Gettin' Outta Dodge

Is anyone surprised that California is seeing a net outmigration, meaning more people (and businesses) are leaving the Golden State than are arriving? Certainly I'm not.

Considering how hard many in California have worked to turn it into a Nanny State, it wasn't a question of if it would happen rather than when. With the flagging economy, ever higher costs of state services, expanding state services and mandates, and an inability to be able to discriminate between need-to-haves and nice-to-haves, California's state budget woes could not have any other effect. It's not like the State Assembly can jack up the already high taxes and fees. All it would do is cause an already bad economy to become worse, making an unemployment rate of 8.4% higher.

California isn't the only state that's seeing a net outmigration.

New York, Michigan, and Massachusetts have seen the number of people leaving those respective states greater than the number entering. All three of them have high tax burdens on their residents and businesses, between income, sales, and property taxes. None of them, including California, seemed to recognize that their tax policies and business climate could lead to the flight of people and businesses to states with lower taxes and a more friendly business atmosphere.

New Jersey is another state that is doing its utmost to drive people and businesses to more friendly states. It's ironic that while the Garden State has seen quite a bit of job growth over the past few years, most of those jobs were with the state government. In other words, businesses weren't hiring because they weren't expanding, meaning New Jersey saw far less revenue than the employment statistics implied.

My own home state of New Hampshire has been fortunate in that we're seeing more people moving in rather than moving out. But that will change if the state legislature lays a whole host of new taxes and fees in order to balance the state budget. A few legislators have suggested adding a broadbased tax, like an income or sales tax, as if that would solve the problem. They've been reminded that states with those taxes already in place are in financial trouble, too. It's not a state revenue problem. It's a state spending problem.

Unless California, New York, Michigan, Massachusetts, and a host of other states can't get their budgets under control, do away with anti-business laws and regulations, and lessen the tax burden on their residents and businesses, they will feel this recession more deeply and for longer than those states holding the line on their spending, taxation, and regulations. As the saying goes, if you want less of something, tax it. California and the others are proof of that axiom.