Tax increases force millionaires to leave California

It's not just federal tax changes that are causing people to move from state to state—it turns out that tax hikes across California are driving wealthy people out of the region in droves.

Фото: Depositphotos

A new study published on 7 on October showed that when California raised income tax rates, it caused a “substantial one-time migration reaction” among wealthy residents who left for places with lower taxes. Fox Business.

The study examined the increase in state income tax rates approved by California voters in November 2012 of the year by 1-3 percentage points for higher-income households. The maximum marginal tax rate was raised to 13,3% for revenues of more than 1 million dollars.

The new bets were applied retroactively to the 2012 year and expire at the end of the 2018 year. Since then they have been extended to the 2030 year.

On the subject: The United States wants to introduce a tax on wealth: the middle class may suffer from this

The study found a “sharp jump” in the outflow of wealthy taxpayers from the state in 2013 compared to previous years, especially among those who earned from 2 to 5 million dollars and more than 5 million dollars.

About 0,8% of wealthy residents who would have paid the highest tax rate left the state, an outflow considered “abnormally high” compared to previous years. Wealthy people who remained in California reported lower incomes.

“Among California's top taxpayers, out-migration and the behavioral responses of those who stayed behind robbed 45,2% of the tax reform windfall in 2013,” write researchers Joshua Rauch and Ryan Shew.

Rauch and Sew said that most of these residents left for the states with zero income tax.

Researchers noted that it is important to understand how wealthy taxpayers respond to tax increases as they contribute to increasing state revenue.

The migration of residents from high-tax states such as New York, New Jersey and California has worsened in recent years due to changes made to the federal tax code by the Tax Cuts and Jobs Act, which was signed into law in 2017. He imposed a $10 cap on local and state tax deductions.

On the subject: States where Americans pay more and less taxes

New York Governor Andrew Cuomo has already expressed concern that state migration could damage income. Cuomo expects the tax deduction restriction to have a negative effect on the state’s population and tax revenue.

He blamed the budget deficit of 2,3 billion dollars that a new tax law had been passed. Cuomo called the financial situation of the state "as serious as a heart attack" due to the departure of wealthy residents.

The financial benefits of moving from a high tax state to a low state can be substantial. People with 650 000 dollars income can save more than 69 700 dollars a year by moving from New York to Florida.

Read also on ForumDaily:

The United States wants to introduce a tax on wealth: the middle class may suffer from this

8 states, counties, and cities that will pay you for your move

American Poverty: How Low-Skilled US Workers Live

The USA has increased the number of requirements for obtaining a work visa: many are forced to leave

Do you want more important and interesting news about life in the USA and immigration to America? — support us donate! Also subscribe to our page Facebook. Select the “Priority in display” option and read us first. Also, don't forget to subscribe to our РєР ° РЅР ° Р »РІ Telegram  and Instagram- there is a lot of interesting things there. And join thousands of readers ForumDaily New York — there you will find a lot of interesting and positive information about life in the metropolis.