Our local lefties said that higher taxes on California millionaires would not have any consequences, these wealthy people would be happy to “pay their fair share.” Wrong! Here is a reality check from Joel Fox writing at Fox and Hounds:
Anecdotal, yes, but a news report indicates that warnings made during the Prop 30 campaign last year are playing out — higher taxes are sending some Californians across the state line to Nevada.
Under the headline, California Rich Seek Nevada Tax Haven, in the Tahoe Daily Tribune, the article says that Californians accounted for 43 percent of the 288 sales so far this year in Incline Village and Crystal Bay. More to the point, an Incline Village real estate broker reports that of the 39 sales on Nevada shores of Lake Tahoe to Californians since the beginning of the year, 15 buyers, forty percent of the total, specifically said they moved to Nevada to escape the Prop. 30 tax hikes.
Other brokers confirmed that there has been an increase in high-end housing sales that the reporter wrote was attributed to California residents’ “desire to get beyond the reach of the Golden State taxman.” Sales on the Nevada side of Lake Tahoe were stronger than on the California side with a broker quoted as saying, “Prop. 30 probably has something to do with that.”
Some would argue the numbers reflected in the article are not significant. However, since the California tax system is built something like an upside down pyramid with the few at the bottom holding up the structure, a small but significant stream of high end taxpayers moving to low tax states could have consequences on California’s bottom line.
This is only the beginning. When other millionaires’ friends and neighbors start bragging about their lower taxes in Nevada, they will think about making the move also. The trickle soon could become a tsunami, and then it becomes more than anecdotal evidence. Stay tuned. Taxes have consequences. The rich got rich by watching there money, and they are more than willing to keep it from going down Governor Brown’s extra tax rat hole.