Sometimes taking down the dumbest arguments repeated by “free market” adherents really feels like shooting fish in a barrel. Most of the “theories” are just rhetoric, with no substance beyond a political goal. Here’s another one: the rich will flee your state if taxes go up. Not.
It’s a myth — and especially in California where Jerry Brown pushed for a surtax on the rich to pay for some important investments. A couple of researchers in California, Charles Varner and Christobal Young, looked at the actual data and here’s what they found:
Migration is a very small component of changes in the number of millionaires in California. While the millionaire population sees a typical year-to-year fluctuation of more than 10,000 people, net migration sees a typical year-to-year fluctuation of 50 to 120 people. At the most, migration accounts for 1.2 percent of the annual changes in the millionaire population. The remaining 98.8 percent of changes in the millionaire population is due to income dynamics at the top – California residents growing into the millionaire bracket, or falling out of it again.
Most people who earn $1 million or more are having an unusually good year. Most “millionaires” earned less in years past, and they are not likely to earn this much again. A representative “millionaire” will only have a handful of years in the $1 million + tax bracket. The somewhat ephemeral nature of very high income is one reason why the top-income taxes examined here generate no observable tax flight. It is difficult to migrate away from an unusually good year of income. [emphasis added]
The bottom line, they found, is that the rich like where they live — that’s why they are where they are in the first place. Picking up and moving, especially away from places like Silicon Valley and other centers of skills and particular industries, just isn’t that easy.
Of course, there are a few whiners and cheapskates like Phil Mickelson and, indeed, professional athletes have more mobility. But, most of these elite guys just won’t move to other places…like Texas?
Now, that’s not to say that they won’t whine and complain and try to evade paying a fair share. But, THE EVIDENCE shows that, when all is said and done, the bastards stay put.