High Taxes Leading Cause of California Exodus: Economist

By Rudy Blalock
Rudy Blalock
Rudy Blalock
July 18, 2022 Updated: July 18, 2022

People are leaving the Golden State primarily because of high taxes, according to an economist at Chapman University.

Jim Doti, president emeritus of Chapman, whose A. Gary Anderson Center for Economic Research forecasts economic trends, conducted a survey with 75 different metropolitan areas around the nation, looking at taxes and housing prices in those areas.

Doti said it is high taxes, rather than high housing costs, driving Californians to move to other states.

“The taxes are too high, nothing is being done now,” Doti said in an interview with EpochTV’s “California Insider” program.

Californians and businesses are leaving the state at a high rate, according to Doti. In the last 5 years, California has experienced a net loss of 750,000 people, he said.

Out of those, 62 percent moved to Texas, Florida, Nevada, and Washington which are all zero-income tax states, according to Doti.

Chapman, University of California (UC)–Irvine, and UC San Diego conducted a survey of 150 CEOs throughout the state, 42 percent of which said they’re considering moving their businesses out of California.

When asked on a scale of 1 to 5, with 1 being the worst, how California ranks in terms of doing business, two-thirds responded with an average score of 1 or 2, Doti said.

“More attention should be given not only to the high rate of tax versus other states, but also the significant regulatory burdens being placed on businesses that make it more expensive to compete in a global environment,” Doti said.

To the contrary, Gov. Gavin Newsom, in his May 13 revised California Blueprint proposal, said taxes are not the reason folks are moving, but rather a lack of affordable housing.

“In many respects, it’s not taxes … taxes in places like Texas are higher than taxes in California,” Newsom said. “But housing prices are a big driver” of people leaving the state.

But Doti said that Texas only has a higher real estate tax. Other taxes—like sales, corporate, and state income—are higher in California, Doti said.

“It just bothers me that our governor would say something that is so untrue and misleading. To take one tax and make a general statement about it,” he said.

Doti said that despite state officials attempts to build new housing, which would lower the cost, California has only been producing 100,000 to 120,000 houses annually for the last 5 years.

“I do not deny the fact they’re throwing a lot of money at the problem, but it’s not resulting in additional housing … so the state is not accomplishing its goals,” Doti.

His economic research team at Chapman forecasts about a 12 percent year-to-year drop in housing prices.

He said this is because mortgage rates are expected to rise, which will cause housing affordability to decline, along with the demand for housing.

Rudy Blalock