The great California brain drain continues
For many decades, California wasn’t just the No. 1 destination for families and businesses in the United States.
It was also the state of choice for smart people — America’s entrepreneurs and brainiacs.
That’s because the future started in California.
But in the last decade, the Golden State has somehow lost a net 1.6 million residents to predominantly red states.
Florida has been the biggest winner from this migration, with tens of billions of dollars in income flowing from the West Coast into Florida.
No other state except New York has lost more residents.
California and New York also have the nation’s highest top tax rate of more than 13%, vs. zero in Florida.
Every year for the past 15 years, I have helped prepared the ALEC Rich State Poor State Competitiveness Index. This measures which states have the best and worst economic climate for business and overall affordability.
The good news is California isn’t last.
It ranks 47th, only behind New York, New Jersey and Vermont and just ahead of Illinois.
But one thing is for sure. If California were to adopt a 5% wealth tax, California would overnight become the least competitive state in the union.
This is the blue state disease.
It’s the economic equivalent of COVID in its devastation.
“Progressive” states like California with high tax rates and heavy regulation have lost nearly $2 trillion of cumulative income from their states to those ranked with high competitiveness — states mostly located in the South.
That list includes Texas, Utah, Tennessee and Florida.
Rich State Poor State Economic Competitiveness Rankings
| Rank | State |
|---|---|
| 1 | UT |
| 2 | TN |
| 3 | ID |
| 4 | NC |
| 5 | AZ |
| 6 | AR |
| 7 | IN |
| 8 | OK |
| 9 | SD |
| 10 | FL |
| 11 | WY |
| 12 | NV |
| 13 | TX |
| 14 | GA |
| 15 | OH |
| 16 | ND |
| 17 | WV |
| 18 | LA |
| 19 | MO |
| 20 | AK |
| 21 | SC |
| 22 | NH |
| 23 | KY |
| 24 | MS |
| 25 | IA |
| 26 | AL |
| 27 | NE |
| 28 | WI |
| 29 | CO |
| 30 | KS |
| 31 | VA |
| 32 | MI |
| 33 | MA |
| 34 | PA |
| 35 | NM |
| 36 | DE |
| 37 | MT |
| 38 | WA |
| 39 | MN |
| 40 | OR |
| 41 | RI |
| 42 | MD |
| 43 | HI |
| 44 | ME |
| 45 | IL |
| 46 | CT |
| 47 | CA |
| 48 | VT |
| 49 | NJ |
| 50 | NY |
The “progressive” states like New York, California and New Jersey must change, or they will continue to be bled dry by more family- and business-friendly states, where costs are lower and jobs are more plentiful.
In a recent conversation with Florida Gov. Ron DeSantis, he told me: “We used to see the license plates from New York and Connecticut. Now we are seeing more and more from California.”
States like Florida and Texas are plundering the high-tax states and this is decimating the tax base of states like California.
The rich are highly sensitive to tax rates.
Good public policy attracts people, businesses, and money. Bad policy repels them.
High taxes and costly regulations are like spraying employees in the eyes and mouth with pepper spray. Do it once and it will be a long time before they will come back — if ever.
It’s not just financial power that states like California are losing. They’re surrendering their political power as well.
Based on current trends, California, Illinois, New Jersey and New York could lose eight, nine or even 10 congressional seats in the next Census redistricting after 2030.
What’s sad about this demise is that America needs a strong and dynamic California to remain the world’s economic and tech superpower.
Silicon Valley must lead the way of AI just as we dominated the Internet age.
That’s why the “soak the rich” tax that Golden State voters will probably decide on in November won’t just hurt their own state, but the nation’s economy as well.
Stephen Moore is a senior fellow with America First Policy Institute and a co-founder of Unleash Prosperity.
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