Your thought process is suffering from selection bias. You're thinking to yourself, "California taxes are high but lots of smart people still live there." Yes

Your thought process is suffering from selection bias. You're thinking to yourself, "California taxes are high but lots of smart people still live there." Yes, those people do, because there are enough offsetting positive factors for these folks that CA is still a reasonable deal for them compared to the alternatives. There are also plenty of smart and wealthy folks who live in Colorado, Nevada, New Mexico, and Florida, in part, because the taxes are lower. As with any marginal change to a policy, you have to look at the effect on the marginal cases. You have to ask, "if taxes in CA were reduced by X%, what Y% more smart and wealthy people would choose to live there?" I guarantee Y > 0 for any X > 0.