Tax Hikes Don't Drive the Rich Out of California
Do millionaires really bolt from a state when taxes go up? A new study from Stanford and Princeton University researchers says they don't.
Cristobal Young, an assistant professor of sociology at Stanford, and Charles Varner, a doctoral candidate in sociology at Princeton, looked at 20 years of California tax records at the request of the State Board of Equalization. Then they analyzed how millionaires reacted after Californians imposed a mental health services tax on high-income earners in 2005.
"People who were affected by the tax," Young said, "after the tax kicked in, were more likely to stay in the state."
And Young said millionaires were not more likely to move into California after the state cut tax rates in 1996.
"People are certainly mobile. And if you have a large bank account -- absolutely, you can live anywhere you want. But you may not be able to take your salary with you."
Young says migration rates between states have been declining for decades for all income classes, and are stable at about 1.5 percent.