Drain the Swamp · IRS Tax Flight · May 2, 2026

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They Raised Taxes. Everyone Left. Now Hochul Is Begging Them to Come Back.

• −$23.8BCalifornia single-year AGI lossfrom domestic out-migration — the 2021–2022 peak filing year— IRS Statistics of Income
• +$20.65BFlorida single-year AGI gainthe largest single-state inflow in the U.S. — more than the next two states combined— IRS Statistics of Income · 2022–23
• $11Illinois rate of income loss per $1,000 earnedhighest rate in the nation in the 2022–23 filing year — population declined for the 10th straight year— Illinois Policy Institute · IRS SOI
• 28.6%Downtown Chicago office vacancy raterecord high. San Francisco 28%. Manhattan 22.7%. All record highs. U-Haul Growth Index: California dead last 6 consecutive years— CBRE · U-Haul Holding Co.

$11.9 Billion Out of California. $20.65 Billion Into Florida. These Are Tax Returns, Not Projections.

Every year, the Internal Revenue Service publishes Statistics of Income migration data — tax returns filed by people who moved between states, showing how much adjusted gross income (AGI) moved with them. It is the most complete, most reliable measurement of wealth migration in the United States. There is no survey error. The money either filed a return at a new address or it didn’t.

The 2022–2023 IRS data — the most recent complete filing year — shows California lost a net 100,397 tax-filing households and $11.9 billion in AGI to domestic out-migration. New York lost 71,987 households and $9.9 billion. Illinois lost 28,609 households and $6 billion — and the Illinois Policy Institute analysis shows Illinois led the nation in rate of income loss: more than $11 per $1,000 of total state income walked out the door. The prior filing year (2021–2022) was worse: California lost $23.8 billion in a single year; New York lost $14.1 billion.

Illinois’s Departing Taxpayers Earn 33% More Than Its Arrivals

The story is not just about how many people left. It’s about which people left. In Illinois, IRS data shows the average adjusted gross income of those leaving is $104,432 — versus $78,784 for those moving in. A 33% income gap between departures and arrivals, every year, compounding. High earners — those reporting over $200,000 — are leaving at twice the rate of other income groups. Illinois led the nation in the rate of income erosion in 2023.

Massachusetts lost approximately 182,000 residents to domestic out-migration over five years. The average AGI of those leaving Massachusetts: $141,672 — the highest departure income in the nation. Boston’s Greater Chamber of Commerce Foundation reports that 26% of residents aged 20–30 plan to leave within five years, with nearly half looking at the Southeast or Southwest.

New York City lost approximately 114,000 more domestic residents than it gained in 2025. NYC’s international migration simultaneously dropped 70% — the immigration supplementing its population decline is drying up. New Jersey’s effective property tax rate of 2.23% is the highest in the nation; combined with a top state income tax rate of 10.75%, the state lost 19,370 net households and $2.55 billion in AGI in 2022–2023 alone.

The money goes directly to Florida. Palm Beach County, Florida received a net $4.9 billion in AGI inflow in the 2022–2023 IRS year — making it the #1 AGI-gaining county in the entire United States. The average income of those moving into Palm Beach: $178,085. The average of those moving out: $98,527. Eight thousand New York City tax filers relocated to the Miami–Palm Beach corridor in 2022–2023, bringing $1.54 billion in AGI with them.

California: 13.3%. Florida: 0%. The Math Isn’t Hard.

The states people are leaving uniformly have the nation’s highest income tax rates. California’s top marginal rate is 13.3% — the highest in the country. New York State reaches 10.9%; New York City adds its own income tax, pushing the combined rate to 14.776% for city residents — the highest combined state-and-local income tax in the United States. New Jersey tops out at 10.75%. Illinois imposes a flat 4.95% income tax but pairs it with the second-highest property tax rate in the nation (2.07% effective rate).

The states absorbing the outflows — Florida, Texas, Tennessee, Nevada — have no state income tax. A $150,000 earner moving from New York City to Florida saves approximately $14,300 per year in eliminated income taxes alone. Over ten years: $143,000, not counting investment returns on that capital. Over a career, the arithmetic compounds into generational wealth.

Historically, high-tax advocates argued these states offered superior services justifying the premium. That case is increasingly hard to make when downtown San Francisco has a 28% office vacancy rate, Chicago’s downtown has a 28.6% vacancy, and New York City faces a $936 million budget hole from collapsing property tax revenue.

San Francisco: 28% Vacant. Chicago: 28.6%. Manhattan: 22.7%. All Record Highs.

Population loss compounds into commercial real estate collapse, which compounds into property tax revenue collapse, which compounds into budget deficits, which drive more tax increases, which drive more population loss. The economists have a name for this spiral. The governors don’t.

San Francisco’s overall office vacancy rate was 28.0% in Q1 2026 — down from its catastrophic 35.1% peak in Q2 2025 but still more than four times the pre-pandemic rate. The Westfield SF Centre, formerly the flagship downtown mall, officially closed January 24, 2026, after reaching 95% vacancy. The city faces a $936 million budget deficit driven partly by declining property tax revenue: the city received 9,000 property tax appeals in 2025 — a 25-year record — and is projected to lose $150–200 million annually in property taxes by 2028.

Chicago’s downtown office market hit a record 28.6% vacancy in Q1 2026. The suburbs are worse: 33.4% — the 21st consecutive quarter of record highs. Among the departures: Boeing and Citadel, two of the city’s highest-profile corporate anchors. Gov. J.B. Pritzker (D) signed the largest budget in Illinois history for FY2025 — $53.1 billion, up $15 billion since he took office — adding $1.1 billion in new taxes. Illinois has had ten consecutive years of net population decline.

Manhattan’s overall office vacancy reached 22.7% in Q1 2026 — a record. Projected above 20% through the end of the year. Pre-pandemic: below 8%.

Hybrid Work, the Lease Rolloff, and Class B Obsolescence Hit Every City. The Same Storm Left Miami at 12.5% Vacancy and San Francisco at 28%.

In fairness to the governors: office vacancies are not driven by tax flight alone. Three structural forces — the shift to hybrid work, a wave of pre-pandemic lease expirations, and the obsolescence of older Class B and C office stock — would have hit every American downtown regardless of who occupied city hall. A serious accountability case has to start by saying so.

Hybrid work is the largest single force.Kastle Systems’ Back-to-Work Barometer, which tracks actual badge swipes inside office buildings, shows weekly U.S. office occupancy at 56.3% — a post-pandemic high, and still roughly 17 percentage points below the pre-2020 norm. New York reached 59.5% and Chicago 55.6% — both new pandemic-era records. Both are also a long way from the buildings being full. Companies need less square footage per employee than they did in 2019, and every lease that expires is an opportunity to give floors back.

The lease cliff compounds it. A Newmark second-quarter 2025 analysis identified roughly 1.4 billion square feet of pre-pandemic office leases scheduled to expire between 2025 and 2027 — with expirations peaking in 2026. CBRE’s tally for Manhattan alone: 46.4 million square feetrolling off across 2025–2027. And when tenants renew, they renew smaller. CBRE’s analysis of recent leasing data shows average renewal sizes are down roughly 21% versus the pre-pandemic baseline; brand-new leases are down 32%. Every expiration is structurally a vacancy event.

And the buildings going dark are not random.Class A “trophy” buildings — newer, well-amenitized, in prime locations — are absorbing positive net demand. Cushman & Wakefield’s Q1 2026 data show Class A net absorption at +1.4 million square feet in a single quarter and +18.7 million square feet over the trailing four quarters. Trophy assets in Miami, Manhattan, and San Francisco have set all-time-high rents. The vacancy is concentrated in older Class B and C stock that can’t compete on amenities, efficiency, or floor-plate flexibility — exactly the buildings that need demolition, conversion, or sustained subsidy to find a second life.

All of that is true. None of it explains the gap.

Miami absorbed the same hybrid-work shock as San Francisco. The same lease cliff. The same Class B obsolescence problem. Miami’s downtown vacancy is now 12.5% — the lowest among major U.S. markets — and Brickell, its core financial submarket, sits at 3.7%. Trophy rents in Brickell now rival Manhattan’s. Manhattan itself has clawed its way down from a 22.7%-availability peak to around 13% direct vacancy on the most recent Yardi and CommercialCafe data, largely by passing aggressive office-to-residential conversion incentives. Even Austin — a red-state, no-income-tax Sunbelt boomtown — sits at 26.2% vacancy, an artifact of the 2020–2022 overbuilding cycle. Hybrid work hurt everyone. It did not break everyone equally.

What Blue Cities Did to Themselves on Top of It

San Francisco — Proposition M (1986) caps new office construction at 950,000 square feet per year and Proposition D (2020) imposes a graduated vacancy taxof $250 to $1,000 per linear foot of frontage on storefronts empty more than six months — the first such tax in any major U.S. city. The combination effectively rations new product on the supply side while penalizing owners on the demand side as Mid-Market resembles, in the SF Standard’s own words, a “ghost town” during business hours. Open-air drug markets that were swept for the 2025 Dreamforce conference were back to capacity within seven days of the badges leaving town. Companies can mandate return-to-office. They cannot mandate that employees feel safe walking from BART to the lobby.

New York City — for most of the post-pandemic period, conversion was nearly impossible. NYC’s Zoning Resolution prohibited residential use in most commercial and manufacturing districts; deep floor plates and light/air rules rendered an estimated 80% of office stock infeasible to convert without expensive structural work; only buildings constructed before 1961 had a streamlined pathway. The NYC Comptroller’s 2024 study, authored under Comptroller Mark Levine (D), identified only 44 viable conversion projects totaling 15.2 million square feet — generating roughly 17,400 apartments — and required $5.6 billion in present-value tax exemptions(the 467-m program enacted in 2024) plus the 2025 lifting of the FAR cap and the City of Yes zoning reforms to unlock them. The proof that policy moves the needle: Manhattan’s direct vacancy has fallen sharply since those reforms passed. The proof that policy delay costs years: New York spent four years from peak vacancy to the first wave of converted units.

Los Angeles — Measure ULA, the “mansion tax,” passed in November 2022 and imposed a 4% transfer tax on real-estate sales over $5 million and 5.5% on sales over $10 million, with revenue dedicated to affordable housing. In its first two years high-value property sales in the city fell roughly 50% — a far steeper decline than elsewhere in Los Angeles County over the same period. Commercial and industrial properties account for 22% of ULA transactions, generating about $200 million cumulative. Revenue has been less than half the lowest pre-passage projection. UCLA’s Lewis Center estimates the tax is costing the city more than 1,900 new housing units per year — including at least 160 affordable units that would have been produced without any subsidy. A tax sold as a way to fund housing is, on the numbers, blocking housing. A January 2026 effort by Councilmember Nithya Raman (D) to tweak the measure failed; the debate is now expected to go statewide.

Chicago — the anchor tenants left, and crime was on the record as a stated reason. Within an eighteen-month window in 2022, Boeing moved its headquarters to Arlington, Virginia; Caterpillar relocated to Texas; and Citadel, the hedge fund led by Ken Griffin and the city’s largest taxpayer, decamped to Miami after more than three decades in the Loop — with Griffin citing crime explicitly in public statements. The Loop’s downtown office vacancy was 24.7% by Q2 2025 (Chicago Sun-Times) and 28.6% by Q1 2026 — a record. Loop Chicago, the business-improvement district, has argued the safety perception outruns the statistics. The corporate-relocation decisions are evidence that perception is, in the end, what determines whether a $50-million-a-year lease gets renewed.

Hochul: “See Who You Can Bring Back Home.” Newsom: “Don’t Count Us Out.” Pritzker: Raised Taxes Anyway.

In March 2026, Gov. Kathy Hochul (D-NY)appeared at Politico’s New York Agenda: Albany Summit and urged wealthy individuals to visit Palm Beach, Florida — specifically to “see who you can bring back home, because our tax base has been eroded.” She told remaining millionaires that they are needed to “support the generous social programs.” Hochul simultaneously extended higher taxes on wealthy individuals and corporations, the policy accelerating the very exodus she was asking people to reverse.

“Our tax base has been eroded. See who you can bring back home, because our tax base has been eroded.”

Gov. Kathy Hochul (D-NY) · Politico Albany Summit · March 2026 · addressing wealthy New Yorkers who fled to Florida

The contrast with 2022 is stark. While campaigning for governor, Hochul told Republicans they didn’t belong in New York and should leave — to Florida specifically. In March 2026, four years later, she flew to Palm Beach to beg those same people to come back and fund her budget. The people she told to jump on a bus are now her tax base.

“Just jump on a bus and head down to Florida, where you belong, OK? Get out of town because you don't represent our values.”

Gov. Kathy Hochul (D-NY) · October 2022 · campaign remarks addressing Republican voters · reported by Fox News columnist Karol Markowicz

“If you are not one of us, you have no place in the state of New York.”

Gov. Andrew Cuomo (D-NY) · January 2014 · public remarks addressing conservative and pro-life New Yorkers · the pattern predates Hochul

Gov. Gavin Newsom (D-CA), in an interview on Fox’s Hannity, disputed the exodus narrative: “Per capita, more Floridians move to California than California is moving to Florida.” California’s Census Bureau domestic out-migration for 2025 was 239,575 — the largest of any state in the nation. The IRS data is not a matter of narrative; it is a matter of tax filings.

Gov. J.B. Pritzker (D-IL)signed the largest budget in Illinois state history despite ten consecutive years of population loss. A 2025 survey found 51% of Illinois voters want to leave the state; high taxes were cited as the #1 reason. The Illinois Policy Institute gives Pritzker an “F” on economy, taxes, and education in its governor scorecard.

Rather than reduce taxes, at least ten states led by Democrats are now exploring exit taxes — provisions designed to extract wealth from people who leave. California’s Assembly Bill 259 proposes a tax on worldwide net worth with an exit provision that would follow former residents for up to ten years after they leave the state. NYC Mayor Zohran Mamdani (D)has proposed a 2% income tax hike on millionaires — who already face a combined state-and-city rate of 14.776%. Six California billionaires left before the proposed January 1, 2026 residency cutoff, taking an estimated $27 billion in potential taxable value with them. The state’s response is to extend its taxing authority across state lines rather than reduce the tax that caused the departure.

The U-Haul 2025 Growth Index — measuring net one-way truck rentals, a real-time behavioral indicator — ranked Texas #1 inbound for the seventh time in ten years. Florida: #2. North Carolina: #3. Tennessee: #4. California ranked dead last — for the sixth consecutive year. Also in the bottom five: Massachusetts, New York, New Jersey, and Illinois.

The IRS data, the Census data, the U-Haul data, the office vacancy numbers, the budget deficits, the property tax appeals — they are all measuring the same phenomenon from different angles. People leave when it costs too much to stay. The governors who raised the costs are now asking the people who left to come back and pay them again. Some are considering laws to make it harder to leave.