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California Isn’t Nottingham

June 18, 2010

In California, an oft-repeated argument against raising taxes is that they will force wealthy individuals and businesses to ‘flee the state.’ It’s a wonderful image: a family in matching cashmere sweaters loading their Cadillac Escalade with iPads and fine art as the taxman approaches in the distance. At a work event last night, this concern was raised by some of the, let’s say, less patient and more vocal members of the audience. On the face of it, it seems ridiculous to me. People are going to go live in Nevada because they’ll be able to keep an extra $5,000 a year? That’s more than a small chunk of change, but Nevada?

Of course, I can’t read other peoples’ minds so what I think about what other people are thinking is of little consequence. Still, the truth is that generally higher taxes doesn’t cause an exodus of wealthy people from a given state. Ezra Klein recently wrote a post on a research review by the Center for Budget and Policy Priorities which concludes that income taxes have a minimal effect on interstate migration. The PPIC also researched the issue recently and issued a report (PDF) saying that high income taxes don’t cause people to leave the state. To me, it never made much sense to argue that a slight increase in income tax would send people rushing to Texas. And, in reality, it doesn’t.

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One Comment leave one →
  1. Tim permalink
    June 28, 2010 2:15 pm

    “I’d rather be dead in California than alive in Arizona [Nevada].”

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