NEW: Are millionaires really leaving the state?

Oct. 13, 2012

By John Seiler

In the debate over the Proposition 30 and Proposition 38 tax increases, the question comes up: Will such tax increases drive millionaires from California?

The liberal-oriented California Budget Project just teased us with an email:

“In the debate around the revenue-raising measures on the November ballot, including Proposition 30, a persistent ‘urban legend’ has resurfaced: that increasing taxes on the wealthy would cause them to leave California. However, new research on the migration patterns of California’s personal income taxpayers could help put this claim to rest. 

“On Monday, October 22, from noon to 1:30 p.m., Charles Varner, doctoral candidate at Princeton University, and Cristobal Young, Ph.D., assistant professor of sociology at Stanford University, will discuss their new study that looked at Proposition 63′s ‘millionaire’s tax’ and found no evidence that millionaires left California in order to avoid the higher tax. Varner and Young will discuss their findings in a presentation titled Flight of the Millionaires?: Experiments in Taxing High Incomes in New Jersey and California, at an event hosted by the University of California Center Sacramento. For additional details, read the event flyer.”

I guess we know which way the study will look at this “urban legend” then “put it to rest”!

Except I personally know wealthy people who have left this state because of its high taxes. And Joseph Vranich used to tally the large number of companies leaving the state. Comcast and Campbell’s just relocated hundreds of jobs out of the state.

It will be interesting to see the study’s take on Prop. 63. It took effect in 2005, right in the middle of the real-estate boom. A lot of rich folks might have figured, “I hate this tax. But I’m making so much money off real estate, it’s worth it to stay.”

Then real estate crashed, of course, in 2007-09.

I’ll be looking at what years the study covers.

By the way, if raising taxes on millionaires doesn’t drive them out of the state, then why stop at raising California’s top state income tax rate at 13.3 percent, as Prop. 30 does? Why not raise it to 20 percent? How about 40 percent?