The great state of California has long been known as a land of opportunity—but also as the corner of the country to which all the sleaziness, greed, and stupidity of the nation eventually slide. Politically, it has been exactly that for about the past two decades.
As the Opinion Journal notes in an editorial in today's edition, California pols have done their level best to destroy the state's economy by abusing everyone who actually succeeds in fulfilling the economic promise laid down by the state in years past, in an endless stream of harassment done in the name of fairness, equality, economic justice, and other fine things. As the Journal editorial notes, the consequences of California's high and ever-increasing taxes and strangling regulatory apparatus are resulting in a turnaround of immigration patterns:
The latest Census Bureau data indicate that, in 2005, 239,416 more native-born Americans left the state than moved in. California is also on pace to lose domestic population (not counting immigrants) this year. The outmigration is such that the cost to rent a U-Haul trailer to move from Los Angeles to Boise, Idaho, is $2,090--or some eight times more than the cost of moving in the opposite direction.
What's gone wrong? A big part of the story is a tax and regulatory culture that treats the most productive businesses and workers as if they were ATMs. The cost to businesses of complying with California's rules, regulations and paperwork is more than twice as high as in other Western states.
But the worst growth killer may well be California's tax system. The business tax rate of 8.8% is the highest in the West, and its steeply "progressive" personal income tax has an effective top marginal rate of 10.3%, or second highest in the nation. CalTax, the state's taxpayer advocacy group, reports that the richest 10% of earners pay almost 75% of the entire income-tax revenue in the state, and most of these are small-business owners, i.e., the people who create jobs.
Of course, some will argue that this reversal of immigration is a good thing, as it will reduce overpopulation, etc., and reduce pressure on the state's resources. But Hongkong and Amsterdam are much more crowded than any part of California, and have almost no natural resources, yet they do just fine. No, regardless of any small good that may come of it, this demonstrates a huge and preventable failure on the part of the leadership of the state of California—and a stern warning to others.