You would figure that despite the exorbitant taxes, knee-jerk policies, and stifling business regulations, billionaires would find a way to stick it out in the Golden State. Apparently, even they can’t handle it…
Jeffrey Gundlach is a billionaire bond manager who lives in California. He is seriously considering leaving the Golden State, following the footsteps of Elon Musk, Joe Rogan, and Ben Shapiro, “to name just a few.”
Why leave? It would, according to Gundlach, “to escape the incompetent governance” and “massive income tax increases on job creators (AKA ‘the wealthy’)” buried in the state’s DNA.
Gundlach is not saying where he plans to move, but he recently tweeted a selfie where he was wearing a cowboy hat with two cowboy wranglers in the background.
California, like many high-tax-and-spend states is going broke as the coronavirus stifles revenue. Sacramento lawmakers recently proposed another 0.4% wealth tax on anyone whose net worldwide wealth exceeds $30 million. That wealth tax proposal includes (a probably unconstitutional) exit tax for anyone who chooses to leave the state, and it will remain in effect for ten years.
So, California is a microcosm of the rest of the nation. Its top 1 percent of income earners pay 45 percent of California’s income tax. According to the IRS, over 50,000 Californians left the state between 2017 and 2018, shrinking the California tax base by $24.6 billion.
The recently proposed additional tax increase for the not-so-rich would cap the state’s highest income tax rate to 16.8% from its current 13.3%. Also, Californians can expect a ballot initiative increasing property taxes for commercial and industrial properties, based on their subjective market value, rather than what the owners paid.
California, unlike the federal government, must balance its budget. Its current deficit, again, mostly because of the COVID-19 pandemic, is $54 billion.
Like New York, high taxes aren’t the only reason the wealthy are fleeing. The quality of life in California is on a downhill slope. Californians are dealing with a high cost of living, civil unrest and riots, devastating wildfires and rolling power blackouts.
Other factors include:
An exodus of middle-income residents, mainly because of high housing costs. According to census figures, in 2018 California lost about 190,000 residents. California median home costs are beyond the reach of the average wage earner — $827,000 in Santa Cruz County, for example.
Texas leads the pack as the preferred destination for California refugees. The U.S. Census Bureau’s annual American Community Survey found that just over 86,000 people headed for the Lone Star State. Other popular destinations for California’s disillusioned dreamers included:
- Arizona: 68,516 people
- Colorado: 28,288 people
- Florida: 26,888 people
- Nevada: 50,707 people
- Oregon: 43,058 people
- Washington: 55,467 people
- Virginia: 21,210 people
- Idaho: 21,018 people
A Democrat stranglehold on State politics means that conservative candidates never make the final cut on most state ballots. Except for presidential primary and a few other local offices, the top two candidates who receive the most votes are the only choices voters have in the general election. Under this system, it is unlikely that California will ever elect another Republican senator, for example.
So, as wealthy taxpayers like Gundlach and middle-income residents head in four directions, California liberal leaders have historically said “good riddance.”
But there could be another wildfire approaching if President Trump wins reelection and the Republicans hold the U.S. Senate.
Up to now, Governor Newsom has relied on federal bailouts and loans. Lawmakers have only one choice when they are out of money, and more Californians may vote with their feet rather than pay still higher taxes.
Featured Image by Ken Lund