Tax Hike Drives Millionaires Away From California

leaving-californiaAccording to new research released by Charles Varner, associate director of the Stanford Center on Poverty and Inequality, California lost an estimated 138 high-income individuals following passage of the Proposition 30 income tax increase championed by Gov. Jerry Brown (D) and approved by Golden State voters in 2012.

This new research by Varner updates a previous paper released six years ago that looked at domestic migration to and from California following a 2004 income tax hike.

“One reason we wanted to update our previous paper is that this tax change in 2012 is the largest state tax change that we have seen in the U.S. for the last three decades,” Varner said.

Prop. 30 raised the state’s top income tax rate by more than 29%, increasing it three percentage points from 10.3% to 13.3%, which is now the highest state income tax rate in the nation. Prop. 30 also hiked the tax rate on income between $300,000 and $500,000 by two percentage points (a 21.5% rate increase), and raised the rate on income between $500,000 and $1,000,000 by three percentage points (a more than 32% rate hike).

In 2016, California voters extended the Prop. 30 income tax increases, which were originally scheduled to expire in 2019, until 2030. There will be an effort to extend those income tax hikes yet again prior to their expiration in 2030; book it now.

Varner’s new research examined taxpayers who were and were not hit by the Prop. 30 rate hikes. He found that in the two years before the Prop. 30 tax hike was imposed (2011 and 2012), net in-migration for both groups “was positive and roughly constant.” Yet following 2012 and the passage of Prop. 30, net in-migration dropped for households that were facing an effective tax increase of 0.5 percent or more. The reduction was greatest for households facing the highest effective tax hike, according to Varner and his coauthors.

This isn’t surprising for those who are familiar with other attempts to soak the rich with punitive state income tax hikes on high earners. Take what happened in Maryland after Martin O’Malley, the former Democratic presidential candidate and governor, imposed a millionaires tax hike a decade ago. …

Click here to read the full article from Forbes.com

Patrick Gleason is vice president of state affairs at Americans for Tax Reform, and a senior fellow at the Beacon Center of Tennessee. Follow Patrick on Twitter: @PatrickMGleason

Atkins Proposes $1.8 Billion Tax on CA Drivers

For the second time in as many weeks Californians got the news that Sacramento politicians are proposing yet another big tax hike.  The truth is that new taxes would never be required were it not for Sacramento’s mismanagement of existing tax dollars.

Last week, it was the proposal to deal with the very real problem of “revenue volatility” in California’s tax structure with the very unreal “solution” of a $10 billion tax on services.

But the latest proposal comes from new Senate leader Toni Atkins who proposes a brand new tax on drivers to pay for highway and road repairs in California.  This new “fee” would take $1.8 billion dollars out of the pockets of hard working California citizens over the next five years.

Now, most Californians would wholeheartedly agree that our roads are in terrible shape.  Years of neglect have resulted in a highway system that, according to a recent state report, requires a massive infusion of $59 billion.  But taxpayers have a very good question that has yet to be answered:  How is it that California has the highest gas tax in the nation and yet cannot keep its roads in decent condition?

Moreover, although the exact nature of this new “fee” has yet to be determined, Senator Atkins’ comments in proposing the new revenue source can only be described as foolish and insulting. Here is what she said:  “California cannot have a strong middle class or a thriving economy if our roadways are congested and people and goods cannot move efficiently.”

Really?  A left-wing politician now claims that this new tax is needed to protect the middle class?  She is simply blind to the truth that the progressive policies of heavy taxation and over regulation are crushing the middle class in California.  As is so common now in California, statements from politicians such as Atkins reveal a profound disconnect between their pampered lives and the lives of ordinary citizens.

So, instead of slamming Californians with another tax hike, what is a better way to meet the funding needs for our crumbling highway system?  Glad you asked.

First, let’s demand that gas tax revenues pay for roads, not bike lanes, environmental mitigation programs and mass transit.  The latter programs are all well and good, but gas taxes should go for roads.  (For purposes of full disclosure, as a cyclist I support bike lanes.  But I don’t want my gas taxes paying for them).

Second, how much of our transportation dollars are wasted on burdensome labor restrictions?  So-called “Project Labor Agreements” add between 25 to 35% to the cost of highway construction. Let’s get rid of PLA’s and, while we’re at it, “prevailing wage” laws which also add to the cost of construction unnecessarily.

Third, let’s direct valuable transportation dollars to those systems that actually work.  This would mean abandoning the doomed-to-fail High Speed Rail Project that is sucking up tax dollars in a way that voters never approved.

Fourth, we can agree that gas tax revenue has fallen a bit short of expectations because cars are now more fuel efficient.  But if that is the case, why does the state still subsidize electric vehicles? Shouldn’t we abandon those subsidies and direct those dollars to filling potholes?

Instead of reflexively demanding higher taxes, our elected officials should do what other states seem to do without controversy – prioritize spending.  Now there’s a novel concept.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

Originally published at HJTA.org