According to newly released IRS statistics, California and New York have reported the highest losses in income tax revenue State Income Tax Revenue as individuals leave these two states for more appealing opportunities.
MyEListing.com, an online real estate portal that conducted the research, identified the greatest beneficiaries of this migration in terms of tax income.
California’s decline was particularly notable, with IRS tax revenue losses of over $300 million in 2021.
Depending on the outcome of the movie industry writer’s strike, higher costs could also contribute to the departure of production companies to look for more profit-friendly states in which to shoot their future motion pictures.
Despite its attractive tourist incentives, such as the thriving tech industry, picturesque landscapes, universities, and culture, the high cost of living and the state’s increasingly high personal income tax seem to drive many high-wealth individuals away.
The high cost of living in California and exorbitant tax rates are two leading causes of wealth migration out of California.
The migration out of California is leading to tangible outcomes. For the first time since becoming a state in 1850, California lost a congressional seat in 2021. Should the population keep diminishing, the state may risk losing another seat.
In May, California’s Governor Gavin Newsom revealed that the state’s budget deficit had escalated to almost $32 billion, roughly $10 billion higher than his initial estimate in January when he presented his first budget plan. This increase was partly due to tax revenue falling short of expectations.
The situation could potentially deteriorate further. A recent survey by a group of California nonprofits indicates that over 40 percent of Californians are contemplating moving out of the Golden State. Nearly one-third of those surveyed expressed that their desire to leave was motivated by the state’s liberal political climate.
The study also pinpointed Texas and Florida as the states that had benefited the most from income tax revenue due to new residents moving in.
Florida saw an increase of $12.4 billion in taxes from newcomers, while Texas gained $10.7 billion.
The findings highlight a trend from high-tax states to those with more financially favorable conditions, reflecting a broader shift in domestic migration patterns.