How California Could Stop Its Population Exodus

California was once the land of opportunity, but it is going down the tubes. Several of California’s prominent cities have declared bankruptcy, such as Vallejo, Stockton, Mammoth Lakes and San Bernardino. Others are on the precipice, and that includes Los Angeles, California’s largest city. California’s 2012 budget deficit is expected to top $28 billion, and its state debt is $618 billion. That’s more than twice the size of New York’s state debt, which itself is the second-highest in the nation.

Democrats control California’s Legislature, and its governor, Jerry Brown, is a Democrat. California is home to some of America’s richest people and companies. It would then appear that the liberals’ solution to deficit and debt would be easy. They need only to raise taxes on California’s rich to balance the budget and pay down the debt — or, as President Barack Obama would say, make the rich pay their fair share.

The downside to such a tax strategy is the fact that people are already leaving California in great numbers. According to a Manhattan Institute study, “The Great California Exodus: A Closer Look,” by Thomas Gray and Robert Scardamalia (October 2012), roughly 225,000 residents leave California each year — and have done so for the past 10 years. They take their money with them. Using census and Internal Revenue Service data, Gray and Scardamalia estimate that California’s out-migration results in large shares of income going to other states, mostly to Nevada ($5.67 billion), Arizona ($4.96 billion), Texas ($4.07 billion) and Oregon ($3.85 billion). That’s the problem. California politicians can fleece people in 2012, but there’s no guarantee that they can do the same in 2013 and later years; people can leave. Also, keep in mind that rich people didn’t become rich by being stupid. They have ingenious ways to hide their money.

California has one-eighth of the nation’s population but one-third of its welfare recipients.

According to Businessweek, “it is one of the few states that continue to provide welfare checks for children once their parents are no longer eligible.” There’s nothing new about the handout strategy. As far back as 140 B.C., Roman politicians found that the way to win votes is to give out cheap food and entertainment, what came to be known as “bread and circuses.”

Given the widespread contempt for personal liberty and constitutional values, there might be a way for California politicians to solve their fiscal mess. They can simply stop wealthy people from leaving the state or, alternatively, like some Third World nations, set limits on the amount of assets a resident can take out of the state. This would surely be within their jurisdiction and would not raise any constitutional issues, because it would serve a compelling state purpose. In other words, if California were to set up border controls to stop people, as East Germans did at Checkpoint Charlie, before they cross the state line, such action would be protected by the 10th Amendment.

The fact that many Californians have managed to get their assets out of the state complicates the issue. Article 1, Section 8 of the United States Constitution authorizes Congress “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” This is known as the commerce clause. There’s no question that people who pull up stakes and leave California affect interstate commerce; California has less tax revenue, and recipient states have more. What California Attorney General Kamala D. Harris might do is sue Nevada, Arizona, Texas and Oregon in the federal courts for enticing, through lower taxes and less onerous regulations, wealthy California taxpayers.

Were California to take such measures and have a modicum of success, one wonders how many Americans would be offended by such an encroachment on personal liberty. After all, how would forcing an American to remain in a state differ in principle from forcing him to purchase health insurance?

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  • kafir4life

    I think this was something they did in the old Soviet Union. Individuals didn't have the right to decide for themselves where to live, and it was done based on what was best for the state. We'll get there…..we'll get there….we're getting there…..

    Some states already force former residents to pay their income tax even after they move. NY is one of them. Here's an example:

  • Schlomotion

    Mr. Williams should not even joke like that. I think people read these crazy ideas, even the sarcastic ones and then try to implement them as sound policy.

    Mr. Williams also left off that while the California legislature might be trying to rape the rich to pay for overspending, the rich are counter-raping the state with energy market manipulation.

  • Spider

    Cali is proposing a GPS device be added to every automobile so its owner can be taxed for every mile he drives. Of course the 40% gas tax will stay in force as well. What's next? Actually the authors sarcasic proposal is not so rediculous Cali hit a relative of mine with a car "exit tax" after she had fled the state which is what I plan to do soon…

    • dmw

      Reminds me of when I went to Mexico City (from Texas) back in the late 70s. When entering Mexican Customs my friend had to get a special piece of paper for his automobile. And when he exited Mexico after a two week stay, he'd better be exiting in the same car or else a big tax or big fine. Two ways to get around it: either provide the appropriate papers of sale and, more importantly, that the 100% Mexican tax on car transactions was paid, or bribe the customs official (called a "mordida")..

    • Neal

      Smart idea……..this is just the start as these pensions loom larger everyday.

  • UCSPanther

    In my stats class, we did an exercise where we sorted the US States by per capita and income and correlated them with teenage motherhood, and I noticed that many of the more socialist states, such as California had the highest per capita incomes.

    I am thus led to the conclusion that having high wealth without vigilance and critical thinking can lead to complacence and decadence, which in turn often leads to stupidity as in the case of California. I suspect that if California was not as rich as it was, they would have probably been more guided by common sense.

  • Thomas Wells

    Illegal immigration from California?

  • tagalog

    The fear of the government of California that wealthy Californians might flee California for some other state if they are taxed more is the same fear that inspires the 150-year-old movement to put more and more power in the hands of the federal government and standardize our laws. Can't have people being free to choose between a state with oppressive tax laws and a state with easy tax laws, can we?

    That wouldn't be fair, now would it? It would only be free, and we can't have freedom – if we have freedom, some will succeed and some will fail. Can't allow that.

  • texasron

    I'd like to see the other states deport all of their illegals to California.

    • Tanstaafl jw

      Isn't Mexico doing that already?

  • Ar'nun

    Dr Williams brilliance is unmatched. Although I wish he wouldn't give the Demobrats any ideas, especially ones like this. I live in Mass, we have some similar problems. It has become so bad here that they acuallty took away a Congressional seat from us. Don't get me wrong, one less Massachusetts Taxocrat in Congress is great. I hope to see oon a Mass Delegation of 3 Congrssmen and 1 Senator and if we keep loosing population, that might not be too far off. My problem being is no onw will buy my house unless I take a huge loss, and then I wouldn't be able to afford the gas to move out of state anyways.

    • Karen

      They can't take your senator. Every state gets two, regardless of size or population.

  • johan

    make sure to keep the muslims out that will help.

  • Questions

    There is relatively little California, on its own, can do to stop the outflow of its population (read: white population). But there is somehting very big that Washington, D.C. can do: Stop Mexican immigration.

  • Barb3000

    Well I just read that LA is 45 % Latino with a large percentage illegal. All these women have to do to sign onto the welfare roles is to produce one kid which is a instant US citizen because it was born here. That opens the doorway to free medical, food stamps,help with housing and the more they have the more freebies they get. This one of the number one reasons why the state is going broke and trying to make it up with taxes. There are at least 3 million illegals living in this area and these people do not pay state taxes. From what I understand there isn't money to even fix the pot holes or anything else this is why people are leaving.

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  • Skypenguin

    People are leaving California because they cannot find good jobs. Rich people claim that its because of marginal tax rates. I see constant examples in Bishop and Mammoth Lakes that people want to stay for the culture and outdoors, but are forced to leave looking for opportunity.