State Tax Problems
CA Lost More Tax Income Than All Other States Combined Over Past 3 Years
New data about California's population exodus has emerged, and the state lost more tax income than all other states combined between 2020 and 2022.
Earlier this year, a CNBC report shared details regarding IRS data that confirmed New York State lost $25 billion in adjusted gross income in 2021, plus an additional $20 billion in losses in 2020. Similarly, California lost $29 billion in 2021 and $18 billion in 2020. Together, the two states lost approximately $92 billion in just 24 months.
The primary reason for this was a mass exodus of high-income earners.
Now, it has emerged that California, specifically, lost more tax income than all 49 other states over the past three years. News network KION 46 noted that The Golden State lost upwards of $340 million in 2021 IRS tax revenue due to residents relocating.
In a new article analyzing the wealth migration, MyEListing wrote, "Despite its numerous attractions, from the booming tech industry and world-class universities to beautiful landscapes and cultural richness, California's high personal income tax rates seem discouraging for many high-wealth individuals."
The report continued, "This, coupled with the state's high cost of living, will likely fuel a wealth migration out of California."
KION shared that from January 2020 to July 2022, "well over half a million" people permanently moved out of California. The U-Haul Growth Index, which is used to track relocations, confirms that over two million one-way trips were made out of the state last year alone.
While the relocation trend is problematic for California, it has been a boon for other states. Florida, for example, has hugely benefitted.
The Sunshine State increased its population by a net 128,000 households in 2021. These new residents brought over $39 billion in income with them.
Nearly 1/3 of the income came from people leaving New York, New Jersey, Illinois (Chicago), and California. U-Haul notes that Ocala, specifically, topped the list of Florida cities with an influx of new residents.
It is not shocking that high-income Americans are leaving for Florida full-time. The state has long been a bastion of wealth, particularly in areas like West Palm Beach. With virtual work becoming increasingly common, and the travel industry once again functioning normally, there is little reason for those who can work from home most of the time -- and afford to travel for business when needed -- to maintain primary residences in high-tax states.
California Governor Gavin Newsom (D), however, disputes that his state is in trouble.
He recently said, "I love this state. Don’t count us out."
What do you think about people migrating out of California?
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Feature Image Credit: DustyPixel/Getty Images
Rebekah's search engine optimization career began completely by accident as a college student. Over the course of her career so far, she has "grown up" with the SEO industry, from writing content while juggling classes to managing her own teams of writers and overseeing SEO strategy in subsequent roles. She is excited to bring her passion for high-quality content to CountingWorks, Inc.
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