A few points --
1. California has a net inflow of migrants. The net outflow of people to other states is more than offset by a net inflow from other countries. The Census Bureau estimates that in the year ending July 1, 2013, California had a net outflow to other states of 49,000, and a net inflow from other countries of 123,000, for an overall net gain of 74,000.
2. California ranks third among the states in overall net migration (including both state-to-state and international migration). The only states that had higher net migration last year were Texas and Florida.
3. California still is one of the most popular destinations for state-to-state migrants. According to the Census Bureau, only Texas and Florida drew more state-to-state migrants in 2012 -- Florida drew 537,000 people from other states, Texas drew 508,000, and California drew 493,000.
4. Although California gains a lot of state-to-state migrants, California loses more people to other states than it gains. The people who leave California for other states tend to be those in lower income brackets, not the wealthier people. That makes sense -- California is expensive and not everyone can afford it. Of course, the reason California is so expensive is because lots of people want to live here, and they bid up the housing prices. Some people in lower income brackets can't afford to stay, so they move to other states. The fact that lower-income people move out doesn't prove that California is undesirable. Quite the opposite: it's a byproduct of the fact that California is very desirable, and therefore very expensive.
![[Image: LowIncomeHHLeaveCA1.png]](http://www.trulia.com/trends/files/2013/02/LowIncomeHHLeaveCA1.png)
5. International migration has a significant economic impact on California. For example, Silicon Valley is full of immigrants from China and India who have come to the U.S. to start, or work in, tech companies. I know some of these people. They are my firm's clients. They are my neighbors. They have created many thousands of jobs and billions of dollars of wealth in California.
6. It seems misleading to base an economic analysis on the out-migration from California to other states (49,000 people last year) while ignoring the economic impact of immigration from other countries (123,000 people last year). But that's what the Tax Foundation's graphic does. It seems to me that the Tax Foundation is trying to create a narrative to the effect that high tax rates are driving wealth out of California. It's easier to tell that story if they ignore the wealth brought to California and created in California by immigrants. However, it's not a particularly good reflection of reality. And it begs the question of whether the net out-migration to other states is attributable to high-earning taxpayers being driven out by high tax rates or lower-earning residents being driven out by the high housing prices. The chart above tends to suggest that the issue is affordability, not tax rates, and the people who are leaving are the lower-income people, not the higher-income people.
7. That brings me back to a point I made earlier: the market is telling us that people want to live in California. Overall, people value living in California more than they value living just about anywhere else. The housing prices in California could not be so high unless people were willing to pay them. The market is telling us where people want to live.
1. California has a net inflow of migrants. The net outflow of people to other states is more than offset by a net inflow from other countries. The Census Bureau estimates that in the year ending July 1, 2013, California had a net outflow to other states of 49,000, and a net inflow from other countries of 123,000, for an overall net gain of 74,000.
2. California ranks third among the states in overall net migration (including both state-to-state and international migration). The only states that had higher net migration last year were Texas and Florida.
3. California still is one of the most popular destinations for state-to-state migrants. According to the Census Bureau, only Texas and Florida drew more state-to-state migrants in 2012 -- Florida drew 537,000 people from other states, Texas drew 508,000, and California drew 493,000.
4. Although California gains a lot of state-to-state migrants, California loses more people to other states than it gains. The people who leave California for other states tend to be those in lower income brackets, not the wealthier people. That makes sense -- California is expensive and not everyone can afford it. Of course, the reason California is so expensive is because lots of people want to live here, and they bid up the housing prices. Some people in lower income brackets can't afford to stay, so they move to other states. The fact that lower-income people move out doesn't prove that California is undesirable. Quite the opposite: it's a byproduct of the fact that California is very desirable, and therefore very expensive.
5. International migration has a significant economic impact on California. For example, Silicon Valley is full of immigrants from China and India who have come to the U.S. to start, or work in, tech companies. I know some of these people. They are my firm's clients. They are my neighbors. They have created many thousands of jobs and billions of dollars of wealth in California.
6. It seems misleading to base an economic analysis on the out-migration from California to other states (49,000 people last year) while ignoring the economic impact of immigration from other countries (123,000 people last year). But that's what the Tax Foundation's graphic does. It seems to me that the Tax Foundation is trying to create a narrative to the effect that high tax rates are driving wealth out of California. It's easier to tell that story if they ignore the wealth brought to California and created in California by immigrants. However, it's not a particularly good reflection of reality. And it begs the question of whether the net out-migration to other states is attributable to high-earning taxpayers being driven out by high tax rates or lower-earning residents being driven out by the high housing prices. The chart above tends to suggest that the issue is affordability, not tax rates, and the people who are leaving are the lower-income people, not the higher-income people.
7. That brings me back to a point I made earlier: the market is telling us that people want to live in California. Overall, people value living in California more than they value living just about anywhere else. The housing prices in California could not be so high unless people were willing to pay them. The market is telling us where people want to live.