The New York Times has a story on California’s recent tax hikes out Thursday, Adam Nagourney reports:
Though no one expects traffic jams at 30,000 feet as panicked millionaires make for the state line, the wealthy are once again grumbling about abandoning California for less punishing tax climates.
…
Cristobal Young, an assistant professor of sociology with the Center on Poverty and Inequality at Stanford, conducted a study last fall that concluded that tax rates had little effect on where millionaires choose to live.
Mr. Young said he suspected that few, if any, millionaires would leave or stay away because of the tax increase. More likely, he said, they would find ways of reducing their tax burden, with loopholes or income avoidance, or simply reduce their work.
“I suspect the accountants are busier this year, but I don’t think the moving companies are getting a boost,” Mr. Young said. “Moving out of state is actually one of the most costly responses they could make. California’s high-income earners are clustered in coastal cities far from state borders. Moving to Nevada or Texas or Florida is a very big life change, and means leaving behind family, friends, colleagues and business connections.”
Actually, no it doesn’t. Growing up in Oakland, California, a coastal city with clusters of high-income earners, I knew plenty of families that worked and went to school in the Bay Area, but as far as the IRS was concerned, they “lived” in Nevada. These families all owned a second, although I guess it was technically their first, home on or around Lake Tahoe (a three hour drive away), and they would identify that home as their primary residence for tax purposes. How often does this happen? How hard does the IRS crack down on such families? I don’t know.
But I do know that according to a recent Manhattan Institute study of California’s emigration problem, Nevada was the top destination for wealthier emigrants. From that study:
And that was before California had the nation’s top marginal tax rate!
