The IRS migration numbers are a reality check: New York and California lost hundreds of thousands of residents and billions in taxable income as people and capital moved to lower-tax states, and that shift is reshaping local economies, budgets and daily life for families left behind.
The raw IRS migration files show a clear pattern: between 2022 and 2023 New York and California posted a combined net loss of 373,309 people and $23.5 billion in adjusted gross income. This is not tourism or short-term moves; it is the tax base permanently relocating, and that has immediate budgetary consequences for schools, public safety and basic services.
Business leaders are sounding the alarm for a reason. “The crowd that keeps daring businesses to leave should treat this as a flashing warning sign. When jobs go, revenue goes as well and the affordability problem gets worse.” That is cause and effect, plain and simple: when firms and wealthy taxpayers exit, the burden shifts to households that can least afford it.
Promises to tax the rich often come wrapped in moral language, but the results land on the middle class. Wealth taxes and retroactive levies squeeze capital out of high-cost states, reducing investment, limiting job creation and forcing companies either to raise prices or cut payrolls. The people paying the price end up being families and small businesses that stay behind.
California offers a live example of these dynamics. The state recorded a net loss of 216,000 residents in 2025, with Los Angeles County alone shedding 54,000 people in one year. A retroactive wealth tax heading to the ballot — reportedly backed by a majority — and a push for a $30-per-hour minimum wage in parts of the state are accelerating exits by raising costs for employers and signaling an unfriendly climate for capital.
BLUE STATES ARE CHANGING THE TAX RULES ON THE WEALTHY AND IT’S GOING TO COST ALL OF US
New York is following a similar script. JPMorgan Chase CEO Jamie Dimon warned that politicians who think excessive taxation is “moral” are hurting the cities they claim to help, and that Americans “vote with their feet.” Proposals like a 9.5 percent property tax hike aimed at middle-class homeowners and raids on rainy day reserves show how quickly policy choices can squeeze the households that shoulder local economies.
People and money are heading toward states with simpler tax systems and lower rates: Florida, Texas, Tennessee and Nevada top the list. Between 2020 and early 2023 more than 370 investment firms managing $2.7 trillion in assets moved their headquarters to the Sun Belt, and both New York and California lost roughly $1 trillion in managed assets, a blow to local finance sectors and tax revenue streams.
On the spending side, experiments like guaranteed basic income pilots can sound compassionate but have real fiscal costs. Cook County’s $500 monthly payments to over 3,200 families and efforts to expand this to 100,000 residents nationwide raise questions about long-term funding and whether one-off cash programs create sustainable communities. A coalition labeled “Mayors for Guaranteed Basic Income” is pushing the idea broadly, but taxpayers are ultimately on the hook.
Price controls are the other wedge. Politicians blaming grocers for narrow net margins while pushing for caps on healthcare and rent ignore the way markets respond to interference. Average grocery net margins sit around 1.7 percent; squeeze those margins and expect lower investment, fewer local stores and rising scarcity in the long run. Rent freezes and other controls quickly reduce supply and deter new construction, worsening affordability rather than fixing it.
Polls show the consequences in real choices. A 2026 survey found 38 percent of Americans have already moved because their city became too expensive, with the rate doubling among Gen Z. As voters weigh their options, the logical decision for many is to relocate where costs are lower and governments leave more room for economic growth.
These are not abstract trends — they are real families deciding where they can afford to live and work. If political leaders keep prioritizing punitive taxes, sweeping spending experiments and price controls, expect more exits and a smaller revenue base to pay for promises. The central political question now is whether voters will hold the architects of this exodus accountable at the ballot box and in the marketplace.
1 Comment
The best is yet to come. Wait till the low information crowd that stays find out they get to make up the difference. Current lifestyles will be dramatically altered. That Aesop fable about the ‘Ants and Grasshoppers’ will play out in real time.