May 31, 2012
Anyone who still believes in Keynesian economics and the welfare state need only look to California. The state is mired in debt, Gov. Jerry Brown needs a massive tax increase just to keep state government on life support, and productive residents and business owners are leaving California in droves for Colorado and other states that Americans used to leave for California sun.
Our sister paper, the Orange County Register in southern California, reports new data on the “outmigrating” of Californians to other states that should be enough to panic Brown and other California politicians. The figures come from a new calculator created by the Tax Foundation. It’s online at: interactive.taxfoundation.org.
During 2009-10, the latest period for which reliable data was available, 406,833 Californians migrated to other states. Meanwhile, only 281,521 people came to California, and a high number of them were foreign immigrants with lower incomes than the Americans who left. Net outmigration was 125,312. The Tax Foundation calculates lost economic activity from those who left at $10.6 billion. With local and state taxes taking about 10 percent, the imbalance between California’s outmigration and immigration cost the state about $1.6 billion in lost tax revenue for just one year.
The Register used the calculator to calculate the past decade, 2000-10, and found that 4.9 million left the state. Meanwhile, only 2.5 million came in. Net out-migration was 1.4 million. Yearly lost economic production was $146 billion. Lost tax revenues totaled about $14.6 billion a year. That’s almost twice the $8.5 billion Gov. Brown seeks in his tax increase on the November ballot.
“Of course, people who leave no longer use state services. But those who left arguably were more productive Californians. If they had wanted to subsist on welfare, they never would have departed a state with some of the most generous benefits in the nation,” states a Register editorial.
Business-location consultant Joseph Vranich, who heads Spectrum Location Solutions in Irvine, Calif., told The Register he blames the state’s bad business climate, bad school performances, and traffic congestion. He calculated that 254 businesses left California in 2011. “It seems to be at the same level in 2012,” Vanich told The Register. “I still have alerts coming in. The exodus continues.”
Like Colorado Gov. John Hickenlooper, Iowa Gov. Terry Branstad tries to lure unhappy California business owners to his state. It’s fairly easy, because Iowa’s schools perform better, traffic runs better, businesses are not leveraged by overwhelming state-government debt, taxes are lower and regulations are not hostile to prosperity. Gil Duran, Gov. Brown’s spokesman, apparently thinks the whole thing is funny.
“This is a Republican myth that is often repeated, yet simply not true. Reputable studies have shown that businesses are not fleeing the state for the cold, empty and desolate hinterlands.”
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Get serious, Mr. Duran, your state is going out of business. Most business owners aren’t surfer dudes. They want and need prosperity, which California punishes. And here are the cold hard facts: Iowa’s unemployment rate in April was 5.1 percent; California’s was 10.9 percent. From 2000-10, 17,575 Californians left California and moved to Iowa.
California’s liberal politicians and bureaucrats have no clue what economic devastation their tax-and-spend, anti-business policies have wrought for California. Let’s not make the same mistakes in Colorado, where we were smart enough to elect a real businessman to head state government’s executive branch.
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