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    California’s Economic Crossroads: Population Decline, Tax Flight, and the Looming Budget Deficit in 2023

    Main EditorBy Updated: Whatfinger News 7 Mins Read

    Americans are Escaping Decling High Tax – Socialist California For Free States In Droves

    That “fourth largest economy” may soon be just government payments to illegals and homeless people. Those who know better and can are leaving in droves- Neil Axelrod

    The U.S. Census Bureau’s recent estimates indicate a decrease of approximately 75,400 residents over the course of 12 months, bringing the state’s population to just over 38.96 million as of July 1. This information is part of a broader release from the Census Bureau, encompassing data on the entire country and its 50 states.  Continued below the video

    Census Data: California Population Drops Again; Below 39 Million – Failed State – Breitbart

    A projection released Tuesday from the conservative-leaning American Redistricting Project, funded by the Fair Lines Foundation, shows the Democratic state’s delegation could drop from 52 to 48 amid recent population declines. New York is also projected to shed seats, losing three. – More at Washington Examiner

    Jared Walczak, Vice President of State Projects at the Tax Foundation, emphasized in an interview with FOX Business that the migration numbers for California were “even more stark” than the recently disclosed population figures. According to IRS migration data, California experienced a net loss of about 158,200 tax returns, with over 399,400 leaving the state and only 241,200 coming in during 2020-2021. On an individual level, the IRS reported a net loss of over 331,700 people in the same timeframe.

    Walczak highlighted California’s historical trend of outmigration and recent population decline, stating, “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.”

    The Legislative Analyst’s Office projected a potential budget deficit of $68 billion for California in the upcoming fiscal year, attributing it largely to a “severe revenue decline.” This decline included a 25% drop in total income tax collections in 2022-2023, influenced by factors such as the deferral of certain tax payments and economic weaknesses.

    California exodus puts state on path to lose congressional seats in 2030 – Washington Examiner

    A significant aspect of California’s revenue decline is the departure of some of its wealthiest taxpayers. IRS migration data revealed a net decrease of over 27,300 tax returns reporting an adjusted gross income of at least $200,000 between 2020 and 2021.

    California’s high tax rates, particularly during a period when 29 states have reduced individual or corporate income taxes in the past three years, have contributed to this trend. Walczak pointed out, “It’s not a coincidence that California poses some of the country’s highest taxes at a time of much greater tax competitiveness.”

    Other economic factors, including the cost of living and the housing market, have also played a role in residents choosing to leave California. The rise of remote work has further facilitated the decision to relocate, as reported by the Los Angeles Times.

    Approximately 40% of California’s annual revenue from personal income tax is derived from the top 1% of taxpayers in the state. The decline in population poses a threat to the long-term funding prospects of various California programs, according to Walczak.

    He emphasized, “California also has expansive government programs that rely for funding not only on these high net worth individuals but on the idea of continuing population growth and employment growth.”

    To address the $68 billion budget deficit, the Legislative Analyst’s Office proposed several measures, including tapping into the state’s $24 billion reserves, reducing Proposition 98 spending, and exploring other avenues for financial stability.

    The Exodus of Productive Citizens From California Proceeds Apace – Red State

    In addition to California, seven other states experienced population decreases in 2023, as reported by the U.S. Census Bureau. Despite the national population reaching 334.9 million in 2023, growing by 1.6 million people in a 12-month period, California’s challenges underscore the complex interplay between demographics, taxation, and economic policies.

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    Democrat-run states, such as New York and California, saw big population losses in 2023 — as Republican-led states, such as Texas and Florida, saw big growth.

    Major Points Discussed:

    • California experienced a notable decrease of approximately 75,400 residents over a 12-month period, bringing the state’s population to just over 38.96 million as of July 1, 2023.
    • The migration of some of California’s wealthiest individuals has led to a significant impact on the state’s tax base. IRS migration data revealed a net loss of over 158,200 tax returns, with more than 399,400 leaving the state and only 241,200 coming in during 2020-2021.
    • The Legislative Analyst’s Office projected a potential budget deficit of $68 billion for California in the upcoming fiscal year, largely attributed to a “severe revenue decline.” This decline includes a 25% drop in total income tax collections in 2022-2023.
    • California’s high tax rates, especially amid a national trend of reducing individual or corporate income taxes in other states, contribute to the state’s challenges. The departure of wealthy taxpayers has further strained the state’s revenue.
    • Beyond taxes, economic factors such as the cost of living and the housing market, along with the rise of remote work, have played a role in the decision of residents to leave California. These factors, combined with the decline in population, pose a threat to the long-term funding prospects of various California programs.

    James Kravitz, freelance writer

    Comments – Threads – Links

    • More middle class Californians are leaving as taxes skyrocket. As they exit so does the tax base and the state continues to raise taxes to compensate. Enjoy the sinking ship- KAMS
    • In 2021 and 2022, about 750,000 more people left California than moved in. But now, something much worse is happening: For the first time in decades, more high-income people are leaving California than moving to the state. In the past two years, more than 250,000 Californians with at least a bachelor’s degree moved out, while an average of 175,000 college graduates from other states settled in California. This is a potential disaster for the state, because tax filers in the top 1% of income, earning around $1 million and above, have typically accounted for 40% to 45% of the state’s total personal income tax revenue- Tief Gibbs
    • Wealthy Californians are leaving the state in large numbers, looking for lower taxes, fewer regulations, and different socio-political climates- WIOD
    • Yeah and that hellscape has nothing to do with all the “migrants” flooding the state every day, or the Californians leaving their shithole to find a new place to settle down, yet bring their politics with them- BuckFiden
    • California was one of just eight states that lost population between 2022 and 2023, according to the census. – San Francisco Chronicle

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