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. …

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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


  1. Really??? says

    It is called incentives. The Communist/Socialist group think does not get it.

    I refer these idiots to the social structure of the USSR (at its fall) & Communist China. Think incentive is not ingrained in human DNA? Look around you idiots.

  2. Stan Sexton says

    Youi mean 138 people who don’t have an asset protection attorney, can’t figure out how to hide income in multiple corporations or offshore? They are either naïve or have so much money they don’t care.

  3. Bogiewheel says

    Leave it to our “friends” in Sacramento to turn a silk purse into a sows ear.

  4. askeptic says

    But, how can this be?
    Something like this has never happened before….
    except in every other state/jurisdiction its been imposed.

  5. David Owens says

    Will wealthy Progressive politicians in California get hit with a big increase in taxes? Or are they exempted somehow?

  6. CaliExpat says

    I think this helps explain the outmigration of San Francisco tech firms to downtown Denver…

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