Research says: Yes, the ultra rich are also hightailing it out of CA
On Twitter, Stanford finance prof and Hoover Institution fellow Joshua Rauh examines recent research on CA's wealthy population downtick. As taxes spike up, and particularly during Covid, many high-earning taxpayers vamoose to low-/no-income tax states like Florida, Texas, and Nevada. And CA's budget (not to mention remaining residents) is feeling the burn.
In response to this Bloomberg piece on California's ultra rich "flourishing and sticking around" @business @eli_kamisher @bizcarson, I'd like to offer a few facts, all from this paper...
We see significant migration and income-reducing responses by high earners following the passage of Prop 30 in 2012 and the federal TCJA SALT cap in 2017. Those that moved were most likely to choose zero or low income tax states like Florida, Nevada, Texas, or Washington
… Younger taxpayers do generally have higher departure rates across the time period we study, but top bracket taxpayers of all ages exhibit a migration response to tax increases
… During the COVID-19 pandemic, high-income taxpayers had the highest migration rate out of California of all taxpayers, and while the pandemic did not have a direct tax impact, these movers still largely chose to relocate to states with preferential income tax regimes
… Revenue volatility puts California on shaky financial ground, as we have seen in recent budget cycles, and this is the result of the state’s outsized reliance on the wealthiest earners in the top income tax bracket
This thread originally appeared on Twitter. Read the whole thing here.
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