Unveiling the Money Trail: Tracking Financial Flows and Their Impact on Global Economies

Not even the allure of endless sunshine and stunning coastal vistas can prevent a growing exodus from California. The Golden State, long admired for its natural beauty, has experienced a staggering net income loss of $91.4 billion between 2019 and 2023, according to IRS data. This places California at the top of the list for financial outflow among U.S. states during this period.

In the most recent fiscal year of 2022-2023 alone, California saw a net income departure of $11.9 billion, marking yet another year as the leader in financial losses. These figures, released last week, illustrate a troubling trend that has raised alarm bells among economists who regard it as a “major concern” for the state’s economic health.

This trend is particularly worrisome as California considers implementing a wealth tax targeting billionaires, a move that some fear may further drive affluent residents away. The majority of those leaving California are relocating to nearby states such as Texas, Nevada, and Arizona, with a few making their way to New York or heading north to Washington state.

Jake Krimmel, a Senior Economist at Realtor.com, explained to the California Post that mass outmigration can have dire financial implications for a state’s local government, potentially undermining its economic stability and growth prospects.

The ex-Californians mostly headed to Texas, Nevada and Arizona — with others making the long trip to New York and some fleeing to Washington state.

Jake Krimmel, Senior Economist at Realtor.com told the California Post that anytime mass numbers of people move out of a state it can spell financial ruin for the local government.

“It’s not just the number of people that are leaving, but how much wealth or the income profile for the people that are leaving,” Krimmel said.

“California is a high income state, so anytime someone from California moves, especially for quality of life reasons to maybe buy a larger house or live in a more affordable area, that’s gonna be a lot of money leaving the states. That’s part of what’s showing up in the California numbers.” 

Krimmel told The Post the reason people are leaving is two fold — high taxes and low housing supply.

“California’s been chasing housing affordability issues for decades and it’s really born out of the housing shortage,” Krimmel said, adding that people are realizing you can get a lot more house for a lot less money in areas like Texas or Florida.

Alexander Efros, a certified financial planner and tax specialist said that California’s unfavorable tax policies are also to blame for driving people out of town.

“On the corporate income tax side, the highest marginal rate in Florida is 5.5% versus 8.84% in California,” Efros said.

“On the individual side, it’s a much bigger difference — Florida doesn’t have a personal income tax, whereas California has that highest marginal rate at 13.3%.” 

California ranks 48th in the Tax Foundation’s 2026 State Tax Competitiveness Index, and the impact, Efros said is starting be realized as more clients are opting to leave the state due to how much they can save in other parts of the country.  

“Now the trend is that more people are leaving California,” Efros told The Post. “Now we’re hearing their sighs of relief once they get their tax bill and realize that they’re not paying a six-figure or five-figure amount, just for the privilege of living in California.” 

California also doesn’t have a preferential capital gains rate, meaning regardless of how long you hold a stock, it’s all based on the marginal tax rate. 

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“If they’re a resident in California and they dispose of stock with a million dollars of gains, they’re gonna pay $133,000 in state income taxes,” Efros said, who was referring to a client that is considering moving due to this reason.

“If that same person moves to Florida and it’s a bona fide move, then they will save 133,000 if they go ahead and sell that same stock.” 

Efros added that with the stock market hitting all-time highs, many California residents are sitting on billions of unrealized gains.

So where are people going?

The top destination for people leaving the Golden State was Texas, according the report.

Between 2019 and 2023, nearly $28 billion in aggregated gross income left California and moved to Texas, representing roughly 230,000 tax filers.

Jenny Wallace, a realtor in Texas, said her state saw a huge influx of people buying up homes between 2022 and 2023, a trend that is continuing today.

“The prospects that were calling me was significant. There were times where I would have 10 closings in a month,” Wallace told The Post.

“Now there’s another wave of people coming from seeing how others have benefited from it.”

While experts told The Post they believe the trend will likely continue, Krimmel said the push from companies ending remote work might offer a silver lining.

“Before it was the case that people could keep their high salary job for a California company and live in Arizona or Texas and work remotely.

“But, if they’re being pulled back to the office, maybe we’ll see a little bit less of that,” Krimmel said, adding that it will depend on whether states and cities can make it a desirable place to live.