Are Rich People Leaving The State?

The Governor says, “all the rich people are living the state” because of taxes.

We tackled the myth that businesses are leaving the state because of taxes a couple of weeks ago.  (Hint: they seem to be leaving every state — at least they seem to be leaving the ones where conservative think tanks used the same talking points…)

And we pointed out that a 2% tax increase on incomes above $500,000 means that people making $600,000 after all deductions would pay an additional $38.42 per week (which is deductible from federal taxes).

So are rich people are leaving the state over $38.32 per week?

According to a Wall Street Journal op-ed, the rich are leaving lots of states,

“California, Connecticut, Delaware, Illinois, Minnesota, New Jersey, New York and Oregon”

The op-ed goes on to claims that,

“more than 1,100 people every day including Sundays and holidays moved
from the nine highest income-tax states such as California, New Jersey,
New York and Ohio”

So 1,100 rich people every day are leaving these states!  That’s a lot of yachts being moved to the Nevada desert!

But wait!  PPIC Report Finds Poor Leave California At Much Higher Rate Than Rich.

I guess no one will be left in California soon.  

13 thoughts on “Are Rich People Leaving The State?

  1. David,
    Interesting viewpoint…but as someone who plans on moving out of the State within the very near future, I’d have to take issue with your simplification of the $38.32 “extra” per week.
    I believe that the issue of what one gets for their investment needs to be addressed also. So with the additional annual “contribution” of $459.84 (if only I were making $500,000 annually) — what exactly would I be getting?
    Better roads, schools, infrastructure, public safety, recreational resources, and/or elected public servants? I don’t see it…
    Instead I see band aids being applied to a ruptured artery…in a feverish attempt to pacify an increasingly needy (and vocal) sector of our population that has been supplied with an ever expanding safety net. In effect we’ve established a great system for the delivery of fish to those who express a need…without setting up a means by which to teach these same people how to fish (and then expecting them to move towards self sufficiency within an established timeframe).
    If California is going to maintain the establish social safety net that took 39 years to incrementally weave…then substantial new revenues (taxes/fees) are going to be required. On the flip-side, if California decides to slash the established safety net in a cost saving frenzy…then social anarchy on the part of the population least capable of modifying their circumstances is a real possibility. In any event, neither of these situations are really all that appealing to me.
    In the end, I think moving out of State and occasionally returning to see “how things are going” during a scheduled vacation makes better sense on a number of levels. Luckily I have the education, training and experience that will allow me to do so fairly easily.
    All my best…

  2. What we’re seeing is an ever-increasing gap between rich and poor….or richer and middle-class families comprised of people who are just trying to get by and finding it harder and harder to do so.
    It’s really sad to see those who have taken advantage of the state in order to get ahead, decide that they’ve gotten enough and so it’s time to leave. Whatever happened to giving back and being grateful for what others did to give you the opportunity to succeed?
    How about trying to make the situation better rather than bailing after getting all your goodies?
    Guess it’s time to pick up the toys you’ve bought with your state-paid education, roads, infrastructure and opportunities and leave everyone else in your dust.

  3. Dear Rabble,
    Gosh I never thought about how the “State” gave me all the advantages that I’ve gotten. I guess the three years of living on 5 hours sleep so that I could hold down a job and finish a Masters Degree was just some sleep deprived delirium. I guess the 6 six years spent in the Navy so I could save up enough money to go to college in the first place was somehow linked to some State sponsored program that I wasn’t aware of.
    While I fully appreciate your “right of expression” — please understand that “I owe no one anything”…by choice. Between the conservatives wanting to control my personal life and the liberals wanting to control my fiscal life — I’m more than a little disgusted with the entire process. Hence my desire to re-locate to some place where I can ply my profession, raise my kids, and not have to worry about a social engineering experiment gone terribly awry.
    As for giving back…as a role-call member of the Creek Indian Nation — do you really want to open that can of worms? I’m grateful enough not to be bitter about the actions of lesser people taking advantage of a skewed system of government where one side penalizes the other whenever they can see a personal advantage for “their side”.
    Personally I believe that by removing myself and my family from this poorly constructed deck of cards we call State governance…I’m doing what I’ve typically done in the past — leading not by “boisterous word” but by “explicit action”.
    The truly nice thing about a free society…is that the individual is free to leave flawed situations not of their making (so long as they have done the responsible work of preparation to do so).
    All my best…

  4. What we’re seeing is an ever-increasing gap between rich and poor..
    I’ve been seeing this statement used for most of my life and it is a ridiculous statement.
    The distribution of wealth is not a symmetrical variable. It never was, and never will be.
    It is a distribution bounded on one side. While there is no effective limit to the total amount of wealth a person can have, there is an effective limit to the LACK of wealth that someone can have. That limit approximates zero.
    Generally you can’t get to a negative wealth – either because you are protected by bankruptcy laws or because as you approach zero wealth no one will give you any credit. That of course varies slightly from state to state by homestead laws – some places some of your assets are exempted from confiscation even if you owe more money than you have. But at the other end of the spectrum, there is no real limit to the wealth an individual can acquire – be he a Bill Gates or a George Soros.
    The fact of the matter is that there will ALWAYS be poor, and for those poor their net worth will cluster somewhere around zero. 20% of the population can’t handle alcohol, something close to 10% can’t handle gambling in locales where it is legal (and sometimes even where it is not). Others are just piss-poor managers of money, who through profligate spending or bad investing will wind up at or about a zero net worth.
    The wealth distribution curve, for almost all societies, resembles a normal distribution centered on the median income on the wealthier side, and pretty much the mirror image of that on the poor side until you approach zero at which point the distribution is truncated with all the people that would have had a negative net worth if the distribution could actually reach a normal distribution being piled up around zero.
    The greater the median income in the society – the greater the difference will ALWAYS be between the rich and the poor, because while the majority will have increasing wealth, the minority ‘poor’ will always have at or near zero.
    Anyone using this expression is either demonstrating their own ignorance or trying to prey on the ignorance of others. The gap between the rich and the poor is ALWAYS GREATER as societies become more prosperous.

  5. You’re thinking is a nasty piece of neural psychopathic nonsense. We wonder how you made it out of the school yard.
    Being economically disadvantaged because of a corrupt socio-economic model doesn’t give you any meaningful bell curve it defines criminal infiltration of a democratic and egalitarian process. That defines any thing empathic or human. How many billionaires?

  6. Actually, rich people are leaving California so they can pay ZERO state taxes in places like Nevada, Texas, and Florida. That’s not a savings of $38 per week but more like $894 per week.

  7. My wife and I are both engineers and we used to live in Concord, CA. We saved about $800/month in taxes by moving to Texas. And, the house we purchased in Texas was considerably cheaper then the two bedroom apartment we were renting in Concord.
    California is way too expensive and taxes are a big part of it.

  8. Texas taxes oil that is taken from the ground, where California does not. This enables Texas to have lower income taxes.
    Alaska funds the entire state this way. AND sends everyone in the state a check every year.
    California refuses to ask oil companies to pay a fee for the oil they take and sell back to us.

  9. I looked at your reply and did some fact checking. You are correct that the state of Texas does, in fact, get revenue from land that it owns upon which natural gas and oil is being recoverd from. Note: this is not a tax, it is a royalty on state owned land.
    In any case, the amount of royalties collected by the state amounts to about 3.1% of the state budget. To me, it is a huge amount, but to the state of Texas it really is a pittance. It is not large enough to affect income taxes (like Alaska’s royalty payments are). So, I would say that your counter-argument is not valid. There just isn’t enough money collected from royalties to make a difference in the state budget.

  10. By the way, I also did a fact check on your article and I think you have your facts wrong. $38/week on 52 weeks is $2000. $2000 is not 2% of $500,000 of income. 2% of $500,000 of income is about $10,000. So, your number should be over $190/week.
    Of course, I am a conservative and you are a liberal. It is, therefore, probably unreasonable of me to expect you to get basic arithmetic correct.

  11. You really do need to read the post. A tax on income ABOVE $500,000 means that it is not on the entire $500,000 but is on income ABOVE $500,000. That is how tax brackets work. That is why the word “above” is part of the sentence.

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