The Phil Mickelson effect: Do millionaires flee states with high taxes? (+video)
Golfer Phil Mickelson said he might move to Florida after California raised tax rates on the wealthy. Studies looking into tax flight have come to mixed conclusions.
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“If there is anything that can be termed a mass exodus, then I think that will be symbolically very important,” says Jessica Levinson, former political reform director for the Center for Governmental Studies.Skip to next paragraph
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Experts acknowledge that any migration effect is hard to gauge.
The question is more complex than many make it out to be, says Michael Shires, associate professor of public policy at Pepperdine University.
“The question of whether the wealthy are leaving or will leave California is a tough one,” he says. “There is clearly a lot of anecdotal evidence of this shift – all of us know people who say they are doing it."
For those like Mickelson, who can take their game and live elsewhere, it is quite easy to move. “But for the many affluent Californians whose wealth is dependent on California-based enterprises, moving out of state does not relieve them of their tax burden, so there is less impetus to do so,” he adds.
He says Silicon Valley and Hollywood are examples of two places where the wealthiest Californians are tethered to California – unless their firms move, too.
For those who earn their wealth from retail or real estate, it is also not possible to take these earnings easily out of state. Service providers like lawyers and accountants – and Mickelson – are more mobile, but only to the extent that they can compete and provide services in the new landscape.
To Gary Aminoff, communications director for the Republican Party of Los Angeles County, the most vulnerable group comprises "those who earn from $250,000 to $3 [million] to $5 million a year.”
The concern is that those taxpayers might leave as others who pay little or no taxes come in. But to others, the flip side of that scenario is the real concern: millionaires might not leave California in droves, but the new taxes might dissuade others from moving to the Golden State.
“It’s unlikely that the take hike will cause many rich people to move out of the state," says Jack Pitney, professor of government at Claremont McKenna College. "The bigger risk is that it will deter individuals and businesses from moving into the state.”
He notes that, according to US Census data, fewer Americans are moving into California than are moving out. “The tax increase could accelerate that trend.”
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