Headed Out of California? Housing Costs Not Income Tax Driving Migration to Other States

California has experienced negative domestic migration in recent years. The increase in the number of residents moving out of the Golden State to other places in the United States is often blamed on California’s high personal income taxes. In fact, this was one of the main arguments waged against the recently enacted Proposition 30, which raised the statewide income tax rate as a way to address the state’s fiscal woes. However, data from the U.S. Census Bureau show that the perceived connection between out-migrants and the state’s income tax is likely overblown. Statistics on the characteristics of California’s inbound and outbound migrants suggest that the patterns in domestic migration over the past decade are more related to housing costs in the state than to the local income tax structure.