Embroiled in the California debate over Proposition 30's progressive income tax proposals, some politicians have argued that raising taxes on the highest earners will drive them to states with lower tax rates, taking businesses and jobs with them.
But a study released by the Stanford Center on Poverty and Inequality concludes that "millionaire migration" is simply a myth.
Stanford's Cristobal Young, an assistant professor of sociology, and Princeton's Charles Varner, a doctoral candidate in sociology, conducted the study at the request of the California Board of Equalization, allowing them unique access to California Franchise Tax Board income data.
The mountain of data included information from all state income tax records for California from 1992 to 2009. The result of all that data crunching? The migration of millionaires in and out of the state has almost no relationship to tax increases or tax cuts.
Young said that having access to such comprehensive data allowed him and Varner to contribute compelling evidence to the income tax debate. "I think it's important that we can bring really high quality data to these kinds of issues," Young said.
The immense dataset, though a goldmine, also represented a challenge for the researchers, who pored over more than 300 million data points. "It was an entirely different technical world," said Young. "You have to be extremely careful with this kind of data. Everything gets triple checked and code reviewed."
The findings are consistent with the results of a study the team led in New Jersey last year.
The reason the number of California millionaires varies from year to year has almost nothing to do with taxes, the researchers found. Instead, the numbers change as incomes fluctuate, most likely because investments are sensitive to market cycles.
Varner and Young looked at millionaire migration after California's 2005 Mental Health Services Tax was enacted, as well as after state tax cuts in 1996.
They found that millionaires did not flee as a result of the tax increase (in fact, more millionaires moved into the state than out during that period), nor did millionaires from elsewhere move to California as a result of the tax cuts.
http://news.stanford.edu/news/2012/november/millionaire-migration-myth-110212.html
But a study released by the Stanford Center on Poverty and Inequality concludes that "millionaire migration" is simply a myth.
Stanford's Cristobal Young, an assistant professor of sociology, and Princeton's Charles Varner, a doctoral candidate in sociology, conducted the study at the request of the California Board of Equalization, allowing them unique access to California Franchise Tax Board income data.
The mountain of data included information from all state income tax records for California from 1992 to 2009. The result of all that data crunching? The migration of millionaires in and out of the state has almost no relationship to tax increases or tax cuts.
Young said that having access to such comprehensive data allowed him and Varner to contribute compelling evidence to the income tax debate. "I think it's important that we can bring really high quality data to these kinds of issues," Young said.
The immense dataset, though a goldmine, also represented a challenge for the researchers, who pored over more than 300 million data points. "It was an entirely different technical world," said Young. "You have to be extremely careful with this kind of data. Everything gets triple checked and code reviewed."
The findings are consistent with the results of a study the team led in New Jersey last year.
The reason the number of California millionaires varies from year to year has almost nothing to do with taxes, the researchers found. Instead, the numbers change as incomes fluctuate, most likely because investments are sensitive to market cycles.
Varner and Young looked at millionaire migration after California's 2005 Mental Health Services Tax was enacted, as well as after state tax cuts in 1996.
They found that millionaires did not flee as a result of the tax increase (in fact, more millionaires moved into the state than out during that period), nor did millionaires from elsewhere move to California as a result of the tax cuts.
http://news.stanford.edu/news/2012/november/millionaire-migration-myth-110212.html