California tax hike caused ‘significant’ out-migration of top-bracket millionaire residents, study shows

Good news for Texas and Florida taxpayers—thanks to California and New York greedy, theft minded hacks, these States gain rich people, more revenues.  That means taxes do not have to go up—Sacrament and Albany are providing new sources of revenues—rich people protecting their assets and earnings.

“A new study published on Monday showed that when California raised its income tax rates it caused a “substantial one-time out-migration response” among wealthy residents, who left for lower-tax destinations.

The study looked at increases to state income tax rates approved by California voters in Nov. 2012 (Proposition 30) of one to three percentage points for upper-income households. It raised the top marginal tax rate to 13.3 percent for incomes of more than $1 million.

The new rates were retroactively applied to 2012 and scheduled to expire at the end of 2018. They have since been extended through 2030.

The study found a consequent “sharp uptick” in wealthy taxpayer departures in 2013 when compared with previous years, particularly among those earning between $2 million to $5 million and more than $5 million.”

Should Newsom and the Democrats repeal major portions of Prop. 13—you will see an immediate decline in property values in California and the fleeing from the State form those the change will bankrupt.   California has declared itself a Third World State—this is just more proof.

California tax hike caused ‘significant’ out-migration of top-bracket millionaire residents, study shows

By Brittany De Lea, FOXBusiness, 10/8/19 

Payden & Rygel Chief Economist Jeffrey Cleveland on the left going after Americans’ wealth and President Trump’s comments about the Federal Reserve.

It’s not just federal tax changes that drive residents from high- to low-income tax states – turns out hiking statewide taxes on the wealthy drives them out in droves, too.

A new study published on Monday showed that when California raised its income tax rates it caused a “substantial one-time out-migration response” among wealthy residents, who left for lower-tax destinations.

The study looked at increases to state income tax rates approved by California voters in Nov. 2012 (Propoisition 30) of one to three percentage points for upper-income households. It raised the top marginal tax rate to 13.3 percent for incomes of more than $1 million.

The new rates were retroactively applied to 2012 and scheduled to expire at the end of 2018. They have since been extended through 2030.

The study found a consequent “sharp uptick” in wealthy taxpayer departures in 2013 when compared with previous years, particularly among those earning between $2 million to $5 million and more than $5 million.

About 0.8 percent of wealthy residents who would have had to pay the top tax rate left the state – which was considered “abnormally high” when compared with years prior. And the wealthy individuals who stayed reported lower incomes.

“Among top-bracket California taxpayers, outward migration and behavioral responses by stayers together eroded 45.2 percent of the windfall tax revenues from the reform in 2013,” researchers Joshua Rauh and Ryan Shyu wrote.

The majority of those residents left for states with zero income tax, Rauh and Shyu said.

Researchers noted it is important to understand how wealthy taxpayers respond to tax hikes, since they are implemented to raise revenue for the state.

An out-migration of residents from high-tax states – like New York, New Jersey and California – has been compounded throughout recent years thanks to changes made to the federal tax code by the Tax Cuts and Jobs Act, which was signed into law in 2017. It implemented a $10,000 cap on state and local tax (SALT) deductions.

Democratic New York Gov. Andrew Cuomo has already expressed concern an out-migration from the state could hurt its revenues. Cuomo has said he expects the cap on state and local tax deductions to have a negative impact on the state’s population – and tax receipts. He blamed a $2.3 billion budget deficit on the new tax law, calling the state’s financial situation “as serious as a heart attack” as wealthy residents leave.

The financial benefits of moving from a high-tax state to a low-tax state can be substantial. Individuals earning $650,000 can save more than $69,700 in taxes per year by moving from New York to the Sunshine State.

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.

Comments

  1. Next up: A new law will be passed making it illegal for anyone to leave the state. If you don’t think this is possible hold up both your hands.

  2. Gee, whodathunkit. The state of Kali gives all potential employees an IQ test. – 98% pass it, the remaining 2% become state legislators.

  3. Ya think?

    Most of the well heeled Democrats are fleeing the State to keep their millions. It is amusing to watch the Black Players of Professional Football and Basketball hid their money while berating Republicans and supporting Communist based government because of social justice.

    Me thinks they are brain washed or low IQ.

    Now about the Hollywood Crowd

  4. SHANE CONWAY says

    Even if I were a millionaire, I would have left California anyway. Taxes are just part of the reasoning behind taking my family from there and moving to another state.
    I have watched the living conditions deteriorate for the past 40 years. But I did not expect the conditions in California to reach the levels it has this soon. In addition to the poverty, crime and traffic, California has now achieved the status of any third-world country with its undependable electric grid. Residents can no longer depend upon electricity availability. Approximately 1 million people will lose their power because the state has taken control of the power distribution system.

    Instead of harvesting trees and allowing residents to trim back their trees, Sacramento has decided that they will tell when it is safe to use power. And if you think you are all going to rely on solar power produced from your rooftops, think again. That might be a good way to save a few cents each month, but your state is also tearing out clean, inexpensive power producing hydroelectric dams and nuclear power plants.

    I thank God everyday that we escaped when we did. For the rest of you, if you don’t leave now, you will join the rest of the world’s 7 billion peasants who will see a reduction in your quality of life. Take a stand or beat feet for the nearest American state.

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