Financial firms fleeing California in the exodus have cost the state a staggering $1 trillion.

The Cost ⁣of Financial Companies Leaving California

A new ‌Bloomberg analysis of over 17,000 corporate filings shows ‌that the exit ⁣of financial ⁢companies from California is estimated to have cost around $1 trillion when ​measured by assets ​under management.

The⁣ flight of individuals and businesses from California has long grabbed⁢ headlines, with⁣ many of those⁤ fleeing the Golden State ⁤citing factors like red tape and high⁢ taxes.

Now, the latest analysis from Bloomberg⁤ has put a ⁢dollar​ figure on one segment‌ of businesses leaving California, namely ⁢financial firms.

The analysis shows that from the beginning of ​2020 through March 2023, over 370 investment companies with some $2.7 trillion under ‍management ⁢moved their headquarters to⁤ a new state. The⁤ vast majority of those leaving were relocating from California and​ New York, with an estimated‍ value ⁢of assets ​under management at around $1 trillion each.

Texas was the top destination for‌ headquarter relocations from‌ California, ⁤according to the analysis, with companies attracted by factors like no state income ​tax and⁣ lower⁣ living⁣ costs for employees.

50⁤ Percent of Businesses Thinking of Leaving

It’s not⁣ just finance firms that are leaving but all manner of businesses, and many of those staying put for ⁤now ⁣are thinking about an exit.

“As ‌many⁣ as 50 percent of CEOs ‌are suggesting they’re planning to leave California,”⁤ Jim Doti, professor of economics at Chapman University, said in EpochTV’s‌ documentary, ‍”Leaving California: The Untold ⁢Story,” citing high taxes, regulations, ‌and housing prices as key motivating factors.

Mr. Doti said it’s not ⁢just about ‌a loss of tax revenue.

“The ⁤greatest loss to a state ‍is the loss of human capital, not ⁢just jobs or businesses,” Mr. Doti ​said. “If graduate students move to ‍Texas and Florida, it will have a⁤ negative impact that is‌ magnified because ‌we’re losing our best and‌ brightest.”

The latest estimate from Bloomberg, which puts​ a dollar figure​ on one part of⁤ the exodus, builds on other ‌data, such as from the Internal ⁣Revenue⁣ Service ‍(IRS), which showed that California lost a ⁢total of $47.1 billion in taxable personal income in 2020 and 2021 as hundreds of thousands of residents left.

According to ​IRS data, California lost $29.1 billion in taxable personal income in 2021 as 332,00 more taxpayers left ​the state than entered ‌it.

More Businesses Leaving

A study commissioned by the Los Angeles Area Chamber​ of Commerce shows ‍that the ‍number of companies‌ departing California nearly doubled between ⁢2012 ​and⁣ 2019.

“The ‌Golden State’s luster appears tarnished in recent years,” said the study authored‌ by economists and academics⁢ with the Inland ⁤Empire Economic Center. “A seemingly‌ endless stream of firms is leaving ​the state, citing high taxation, heavy regulation, other business costs, and anything but a business-friendly ‍environment.”

For the study,⁤ CEOs were asked what​ they think are the most ​significant challenges to running a business in California.

The typical immediate‌ response ‍to this ⁤question was, ‌”California is a​ very difficult place to do business,” the report states.

“CEOs perceive California to have an anti-business culture, where business is perceived by the​ media, lawyers, and politicians at the local and state levels as ‘evil’ and ‘caring ⁤only about profits,” according to the report.

Company executives⁢ feel that the relationship between public and private organizations is “adversarial”‌ rather ​than “collaborative⁣ and supportive,” the report’s ⁤authors say, making ‌it hard⁣ to meet‍ consumer needs while, at the same time, creating opportunies for business innovation and⁣ for employees.

“I have dealt with governments around the country, but the most business unfriendly adversarial government is California,” was ⁣a typical response⁣ by CEOs,​ as cited ​in the study.

Another major challenge to doing business in California, as ⁣mentioned by CEOs, was taxation “which is seen as excessive.”

This view is​ supported by various studies, including one by the Tax⁢ Foundation, which ‍ranked California #48 in the country on its state business tax climate index, which is based ⁣on a combination of individual income tax, sales tax,⁤ corporate ‍income tax, property tax, and unemployment ‌insurance tax.

$500 Billion in Lost ⁤Income

Over 700,000 people left California from April 2020 to July⁢ 2022‌ to ​relocate to other U.S. states, according ‍to U.S. Census‌ Bureau data.

The following map released on ‍March 30 by the U.S. Census ⁣Bureau shows net domestic migration for the United States, by county, for 2021–22.

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