Dan Walters

Dan Walters

By Dan Walters
Published: Sunday, Dec. 16, 2012 – 12:00 am | Page 3A
Last Modified: Sunday, Dec. 16, 2012 – 8:42 am

One of the debating points vis-à-vis Proposition 30, the tax hike that voters approved last month, was whether sharply increasing marginal income tax rates on a relative handful of high-income Californians would prove counterproductive by driving them out of the state.

Those rates are increasing by one to three percentage points, effective this year, and politicians count on them for about $5 billion per year in additional revenue.

Critics of the measure argued that the wealthy targets of the new taxes could easily avoid them by changing their residences to a state without income taxes, such as Nevada.

Supporters dismissed that criticism as fantasy, saying the high-tech entrepreneurs, movie stars and others who might be taxed enjoy living in California and would consider the extra levies as minor prices to pay.

No one knows, in fact, whether there would be a significant flight of wealthy tax refugees from the state, thereby undercutting the revenue assumptions.

We have anecdotal evidence that it could occur, such as the much-publicized decision of golfer Tiger Woods to relocate from California to income tax-free Florida or a court battle in Nevada over California inventor Gilbert Hyatt’s move there to avoid taxes on royalties.

We also know, from a recent Census Bureau report, that there is already a significant exodus from California to Nevada, Florida, Texas and Washington – all states without income taxes – but don’t know whether taxes play a significant role.

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