San Francisco: Exodus of the Rich

(WSJ graphic)

California, and particularly San Francisco, have become undesirable places to live.

The people who pay the highest overall taxes (income, sales, property, gasoline) in the country have to endure a quality of life that is worse than average according to some indicators (crime, housing cost, air pollution). A sampling of previous posts on this blog:

February, 2018: Warning Signs
January, 2020: California Peaked 1-2 Years Ago
February, 2021: Urban Decline and Fall

Today the Chronicle confirmed the suspicion that rich people, those most desired by communities across the nation, left San Francisco in meaningful numbers: [bold added]

From 2019 and 2020, the number of people listed on a tax return in San Francisco fell by 39,202, a drop of 4.5%, according to data from the Internal Revenue Service. Residents who left made an average of about $138,000 per year in 2019, up 67% from the prior year, when departing residents had an average annual income of around $82,000. San Francisco’s net out-migration, which is the number of people on filings who moved out subtracted by the number of people who moved in, nearly tripled in one year...

The total income in 2019 of people who had left the city by the time they filed their 2020 returns was about $10.6 billion, which compares to $3.8 billion for those that came to the city. A net loss of almost $6.9 billion. The net loss in the previous year was also negative, but much less at $2.6 billion, according to the IRS.

Because the City doesn't collect an individual income tax, the effect of losing high-income people will largely be felt by local businesses. (The direct hit to San Francisco government will be in sales taxes, which fell "from $165 million in 2019 to $88 million in 2020," although some effect is undoubtedly due to working from home by out-of-town commuters.)

Perhaps more meaningful to a leave-or-stay decision than any statistic is the perception of how welcoming California is towards successful businesses.

The Progressives who hold sway in the big-city and state halls of power continue to harp on inequality as the source of California's problems. They focus on raising taxes on the prosperous instead of thanking them for their contributions to the community.

Emblematic of this antipathy was the exchange between then-assemblywoman Lorena Gonzalez and Elon Musk, who threatened to move Tesla out of state because of California roadblocks to Tesla operations. After her tweet in 2020 (below), the company, currently valued at $839 billion, moved to Texas.

Message received

— Elon Musk (@elonmusk) May 11, 2020

Californians continue to vote Progressives into office, so they must be getting the policies they wanted.