First it was the middle class, now the millionaires are “fleeing” California

Some people wonder why we pay so much attention to California. There are a number of reasons. One, we like California. Two, it is the USA’s most populous state. Three, California has become a crony capitalist 1 party state. Four, because California, despite having everything in the world going for it insists on blowing itself up like some troubled Hollywood starlet.

The place is run by people who are doubling down on stupid economic policies. They think the California wealth will last forever. That it is a resource that can’t be depleted. The state is also filled with people who don’t realize the size of the economic storm that is looming in the distance.

If one pays attention to the comments from pro-one party Cali people at this website they often insist that despite the graft (legal and otherwise), despite the clueless social policies, despite the high taxation, things are sound fiscally.

I hate to break it to you folks but the revenue is leaking away. The core of the economy in the middle class is leaving. And now even the people who can insulate themselves against the insanity in Sacramento, who can pay the premium to enjoy the good weather are leaving.

Oh, and there is that $1 TRILLION unfunded state pension liability that is hanging out there off of the official books. How California taxpayers, do you think that bill is going to be paid?

Screenshot The Orange County Register

 

(From Forbes)

Varner’s new research examined taxpayers who were and were not hit by the Prop. 30 rate hikes. He found that in the two years before the Prop. 30 tax hike was imposed (2011 and 2012), net in-migration for both groups “was positive and roughly constant.” Yet following 2012 and the passage of Prop. 30, net in-migration dropped for households that were facing an effective tax increase of 0.5 percent or more. The reduction was greatest for households facing the highest effective tax hike, according to Varner and his coauthors.

This isn’t surprising for those who are familiar with other attempts to soak the rich with punitive state income tax hikes on high earners. Take what happened in Maryland after Martin O’Malley, the former Democratic presidential candidate and governor, imposed a millionaires tax hike a decade ago.

Maryland, for those visiting the East Coast is probably best avoided. Annapolis is nice. Beyond that however. Meh.

Some, like the folks at Next 10, a San Francisco-based think tank, point to high housing costs as a more important factor than high taxes when it comes to what is driving people to leave California. While it’s clear that up is the only direction in which most California legislators want to take the state’s overall tax burden, it’s uncertain what action, if any, California officials will take to reduce exorbitant housing costs. When given the opportunity to institute a modest reform this year to help alleviate the high cost of housing, California officials declined.

Good luck California.

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