Editorial: Economic Exodus
With a corporate tax rate of 8.84 percent (40.7 percent when the federal rate is also factored), a state income tax rate as high as 9.3 percent, and gasoline taxes at a combined 64 cents per gallon, California has gone from being the Golden State to the state that steals your gold. And her residents may no longer be putting up with it.
As reported by the AP's Michael Blood, “The number of people leaving California for another state outstripped the number moving in from another state during the year ending on July 1, 2008. California lost a net total of 144,000 people during that period—more than any other state, according to census estimates.” The article went on to note that the only other state whose exodus was comparable was New York's, which lost 126,000.
Strangely, Mr. Blood assures his readers that the loss of residents from California is “extremely small” because the state is so large and its population is still growing. Perhaps, if more could afford to leave, they would. The process of moving can be costly even when the economic outlook is rosy. And if only there were jobs waiting for them elsewhere. Escape may indeed be the goal, but there has to be somewhere to escape to, and residents will need the means to get there.
As the very same article notes, the state's unemployment rate rose to 8.4 percent in November, and foreclosures for the year are topping 230 thousand. The state's economy—severely hampered by federal and state government policies—is hurting, as are the economies of the several states. Residents complain of the cost-of-living rising, including taxes and property values, to unaffordable levels. As Barry Hartz is quoted as saying, “The saddest thing I saw was the escalation of home prices to the point our kids, when they got married, could not live in the community they lived and grew up.”
It's simple economics. The higher the cost of living—including taxes and asset values—the less wealth individuals will be able to accumulate.
And until the politicians in California figure out how to reduce the burden that excessive government creates in the way of the tax burden, it will continue to lose residents like a leaking ship that the crew refuses to repair. And the Golden State will continue to lose its luster.