Are the rich fleeing California?

May 10th, 2010, 1:00 am
Mary Ann Milbourn

Conventional wisdom has it that if California raises taxes on the rich, they'll flee the state, but the folks at the California Budget Project say that is simply "urban legend."

The Budget Project analyzed moving patterns among rich people. It found that in the 1990s, when 10% and 11% tax income tax rates were in effect for joint filers with taxable incomes over $200,000 and for single filers over $100,000, the number of people subject to those rates rose substantially.

From 1991-1995 — during a recession — the Budget Project says the number of high income joint filers rose 33.4% and single filers rocketed 40.2%. Meanwhile, the total number of joint returns declined 6.7% and 7.3% respectively.

The Budget Project said similar patterns occurred after 2004, when Prop. 63 passed. The measure added 1% to the income tax rates on personal incomes over $1 million.

In addition, the Budget Project cited IRS data that show that taxpayers who stay in California have higher average incomes than those who leave.

The California Budget Project is a non-profit that works to improve public policies that affect low- and middle-income Californians through independent research, budget and policy analysis, and public education.