Wealthy Californians Are Fleeing The State Putting Tax Revenue At Risk

California’s population has been on a decline in recent years, with tens of thousands of residents leaving the state. According to the U.S. Census Bureau, the population of California dropped by around 75,400 over the course of 12 months, bringing it down to over 38.96 million as of July 1. Among those who left are some of the wealthiest Californians, who account for a significant portion of the state’s tax base.

The trend of residents leaving the Golden State is not new. For years, California has been leading the nation in out migration and population decline. In 2020-2021 alone, California had a net loss of approximately 158,200 tax returns, with over 399,400 tax returns leaving the state and only over 241,200 coming in, according to IRS migration data. When it comes to individuals, California experienced a net loss of more than 331,700 in terms of migration during the same timeframe.

Tax Foundation Vice President of State Projects, Jared Walczak, stated that California’s migration numbers were “even more stark” than the newly revealed population figures. Walczak told FOX Business in a Thursday interview that “California is one of only a handful of states that is facing a budget deficit, and one of only a very small number that has seen tax revenues reversed in the past year. Most states continue to see rising tax revenues.”

The Legislative Analyst’s Office recently projected that California could potentially face a $68 billion budget deficit for the upcoming fiscal year if the issue is not addressed. Higher taxes are cited as one of the underlying reasons for the population decline and out migration. High taxes have made California less attractive to both individuals and businesses, leading them to seek out other states that offer a better tax climate.

California’s challenges extend beyond budget deficits and population trends. The state has had to deal with issues related to homelessness, wildfires, and increasing crime rates, which have only served to exacerbate the situation further. Though the population decline is not unique to California, as other states are also experiencing similar issues, it is concerning for the state given its size and economic significance.

California’s future remains uncertain, with larger questions looming over what comes next for the state. The ultimate impact of the population decline and out migration will take years to be fully realized, and the state’s leaders will need to come up with long-term solutions to prevent further losses and promote growth.