In law school, I had a law professor in taxation who stated that taxes do not have any affect in terms of where one chooses to live. This is obviously false and inaccurate. Recently, an Associated Press story titled: "Californians look for the exit", states that 144,000 people have left in 2008. Did they leave California because the weather isn't good? No--California has some of the best weather in the entire nation. Did they leave because the women here are ugly? No--as many realize, the women in California are some of the most attractive on the planet. California has beaches, deserts, lakes, parks, and beautiful vistas; it was literally a city on a shining hill, but it has decayed remarkably in just a couple of decades.
So what is killing California? California has a lot of uncompetitive tax policies, including a high state income tax (9.3 or 10.3%), a high corporate income tax rate (8.84%), a high sales tax rate of 7.75% (in most localities in California, it is even higher). Since California has to compete with other states like Nevada that do not have a state income or state corporate tax (in fact, it is actually written into the Nevada state Constitution that such taxes are not permitted--ever!), it is not a surprise that the unemployment rate is rising in California as the most productive citizens have chosen to live in places that enable them to be richly rewarded for their productive enterprises. Further, there is no evidence that California's political culture seems amenable to the changes that are taking place. It is almost as though California is more interested in joining the European Union where it can be among other nation states that have catastrophic taxes that impede economic development. California has a state legislature that is overwhelmingly liberal, with seats held by almost two-thirds by Democrats who have no interest in promoting any policies that will result in lower unemployment here. California is in a state of decline, and no one is taking up the call to reverse it. Sad.