‘Sometimes When You Tax the Rich, You Lose the Rich’: Americans Move Out of High-Tax States

Advocates of blue-state taxes on millionaires and billionaires say they’re targeting the wealthy, but experts say the taxes will expand to hit more Americans.

A U-Haul van in New York City. Chung I Ho/The Epoch Times

Companies, jobs, and families are moving out of blue states that are raising taxes to fund an expanding array of social programs.

On March 30, Washington state enacted a 9.9 percent “millionaire’s” income tax, transitioning it from a no-income-tax state that had attracted companies such as Amazon, Microsoft, Costco, Boeing, and Starbucks to one of the 10 states and districts with the highest income tax rates, along with California, the District of Columbia, Hawaii, New York, New Jersey, Oregon, Massachusetts, Minnesota, Vermont, and Wisconsin.

In signing the tax bill into law, Washington Gov. Bob Ferguson said, “Adoption of the historic Millionaires’ Tax makes our tax system more fair, and means free meals for K–12 students, the largest tax break in state history for small businesses, eliminating the sales tax for baby diapers, and sending a check to nearly 500,000 working families to make life more affordable.”

Meanwhile, Democrats in Virginia gained control of the governorship and the legislature in 2025 and have been working to implement a slate of new taxes that would put their state in the top 10. And Democrats in California, despite that the state already has one of the highest income tax rates in the country, are working, subject to a voter referendum, to impose an additional 5 percent “billionaire” wealth tax on assets, which they claim will be “temporary.”

Advocates of these measures say they are only taxing the rich—Washington state’s new income tax will apply only to income above $1 million, and California’s wealth tax will apply to assets in excess of $1 billion. But tax experts predict that, if history is any indication, these taxes will soon be expanded to cover many more residents.

“No one believes it’s going to be a one-off, one-time 5 percent wealth tax,” economist Arthur Laffer stated at a March 16 press conference. “If they can do it once, they‘ll do it twice. They’ll do it three times.”

When first ratified in 1913, the 16th Amendment, which for the first time gave Congress the authority to impose federal income taxes on Americans, was also sold as a tax only on the top 1 percent of earners. Since then, the net has been expanded to include virtually all Americans.

Ignoring Warnings

Some analysts have forecast that blue-state tax increases would deliver the projected revenues and would not cause residents to flee to low-tax states.

“State tax levels have little effect on whether and where people move—certainly not to a degree that should lead state policymakers to enact unaffordable tax cuts to attract people or avoid enacting productive increases focused on the wealthy,” tax policy analyst Michael Mazerov, a staffer of the Center on Budget and Policy Priorities, wrote in 2023. “Accordingly, policymakers in states like California, Connecticut, Illinois, Massachusetts, Minnesota, and New York should ignore warnings by anti-government advocates that state taxes are causing massive ‘tax flight.’”

But other analysts say that tax flight appears to be happening.

Wealthy residents “happen to be the most apt to flee the state,” Jonathan Williams, president and chief economist at the American Legislative Exchange Council, told The Epoch Times.

“Sometimes when you tax the rich, you lose the rich, and then at the end of the day states get little or zero revenue and people become taxpayers to other states,” he said.

While blue states are working to increase taxes, eight states—Alaska, Florida, Nevada, South Dakota, New Hampshire, Tennessee, Texas, and Wyoming—currently have no income tax at all, and they are attracting people and jobs.

Companies that have recently left California for Texas, Tennessee, Florida, and other red states include Oracle, Tesla, Chevron, Hewlett-Packard, McKesson, Yamaha Motor Corp., and Charles Schwab. In addition, Caterpillar and Citadel left Illinois for Texas and Florida, respectively.

Texas has ambitions to surpass New York and become the United States’ new financial hub with the establishment of the Texas Stock Exchange, dubbed “Y’all Street,” which is scheduled to begin trading this year. In 2025, the New York Stock Exchange launched NYSE Texas, which reincorporated NYSE Chicago into the Lone Star State, while the Nasdaq tech exchange established a regional headquarters in Dallas. Financial giants that have recently established major campuses in Texas include Goldman Sachs, JPMorgan Chase, and Bank of America.

In addition, over the past decade, approximately 250 financial firms relocated or expanded their presence in Florida, which now hosts more than 19,000 financial companies employing 119,000 workers with an average salary of $126,000, according to Florida’s Business Development Board of Palm Beach County. These companies include Goldman Sachs, Virtu Financial, Siris Capital, Elliott Management, Citadel, Point72, WorldQuant, and ECN Capital.

“We were told by governors in New York and mayors of New York City that New York was a luxury good and that people would pay whatever it took to stay there and have an office in Manhattan,” Williams said. “It turns out that calculation was wrong.”

Most recently, New York-based financial heavyweight Apollo Global Management has been scouting potential new locations in Texas, Florida, and Tennessee. In all, more than 370 financial firms relocated offices between 2020 and 2023, taking $2.7 trillion in managed assets with them, according to Bloomberg. California and New York have each lost an estimated $1 trillion in assets under management in the process.

“High‑tax states are running out of people to tax and businesses willing to absorb the cost,” William Flaig, financial manager and cofounder of the American Conservative Values ETF, told The Epoch Times. “IRS data shows high‑income earners leaving California, New York, and Illinois for lower‑tax states, weakening the fiscal base of those blue‑state economies.”

New York, California Losing Residents to Southern States

A 2025 report by the Heritage Foundation stated that from April 2020 to July 2023, 2.8 million more Americans moved out of high-tax states than moved in to them.

According to the website VoteWithYourFeet.net, New York led the exodus states, losing more than 1.7 million residents net between 2012 and 2022. California took second, losing 1.6 million, followed by Illinois, which lost 881,000. Rounding out the top five, New Jersey lost 350,000 and Massachusetts lost 284,000.

Between 2022 and 2023, nearly $12 billion in personal income left the state of California for states such as Texas, Nevada, and Arizona, according to an analysis of IRS data by Unleash Prosperity, a conservative think tank cofounded by Laffer and economist Steven Moore.

During that period, New York lost nearly $10 billion, Illinois lost $6 billion, Massachusetts lost $4 billion, New Jersey lost $2.6 billion, Maryland lost $1.8 billion, and Minnesota lost $1.5 billion. By contrast, Florida gained more than $20 billion; Texas gained $5.5 billion; South Carolina and North Carolina each gained approximately $4 billion; and Arizona and Tennessee each gained $2.8 billion.

And the migration to low-tax conservative states does not appear to be slowing down.

On an annual basis, the biggest exodus states according to 2024 census data were California (which lost approximately 240,000 people), New York (121,000), Illinois (56,000), New Jersey (36,000), and Massachusetts (27,000). The states that attracted the most people that year were Texas (which added approximately 85,000), North Carolina (82,000), South Carolina (68,000), Florida (64,000) and Tennessee (48,000).

And according to the most recent U.S. Census Bureau data released on March 26, many of America’s fastest-growing counties were in southern states such as Florida, Georgia, South Carolina, North Carolina, and Virginia. Nine of the top 10 fastest-growing counties with populations above 20,000 were also in the South, as were 45 out of the top 50.