More taxpayers are leaving California than moving to it. That trend started in the pandemic, and new data show it’s still going.
The non-partisan California Legislative Analyst’s Office released a report last week which found many California taxpayers continued to move out between 2021 and 2022, even as the pandemic slowed down.
LAO Principal Fiscal and Policy Analyst Chas Alamo said changes to the population of taxpayers in the state aren’t big enough yet to have an impact on the budget.
“This is a small percentage of [the] total population,” he said. “But that gap is as large as it’s been in the historical record.”
He added that if net migration out of state continues at the same rate, it could become a drag on the money the state brings in through personal income tax.
The 2022 IRS data cover only domestic migration of taxpayers, so it does not include international moves or households that do not pay taxes.
The California Department of Finance released a report earlier this year that says population growth more broadly in the state ticked up a bit in 2023.
The IRS data show Texas and Florida benefited most from California taxpayer moves, but Alamo said most of the moves were closer to home.
“By and large, all of the western states are more likely to be the destination of tax filers who move out of California,” he said.
The data also show more middle and higher-income households are relocating post-pandemic, when before, it was mostly lower-income households that left.
Still, Alamo said the housing crisis is likely a factor.
“A trend that we've spotted over the last several decades is that net out migration of this magnitude tends to coincide with periods of high housing costs in the state,” he said.
If California builds more homes and keeps prices in check, it could help the state’s bottom line in the long run.
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