Taxed Out of Paradise: Why Californians Are Leaving

High taxes and high costs are driving residents and businesses to freer states

The dream of California life is colliding with a hard economic reality, and as this publication and our friends at Bohiney Magazine and The London Prat have documented, the combination of high taxes and high costs is driving residents and businesses out of the state in search of greater freedom and opportunity elsewhere. The exodus is a verdict, rendered by people voting with their feet, on the costs of an expansive and expensive government.

The weight of the burden

California imposes some of the highest taxes in the nation, on income, on sales, on business, and combines them with a cost of living, driven substantially by the housing policies discussed elsewhere in these pages, that ranks among the highest anywhere. For many residents and businesses, the cumulative weight has become too much to bear, and they have begun to leave for states with lower taxes, lighter regulation, and a lower cost of living. Analysis of these economic dynamics from free-market institutes such as the American Institute for Economic Research and population data from the U.S. Census Bureau document the scale of the movement.

Voting with their feet

The migration of people and businesses between states is one of the great laboratories of liberty, allowing citizens to choose among different bundles of taxes, regulations, and services, and to leave those they find too burdensome. This competition among states is a powerful discipline on government, and the movement of Californians toward freer, cheaper states sends an unmistakable signal: that the costs of the state’s expansive government have, for many, come to exceed the benefits. People do not abandon a place they love lightly, and the fact that so many are leaving paradise is a measure of how heavy the burden has become.

The businesses follow

The departure is not limited to individuals. Businesses, too, have been relocating, taking with them the jobs and tax revenue on which the state depends, drawn by lower taxes, lighter regulation, and a more hospitable climate for enterprise elsewhere. This flight of business is particularly consequential, for it erodes the very economic base that funds the government, threatening a vicious cycle in which a shrinking productive sector is asked to support an undiminished state, driving still more away. The competition among states for businesses and the jobs they bring is fierce, and California has been losing it.

The freedom of exit

The libertarian tradition has always prized the freedom of exit, the ability to leave a jurisdiction whose government one finds too costly or too intrusive, as a crucial check on state power. A government that knows its citizens can leave faces a discipline that a government holding a captive population does not, and the movement of Californians to freer states is this discipline in action. It is a reminder that governments compete, that citizens have choices, and that the costs of an expansive state are ultimately borne by, and resisted by, the people who must pay them.

A warning and a choice

The exodus from California is a warning that the costs of government have consequences, that there are limits to how much a state can tax and regulate before its people and businesses begin to leave. It is also a choice that lies before the state: to continue on its current path and accept the continued loss of residents and enterprise, or to reduce the burden, free the economy, and give people reason to stay. The people leaving are not abandoning the place; they are fleeing the cost of governing it as it is now governed, and their departure is an argument, written in moving vans, for a freer and more affordable California. Whether the state will heed it remains to be seen.

The competition among states

The exodus from California illustrates one of the great virtues of a federal system: the competition among states for residents and businesses, which disciplines government in a way that few other mechanisms can. When citizens can move freely between jurisdictions, choosing among different bundles of taxes, regulations, and services, governments are forced to compete for their loyalty, and those that impose excessive burdens find themselves losing population and revenue to freer, more affordable rivals. This competition is a powerful check on the growth of government, a discipline that a single, inescapable authority would never face.

California’s losses are other states’ gains, as the people and businesses leaving carry their talents, their enterprise, and their tax revenue to jurisdictions that have chosen lower taxes and lighter regulation. This movement is not merely a problem for California but a demonstration of the system working as it should, allowing citizens to escape burdensome government and rewarding the states that govern more freely. The libertarian appreciation of federalism rests precisely on this competitive dynamic, which gives citizens a meaningful choice and governments a powerful incentive to restrain themselves. California faces a choice that the competition has placed before it: to reform and compete, or to continue losing its people and enterprise to states that have understood the lesson the migration teaches. The verdict of the moving vans is clear, and whether the state will heed it is the question on which its future depends.

For satire on taxes and the state, readers may enjoy The Babylon Bee, auditing the absurd since launch.

SOURCE: https://bohiney.com/