According to a new study, Texas and Florida received the most IRS tax benefits from individuals migrating in, while New York and California saw the largest loss of tax revenue from migration of any state in the nation as citizens departed the deep-blue havens in droves.
A study of IRS migration data was undertaken by the online real estate portal MyEListing.com, and it revealed that California lost more than $340 million in 2021 IRS tax revenue as a result of residents moving.
California’s high personal income tax rates “seem discouraging for many high-wealth individuals despite its numerous attractions, from the booming tech industry and world-class universities to beautiful landscapes and cultural richness,” MyEListing noted in its report. “This will probably fuel a wealth migration out of California, coupled with the state’s high cost of living.”
The state lost well over 500,000 inhabitants between January 2020 and July 2022, with those departing outnumbering those moving in by about 700,000. California came in last on the U-Haul Growth Index, which assessed more than two million one-way trips last year as demand for trucks leaving the Golden State increased.
The departure from California is having noticeable effects. For the first time since becoming a state in 1850, the state lost a House seat in 2021. Another could be in danger if the population keeps declining.
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MyEListing’s findings also show that fewer people lead to a reduction in the tax base in California, which already has one of the highest tax burdens in the nation because to its 13.3% top income tax rate and other onerous taxes.
Gavin Newsom, the governor of California, said in May that the state’s budget deficit had increased to around $32 billion, or approximately $10 billion more than he had predicted in January when he unveiled his initial budget proposal. Lower-than-expected tax collection was one factor in the higher number.
The issue might only worsen. According to a recent survey conducted by a group of charitable organizations in California, more than 40% of Californians are thinking of leaving the Golden State. Nearly one-third of locals claimed that California’s liberal politics were the reason they wanted to move elsewhere.
Another significant issue for many is the high expense of living. Some people have also brought out additional social and cultural aspects, such as the homelessness epidemic that is wreaking havoc in big cities like Los Angeles.
Along with increased crime rates, LA has seen an increase in the number of homeless encampments that have appeared along the city’s streets, resulting in scenes of trash, needles, and even human feces and urine in public places. Numerous business owners have expressed their outrage about such encampments being so close to their places of business and the possible loss of clients.
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