We have had a running discussion for a number of years under the theory that certain city and state governments across the country are on a course to relatively quickly go bankrupt. The states we think have the best chance of winning the race to bankruptcy court include California, New York, New Jersey and Illinois. The cities with the best chance include New York City, Los Angeles, Chicago, and San Francisco.
The bankruptcy trajectory is unfolding as follows:
State and city politicians continue to implement and manage government programs that are inefficient, ineffective, wasteful, or criminally infested.
Rather than become more efficient, the politicians raise taxes which drives residents and businesses to leave and relocate, reducing the tax base.
Faced with a reduced tax base, rather than cut back spending to match the reduced tax revenue, politicians typically raise taxes even more, which drives more residents and businesses out of the state.
Eventually police fire, education, and other city and state services suffer from lack of funding which reduces the quality of life and drives more folks out of the city or state.
Eventually, taxes cannot be raised enough on a shrinking tax base to offset the government spending and debt obligations and the financial viability of the government entity crashes in bankruptcy proceedings.
Over the years, different states and cities have jockeyed for the lead in the race to bankruptcy. They all share the death spiral scenario laid out above. City-wise, we now believe that New York City will be the next major city to go bankrupt, given the idiotic and naive governing theories of the recently elected communist mayor, Zohran Mamdani. His communist-like ideas about governing have failed around the world and historically but that is not stopping him.
However, in a recent post we made the very strong argument that California will be the first state government to go bankrupt. That argument and thesis can be found at the following link:
https://loathemygovernment.blogspot.com/2026/01/will-proposed-california-wealth-tax.html
Since we put up this post, we have found some additional statistics and realities that reinforce our prediction that California will indeed be the first state to go bankrupt:
For decades, California and its Silicon Valley was the tech center of the nation and world, creating wonderful products and services that served humanity very well.
The companies that created these services and products are now household names: Facebook, Google, Tesla, Twitter/X, Apple, etc.
This resulted in incredibly rich companies and individuals, wealth creation that resulted in fat tax streams for the state government.
However, recent analysis has shown that the share of the nation’s technology workforce is dwindling relatively rapidly in California as companies and individuals find better taxation and quality of life locations outside of the Valley and state.
According to recent work done by the CompTIA State of the Tech Workforce, California’s share of the country’s technology workforce has decreased from 19% in 2019 to only 16% six years later, a 16% increase.
Not only has the percentage of tech workers gone down substantially in the state, but the size of the national tech workforce has also decreased in the timeframe, giving California a smaller portion of a smaller workforce market.
According to the Bureau of Labor Statistics, the technology workforce peaked at around 6 million workers in 2023 but has shed over 90,000 jobs since then.
From the middle of 2022 to the middle of 2025, California lost 71,000 tech jobs.
The CompTIA analysis predicts that by the decade’s end, the California share of tech jobs will decline even further to, 14% of the nation’s share.
San Francisco has been especially hard hit by the cratering of tech positions with downtown office vacancies in the city currently sitting at 35%.
With AI possibly shrinking down the other wealthy industry in the state, the Hollywood industry, this declining status of the tech industry fits right into the flight of jobs and wealth from the state. With high taxes, high crime rates, high regulatory interference in business, high homeless rates, etc,. the tech industry and its wealthy and high taxpaying employees are finding better places to live and work and create new wealth.
Since the wealthiest 1% of California residents pay about 40% of the entire state income tax stream, even small migrations and shrinkage of the tech workforce and wealthy state residents out of the state will have a major negative impact on the state income tax stream and finances. This reinforces our assertion that California still leads the race to bankruptcy court.
And with wealthy residents and businesses leaving the state, housing values fall which reduces property tax dreams, retail sales fall which reduces sales tax streams, and the financial death spiral takes hold.
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If you agree that we need to deseat every member of Congress for their lack of success and accomplishment, then please consider going to the following petition link to help the cause:
https://www.change.org/p/deseat-congress-reset-freedom
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