Democratic state legislators have introduced a
new Assembly bill that would raise the state income tax on California’s highest earners from the current rate of 13.3 percent to 16.8 percent. This would mean that, after factoring in federal income taxes, California millionaires would face a top tax rate of 53.8 percent... Meanwhile, progressive state legislators have
introduced a wealth tax that would fall on Californians with a net worth of $30 million or more.....
In 2012, Californians voted to increase the state income tax for top earners by 3 percent. A recent
academic paper researching this tax hike’s impact found that it prompted a greater number of higher earners to leave the state, and that “eroded 45.2 percent of state windfall tax revenues within the first year and 60.9 percent within two years.” This has played out in similar fashion across the country. For example, the state of Maryland passed a so-called
millionaires tax in 2008, projecting it would bring in $106 million in new revenue for public services. In actuality, the result was $1 billion of its tax base lost to other states due to out-of-state migration...
In fact, we have reason to believe that right now, the well-off could be more responsive than ever before to increases in taxation. Because of the COVID-19 crisis, many industries have shifted their work force to remote work. In Silicon Valley, for example, tech giants such as
Twitter and Facebook plan to allow many employees to work from home on a permanent basis. Why wouldn’t successful software engineers and other high-earners move out of high-tax cities and states, if they are no longer tied there for employment?...
