California’s Fiscal Cliff: As Residents Flee, California Trades Wealthy Residents for Poorer Ones

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New IRS data shows wealthy Californians are fleeing the state and poorer Americans are moving in, signaling a fiscal crisis with the state’s future tax revenue. Reform California warns that the remaining middle class residents will now face tax increases to keep the state’s social services afloat.

A riddle has emerged for Californians and their politicians: if the taxes of wealthy residents are used to pay for programs for poorer residents, and the wealthy residents move away, then who is left to pay for those services?

We’ll soon know the answer. According to new data on people fleeing our state, California could be facing a new fiscal crisis and on a path toward not being able to pay for its generous social service programs.

Reports from the U.S. Internal Revenue Service (IRS) show that 716,948 Californians moved to another U.S. state or territory between 2020 and 2021. In that same time, 385,188 Americans moved into California — making California’s net population loss 331,760 residents.

And those people took $29 billion in taxable income with them — or $183,737 on average. Meanwhile, those that moved into the state earned much less at $87,000 on average.

Carl DeMaio, chairman of the tax-fighting organization Reform California, says that the main cause for the wealthy and businesses fleeing California is the amount of taxes and regulations.

“California’s liberal politicians in the supermajority run the state as a grand experiment in socialist wealth redistribution — they tax wealthier individuals and large businesses at high rates to pay for their vast social programs, handouts, and freebies — and every day thousands of Californians are saying enough is enough and just moving away and taking their tax dollars with them,” explained DeMaio.

DeMaio says the state’s fiscal model of taxing productive workers to pay for the poor is unsustainable, especially if a net loss in migration continues. But the kicker, he states, is that Sacramento’s solution to balancing the budget will be to target the wallets of remaining Californians.

“The politicians aren’t going to make any cuts to their social programs to balance the budget — no, they’re going to increase your taxes to make up for the difference from higher earners fleeing the state,” DeMaio explained.

“Ironically, that will push more people to flee the state and could put us in a different unsustainable financial situation of continuous tax increases,” he continued.

But DeMaio says that there is hope to fight tax increases and even repeal previous taxes to attract high earners and businesses back to the golden state. The reason? The California Taxpayer Protection Initiative.

The California Taxpayer Protection Initiative is a measure that will appear on the California ballot in 2024. It would require that any taxes or fees must be approved by a two-thirds vote of the California State Legislature and a vote of the people of California. The measure also prevents the government from charging a ‘fee’ for what is really a tax.

Passing the initiative would immediately block and repeal a number of California’s taxes, including the Mileage Tax, the Gas Tax, Utility Taxes, and more.

DeMaio and Reform California are leading the campaign to pass the Taxpayer Protection Initiative to make California more affordable and stop further tax increases in their tracks. Join the campaign today to fight back.

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