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.
State to State migration The data recently released by the Internal Revenue Service (IRS) shows that California lost about 70,534 net households, or 165,355 taxpayers and their dependents – in the years 2017-2018, fleeing people taking with them around $ 8.8 billion in adjusted gross net income.
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, known as Place du Center that the flight of billions of dollars from California is driven by “bad state policies in economics, education and more.”
“California was a place where everyone wanted to live, but now California has become a place where people want to go,” 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.
A 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 picks in 2019-2020 (xls), ranked by popularity, were “looking for a newer / better / larger house or apartment”, followed by “new job or job transfer”, “to establish own household”, “other family reason “, Rent” and “wanted cheaper housing”.
The least popular were “natural disaster”, “climate change” and “foreclosure or eviction”.
But while taxes were not part of the Census Bureau survey, a 2018 Analysis by the Cato Institute argued that taxes influence migration, and said tax incentives could be inferred from some of the Census Bureau survey responses.
“The 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, ”the institute wrote in the analysis.
California, with its local effective tax rate of 11.5%, ranked eighth in terms of local and state tax burden for 2019, according to a Analysis of the Tax Foundation. 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 2021 State index of the fiscal climate for companies, California’s ranking was even darker, just behind New Jersey, which the foundation called less tax-efficient.