However, as yet there’s no evidence of massive “tax flight,” as it’s been dubbed.
A study conducted for Controller Betty Yee by Stanford University concluded, “Migration is a very small component of changes in the number of California millionaires.
This year, Beacon Economics produced a study of migration patterns for the Next 10 foundation and concluded that while California had a net loss of 625,000 people between 2007 and 2014 in state-to-state moves, those most likely to leave are over the age of 25 and lack college educations, while the state had a net gain in college-educated movers.
Whether California’s highest-income residents stay or go is no small matter.
The state’s one-percenters, about 150,000 families, pay half of its income taxes and thus account for about a third of general fund revenue – a share that has climbed sharply in recent years.
While there’s only anecdotal movement of tax flight to date, it’s difficult to predict whether that will continue because conditions may soon change.
The 2012 tax-increase package was, as noted earlier, sold to voters as being temporary, and as such was not likely to spur a major change in behavior.
However, a coalition of pro-spending groups, led by the California Teachers Association, is pushing Proposition 55, which would extend the high-bracket surtaxes for an additional 12 years. And were it to pass, there’s every reason to believe that the same groups would seek to extend it further, perhaps permanently, when the time came, circa 2030.
Would making higher rates at least semi-permanent do what the temporary taxes apparently did not do – spur the wealthy to flee California in serious numbers?
It’s a question that no one can answer – yet.