California Tries to Tax People Who No Longer Live There

California is pushing a legal theory that should alarm anyone who values mobility, federalism, and basic fairness in the tax code. A new lawsuit challenges whether a state can continue taxing income long after a taxpayer has left, raising serious constitutional questions about how far state tax authority can stretch.

At the center of the dispute is California’s effort to tax income earned by former residents who have moved to states like Florida. The lawsuit argues that California is attempting to reach beyond its borders and impose taxes on people who no longer live, work, or receive services in the state.

If that approach stands, no state tax system is truly limited by geography anymore.

A Governor-Driven State-Versus-State Fight

This case is not abstract. It is a direct confrontation between two states with sharply different tax systems and economic models.

On one side is California, led by Gov. Gavin Newsom, whose administration has defended expansive taxing authority even after taxpayers leave the state. On the other side is the State of Florida, led by Gov. Ron DeSantis, which is suing California to stop what it sees as an unconstitutional grab at former residents’ income.

Florida is not defending a tax loophole. It is defending its residents and its sovereign right to set its own tax policy without interference from another state.

What the Lawsuit Is About

The legal challenge targets California’s attempt to tax certain income streams, particularly deferred compensation and investment income, earned after a taxpayer has become a legal resident of another state.

California argues that because the income is connected to work previously performed in the state, it retains taxing authority even years later and even when the taxpayer now lives elsewhere. Florida argues that once residency ends, California’s taxing power ends with it.

This dispute goes to the heart of constitutional limits on state taxation. Taxes are supposed to be tied to current residency, in-state activity, or benefits provided by the taxing state. California’s position stretches that principle beyond recognition.

Why Florida Is Pushing Back

Florida’s lawsuit is about more than one tax bill. It is about protecting residents from being permanently tethered to the tax systems of states they left behind.

If California’s theory prevails, states with high taxes could effectively impose lifelong tax claims on anyone who once lived there. Moving would no longer mean a clean break. State borders would matter less. Tax competition would erode.

That outcome would punish mobility, discourage entrepreneurship, and weaken the ability of states to compete on tax and economic policy.

A Test of Federalism

This case will help determine whether state tax authority has real boundaries or whether states can chase taxpayers indefinitely.

Florida is asking the courts to reaffirm a basic rule. States may tax residents and in-state income, but they may not follow former residents across state lines forever.

The answer will shape how Americans think about where to live, where to work, and whether leaving a high-tax state truly means leaving its tax system behind.