California driving out taxpayers

“Capital flows to where it is treated best,” is an old saying in economics. New IRS data shows capital is being clubbed out of California.

This data is based on actual tax returns, with the names of taxpayers redacted.

It affirms U.S. Census Bureau data showing recent population declines.

The key statistic is adjusted gross income between states in 2022.

The biggest state AGI losses: California $23.8 billion, New York $14.2 billion, Illinois $9.8 billion, New Jersey $5.3 billion and Massachusetts $3.9 billion.

Note all these are high-tax states. California saps taxpayers with the highest top state income tax rate at 14.4%. Even the middle class pays 10.4%. New York state’s top income tax rate is 10.9%. But in New York City it’s even higher than in California, 14.776%.

The biggest state AGI gainers were: Florida $36 billion, Texas $10.1 billion, South Carolina $4.8 billion, Tennessee $4.7 billion and North Carolina $4.6 billion.

All are low-tax states. Florida, Texas and Tennessee don’t even have an income tax.

“Although higher interest rates and housing prices reduced mobility in 2022, the flight from progressive states far surpassed pre-pandemic levels,” reported the Wall Street Journal.

After Gov. Gavin Newsom took office in 2019, the AGI loss nearly tripled.

It could triple again. Last month the state Supreme Court removed the Taxpayer Protection Act initiative from the Nov. 5 ballot, preventing voters from safeguarding themselves against new raids on their hard-earned incomes.

Yet on the ballot are Proposition 5, which would make it easier to raise taxes for affordable housing — ironically making living here less affordable for taxpayers themselves. And Proposition 35 would make permanent a tax on managed health-care insurance plans set to expire in 2026 — preventing taxpayers from getting a rare tax break from this state.

Lawmakers and special interests need to understand people who leave don’t pay taxes in the state left behind. That hurts state and local budgets, adding to the deficits of recent years, and it undermines the ability of California to pay for what it really needs.

Killing the Golden State goose means no more eggs.