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View Diary: Oh Noes!!--Phil Mickelson (R-Golf) Might Retire, Citing (Incorrectly) Tax Hikes on Top 1%--Boo-hoo. (302 comments)

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  •  Again the research I cited shows that (3+ / 0-)

    states lose little to nothing from high tax payers fleeing. See the post.

    •  Ian - I am sure the states are net possitive (2+ / 0-)
      Recommended by:
      Ian Reifowitz, valion

      on revenue, but I your research is dated and I think we are about to see an acceleration here in CA as high income boomers retire. If have very high income and don't need to be in CA to work, it makes economic sense to have your tax residence in a no income tax state. If you have annual income of more than $1 million you can buy a home in Nevada, keep your CA property, and pay for the Nevada home just on your tax savings. We are seeing an acceleration of higher income tax payers leaving CA, particularly as they reach retirement age, and moving to no, or low, income tax states. In CA we have, for budget purposes, an over reliance on high income earners for a high percentage of the state's total revenue. This makes our cycles more challenging because high income earners have more variable income that tends to track with economic cycles. Over the longer terms as our population loses high income, high tax paying residents, if they aren't replaced it will impact the state budget in a negative fashion.

      "let's talk about that"

      by VClib on Mon Jan 21, 2013 at 08:46:30 AM PST

      [ Parent ]

      •  We'll see, but I doubt it. (2+ / 0-)
        Recommended by:
        VClib, sukeyna

        3% extra, and only for 7 years. If 10% didn't make him move, 13% won't either.

        •  Ian - I think it will be very interesting to watch (0+ / 0-)

          At the margin what is enough to make people think about moving, which is never easy. Even at 10.3% for high income earners it caused a lot of discussion as people approached retirement. My guess is that the increase to 13.3% will accelerate an existing trend.

          Even for people at much more modest incomes state taxes did impact decisions. My next door neighbors, who ran a very successful market research business from their home, sold and moved to the State of Washington. Their children were grown, none of the children lived in California (or Washington) and they were paying 9.3% state income tax. In Washington they pay zero state income tax, which makes another $20-30K available each year to put into their retirement program.

          I do think at the margin state income taxes impact decisions and that the impact of state tax rates will have more influence in the future than it has in the past.

          "let's talk about that"

          by VClib on Mon Jan 21, 2013 at 10:15:21 AM PST

          [ Parent ]

        •  Yeah. those sunset provisions always work out. (0+ / 0-)

          "Keep the Brown tax rates!" will be the battle cry from the left.

      •  The 13.3 percent rate (0+ / 0-)

        is only for income above 1 million. I am pretty sure that only applies to like .00001 percent of all taxpayers, so let 'em go live in some third world hellhole like Florida. Who cares.

        •  runfastandwin - it's a small number (0+ / 0-)

          but larger than .00001 percent. The challenge for California is that the top 1% pay in the area of 20%+ of all the state revenue. The income of the top 1% is variable, in years when the economy is good it is very high and in down cycles it can drop by 50% or more. Stock options play a big part in this and all of the stock option gains are taxed as ordinary income. The state got in real financial trouble because when we had the dot com boom cash rolled in because of stock options and the legislature baked that new level of income into the budget, rather than viewing it as a short term windfall.

          Now, a 50% decline when you earn $ 2 million is still plenty but the state has $133,000 less income just at a time when government has higher costs due to the declining economy.  That's one of the reasons we have such a high sales tax and that the 9.3% state rate applies to all income over $50,000, it's an attempt to have more predictable state tax revenue .

          "let's talk about that"

          by VClib on Mon Jan 21, 2013 at 10:06:16 AM PST

          [ Parent ]

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