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By EJ Antoni*
California is hemorrhaging its greatest resource—people—at an alarming rate. Despite beautiful landscapes, an abundance of natural resources, and some of the best weather in the country, unwise government policies are driving the Golden State into the ground.
Many of those policies can be traced back to state and local elections, which can have a far greater, and more direct, impact than general elections on the lives of most Americans. California is a perfect example.
States are laboratories of democracy and people ultimately vote with their feet. In California, that vote is clearly one of disapproval. Almost 370,000 more people are leaving the state annually than move there. The bleeding is so bad that California lost a seat in Congress for the first time after the 2020 census.
Why is everyone leaving? In short, California’s misguided leadership has turned the state’s finances into a complete basket case.
Because California’s lockdowns during the pandemic were so strict and lasted so long, its economy went into a tailspin and then only grew anemically compared to the national average. Unemployment and subsequent unemployment claims were abnormally high, and the state did not have the funds to pay unemployment benefits. The result is that the state owes the Treasury’s unemployment trust find almost $18 billion, which will have to be financed by increasing taxes on state businesses.
The Golden State is already home to some of the highest tax rates in the country. The top marginal income tax rate is 13.3% and the state sales tax rate is 7.25%, both the highest in the nation. It has the fifth highest overall state and local tax burden in America.
California also has one of the highest corporate tax rates and is ranked the third worst business tax climate. Additionally, it has the highest gasoline and diesel taxes in the nation, about 68 cents and 100 cents per gallon, respectively.
Meanwhile, 22 states reduced individual income tax rates and 13 reduced corporate income tax rates in the last two years, leaving California in the dust.
Compounding the burden on residents, California’s elected officials have relentlessly pushed the state towards unreliable and expensive “green” energy, leaving Californians with the sixth highest cost of electricity in the country, about 80% higher than the national average. So, after being taxed to death, residents are faced with a higher cost of living. No wonder people are leaving California at a record rate.
Where those people are going is also informative. Californians are primarily fleeing to Arizona, Colorado, Florida, Nevada, Oregon, Texas, and Washington state. The states in that list are quite varied in terms of political leanings, which demonstrates that California’s problems are about policies, not political parties.
Neither Democrats nor Republicans have a monopoly on ineffective, or even counterproductive, policy.
Texas, a state dominated by Republican political control, has vastly expanded its dependence on unreliable “green” energy and the Lone Star State had widespread blackouts from wind and solar failures during a winter storm in 2021. But blackouts have become commonplace in California.
Not only are people abandoning the Golden State in droves, but it can’t even keep the lights on for the people who remain. To avoid rolling blackouts, residents are having to set their thermostats to 78 degrees, not use major appliances, and not charge their electric vehicles. Ironically, California is also banning the sale of non-electric vehicles in just a few years, so residents may be unable to drive the only vehicles they can buy.
With these many public policy disasters at the state level, it is no wonder the Golden State is going south in a hurry. California is sinking like the Titanic—but at least the Titanic had its lights on when it went down.
*EJ is a research fellow for Regional Economics in the Center for Data Analysis at The Heritage Foundation.
This article is part of an agreement between El American and The Heritage Foundation.