Dan Walters

By Dan Walters
dwalters@sacbee.com
April 19, 2016 – 2:04 PM

  • State has pursued inventor Gilbert Hyatt for a quarter-century
  • Nevada courts said California had harassed Hyatt
  • U.S. Supreme Court upholds Nevada’s spanking of California

There is a perpetual debate in California political circles over whether the state’s highest-in-the-nation income tax rates encourage the wealthy to take themselves and their money elsewhere.

The debate intensified four years ago when Gov. Jerry Brown persuaded voters to temporarily increase the bite on the highest-income taxpayers, which raised billions of dollars and helped Brown close a yawning budget gap.

There is no shortage of anecdotal accounts that the tax hike encouraged some Californians to move to low- or no-tax jurisdictions, such as neighboring Nevada. But there is no solid evidence of mass migration.

It’s heating up again because voters will decide in November whether to extend the high-income surtax, or let it expire.

Perhaps those affected were willing to tolerate a relatively brief period of higher taxes to help the state climb out of a hole, some argue, but a semi-permanent increase, pushing their combined federal-state marginal tax rate over 50 percent, could spark a flight.

If wealthy Californians want to flee the state, there is no question that Nevada is very willing to accept them – and will erect legal barricades to protect them from California’s notoriously aggressive tax collectors.

That is the underlying theme of Tuesday’s U.S. Supreme Court decision upholding the legal spanking that Nevada Supreme Court administered to the California Franchise Tax Board for its quarter-century-long pursuit of taxes from one wealthy expatriate.

Gilbert Hyatt, a brilliant technology inventor, deliberately moved from California to Nevada in 1991 to avoid state income taxes on a series of patent royalty payments he knew he would receive.

To read expanded column, click here.