account the level of property taxes since these taxes are a standard item on notices of sale of housing. Likewise, people who move for a new job may consider the effect of income tax if they move, for example, between a high-tax state like California and a non-tax-free state like California. Nevada, âthe institute wrote in the analysis.
California, with its local effective tax rate of 11.5%, ranked eighth in local and state tax burden for 2019, according to a Tax Foundation analysis. Texas, on the other hand, with an effective local tax rate of 8%, ranked 47th. Arizona, with an effective local tax rate of 8.7%, ranked 45th, while Nevada, at 9.7%, ranked 29th.
According to the Tax Foundation’s 2021 Business Fiscal Climate Index, California’s rank was even bleaker, just behind New Jersey, which the foundation called less tax-efficient.