California Millionaires Flee State After Tax Hike
by Tyler Durden
ZeroHedge.com
Sat, 07/07/2018
California lost an estimated 138 high income individuals due to the passage of the Proposition 30 – a tax hike pushed by Gov. Jerry Brown (D) and approved by voters in 2012, according to new research from Stanford University and members of the California Franchise Tax Board.
The measure raised taxes on the state’s highest earners by 8% – increasing it one percentage point to 13.3%, leaving California top-earners with the highest state income tax rate in the country. It also hiked the tax rate on income between $300,000 and $500,000 by 2%, while raising the tax rate on income over $500,000 by 3%.
Using California Franchise Tax Board data, the study led by Charles Varner, associate director of the Stanford Center on Poverty and Inequality, examined taxpayers who were and were not affected by the Prop. 30 tax hike, and found that in the two years before the increase was imposed (2011 and 2012) net in-migration for both groups “was positive and roughly consistent.” After the tax increases, however, net in-migration fell for households hit with a tax increase of 0.5% or more – with the greatest reduction coming from households saddled with the highest effective tax rate.
For the largest and most recent of these reforms—a 2012 voter-enacted tax increase, the largest top marginal rate increase by any U.S. state over the past three decades—we observe a statistically significant effect in the expected direction. -Varner
The 2012 tax increases affected roughly 312,000 people, resulting in approximately .04% leaving the state. Numerically that’s not a lot, but it’s significant for several reasons – especially considering that an earlier 2004 tax increase had no negative effect on the millionaire population.
The research is an update to an earlier study that found more millionaires actually moved to California following a 2004 tax hike of 1% on income over $1 million to fund mental health services.
“In other words, the highest-income Californians were less likely to leave the state after the [2004] millionaire tax was passed.”
The Rest…HERE
