We are going to take a little break from the past five posts which showed the disgusting waste of taxpayer wealth that is criminally siphoned off from Medicaid, Covid, and other government programs. Instead, we will update some of the latest news and probabilities on what states and cities are likely to go bankrupt first.
As always, our top state governments that we think are nearing bankruptcy include New York, New Jersey, Illinois, and California. Our top major cities we think are rapidly approaching bankruptcy include New York City, Chicago, Los Angeles, and San Francisco.
Before reviewing the latest news and seeing which state or city is making the best progress towards government bankruptcy, let’s review how these cities and states got themselves into this financial death spiral position to begin with:
A government entity keeps expanding its budget, eventually putting pressure on the tax revenue stream it receives.
At some point, rather than cut government spending or make its programs more efficient financially, the politicians in charge raise taxes to meet the ever growing government expenditures.
The raising of taxes causes some residents and businesses to leave the city or state for less tax burdensome areas, reducing the tax base and reducing the revenue stream.
Rather than cut expenses and become more efficient to match the reduced tax revenue stream, politicians in the above cities or states raise the tax burden even more.
This causes more residents and businesses to flee the city or state, further reducing the tax base and tax revenue stream.
At some point politicians panic and raise taxes more and start cutting vital government services (e.g. police, fire, education) in order to try and balance government spending against the shrinking tax base and revenue stream.
The reduction in quality of government services in particular and quality of life in general drives more residents and businesses out of the area.
Eventually, the expenses, costs and financial liabilities outstrip the reduced tax stream and bankruptcy occurs.
Okay, that's the process, let's look at the mounting evidence across the country on how this is playing out.
1)Let’s start with a few simple statistics from the Heritage Foundation:
Two million more people have left California and New York state than moved into those states between 2020 and 2023.
No-income tax Florida gained a net new residents totaling 820,000 during that time frame.
That positive net migration was bigger than any other state’s gain.
Of the 782 businesses that fled New York City and New York state during that time, 341 of them ended up in no-income tax Florida.
These 341 businesses that went to no-income tax Florida included Wall Street type financial companies (e.g. Wells Fargo, Apollo Global Management, and Elliott Management) and small businesses such as plumbers, restaurant owners, and consultants.
No-income tax Palm Beach County in Florida has branded itself as “Wall Street South,” given how many financial firms, bankers, and investment pros have relocated there.
Vanderbilt University is building a new business school in West Palm Beach to serve the ever growing financial community there.
The lesson that the Heritage Foundation drew from this information is simple: keep taxes low, reduce business regulations to the bare essentials, keep the government out of the free market operations and businesses and people from states that do not follow those three principles will bring their jobs, their wealth, and economic growth to you.
That lesson has apparently not been taught to the cities and states listed above, the candidates most likely to go bankrupt pretty soon.
2)We have talked a lot about why businesses leave states like California and New York. The heavier tax burden and the over regulating of business activities eventually cause business owners to reevaluate where they should be located to maximize their business operations and profits, not a complicated process. But what happens when individual citizens decide to pick up and leave high tax states and cities, high crime states and cities, what benefit do they get if any?
A recent analysis by the California Policy Lab may have the answer to that question:
Their analysis found that individuals that leave California dramatically improve their financial well being besides escaping high crime rates, dense traffic problems, high homelessness rates, high housing rates, high gas prices, high utility prices, and high tax burdens.
On average, those moving out of California save an average of $672 a month on housing expenses alone which they consider to be rent or mortgage payments, utilities, property taxes and homeowners insurance.
This comes out to savings of about $8,000 a year.
The median home prices that these relocating residents would experience on average is a whopping $398,000 lower than if they had stayed in California.
According to the Lab analysis, those that relocated out of California are 48% more likely to own their own home relative to “similar Californians who stayed in the state.”
According to Evan White, executive director of the California Policy Lab at UC Berkeley: “The price tag has gone up on the California Dream, and many families are leaving the state for more affordable places. The difference these moves make is stark. Their destination neighborhoods are half as expensive and they end up much more likely to own a home within just a few years.”
More from the Policy Lab analysis: “Between 2020 and 2025, 42 states sent fewer people to California than they did before the pandemic”
The data and information is right out in the open for the politicians to see, be they from California, New York, or the other states and cities approaching bankruptcy: people and businesses want to be free. They want to be free to keep their hard earned wealth and be free to not be oppressed by crime, or over regulation by the government that should be serving them, not using them as a tax farm.
So far, with very few exceptions, those politicians do not get it. And their inaction and ignorance of the financial and economic realities will accelerate the financial death spiral their government entities are probably already in.
3)We have not talked often about the city of Seattle being a prime candidate for winning the race to bankruptcy court. Not that they are not headed down the same path but the other cities mentioned above have a large lead.
But that does not mean Seattle is out of the race. As we pointed out a few months ago, the city is in much the same financial straits as the other more favored cities to go bankrupt first:
According to FBI data analyzed by Security.org, Seattle ranks fourth of major U.S. cities for total crime rate with a crime rate of 5,7822 per 100,000 residents.
This city crime rate is almost 173% higher than the national average.
The Seattle area’s property tax burden is ranked tenth highest among 215 U.S. metro areas according to Attom, a provider of property and real estate data.
Property taxes in the Seattle area have gone up 57% in the past ten years.
The average property tax bill in 2024 in the Seattle area was $7,508, 80% higher than the national average.
The current total sales tax rate in the city of Seattle is a whopping 10.35%, over 37% higher than the national average.
More details on our Seattle analysis can be read at:
https://loathemygovernment.blogspot.com/2026/01/seattle-enters-race-to-city-government.html
And our position has gotten even stronger regarding the financial death spiral for the city, given a recent and insanely stupid comment from the current mayor of the city:
Katie Wilson is the current socialist/communist mayor of Seattle.
The city has seen its share of businesses and wealthy citizens leaving the city including Starbucks and Amazon founder, Jeff Bezos.
Jon Scholes, president of the Downtown Seattle Association, summed up the Seattle out-migration of businesses and residents quite nicely: "This is a city where everything costs more. We have some of the most expensive housing, we have some of the most expensive food, we have some of the most expensive Ubers, and we should be looking at the set of regulations and taxes that have been put in place over the last decade. Are those helping things? Are they making this city more affordable or not?"
But apparently Katie Wilson does not think this is a problem, given her condescending reply to a question that was recently posed to her very explicitly, asking her if she is concerned that billionaires, millionaires, and businesses are leaving town.
Her response: "I think the claims that millionaires are going to leave our state are like super overblown. And the ones that leave, like, bye,"
Nice reaction, telling those that pay the major portion of the city’s taxes and power the local economy, just waving them off and saying “Bye”? My gosh, how ignorant of reality can one be?
At least the governor of New York state, Kathy Hochul, finally realized that billionaires and millionaires are saying “Bye” to New York’s high cost of living and high taxation, helping to create the financial death spiral that New York City and state face. Obviously, Katie Wilson learned nothing from Hochul's epiphany.
The reaction to Wilson’s casual disregard for the major taxpayers in her city was swift and accurate and fierce:
Keving Rpoberts of the Heritage Foundation: “What do socialists think happens when the most productive, highest revenue driving members of their tax base leave their jurisdictions?"
Danile Di Martino of the Manhattan Institute: "Socialists are driven by hate for the rich, not concern for the poor."
Comedian Tim Young: "This is the reaction of a spoiled child whose parents paid her bills up until the point that she became mayor… She has no grasp of reality or economics. Seattle is extra cooked."
Washington state Republican Party: "This clip will live in infamy, Seattle Katie Wilson is not only unfit to be mayor, she lacks grace and gratitude. Perhaps, she's the one who should leave Seattle."
And possibly the best comment of all from the End Wokeness X account: "Mayor Wilson seems to welcome the idea of a wealth exodus from Seattle. This is the FA part. FO coming soon."
Such a smug, condescending response to those leaving the city, those that pay the some of the highest taxes to support her administration and the city government. Her actual smugness and idiocy can be viewed at the following link:
https://www.louderwithcrowder.com/seattle-millionaires-fleeing
That will do it for today: Californians who flee get richer, Florida wins when New York politicians are economically ignorant, and the Seattle mayor says “Bye” to the financial security of her city.
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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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