Tuesday, November 19, 2013

Huge exodus of wealthy from Californa after state tax hikes

. . .  or at least that is what you might have thought if you read a lot of hyperventilating U.S. media reports about California's decision to impose a 13.3 percent tax rate on income over $1 million. This is the very highest rate in the whole of the United States, and obviously this is going to lead to a gigantic exodus of the wealthy from California, along with economic collapse, earthquakes, and all sorts of other really terrible stuff. These. reports. are. ten. a. penny, some carrying blood-curdling  headlines like Millions flee California because of progressive tax system.

Well now. Let's take a little peek at the evidence.

Courtesy of the weekly news roundup from the excellent U.S. inequality-watching organisation Too Much, there is a report out from Wealth-X, a curator of research on the world's wealthiest citizens. The report is sponsored by the radical extremist left-wing Swiss bank UBS.

The Huffington Post summarises the findings, which looked at the behaviour of so-called Ultra High Net Worth Individuals (Ultra-HNWIs):
It turns out, California was the “largest absolute gainer” of super-rich people between 2012 and 2013.
. . .
The statistical evidence backs up previous research out of the Stanford Center on Poverty and Inequality, which looked at a 2005 California tax increase on the rich and found the super-rich stayed put. “The highest-income Californians were less likely to leave the state after the millionaire tax was passed,” the report even said.
And there is a whole lot of other evidence out there too.

Either the super rich are crying wolf when they vow to flee higher taxes, says New York magazine’s Kevin Roose, or they just take a long time to pack.

It reminds us of a rather similar story in Europe that we wrote about recently.  In which, among other things, the anti-taxers seized on a story entitled "Almost a quarter of millionaires want to leave Britain" as evidence that taxes ought to be cut straight away.

And in which the evidence for their case was -- we shall say it charitably -- about as shaky as the evidence available on this matter in the United States.



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