A quarter of the residents in California’s most affluent communities are considering relocating out of state in response to the increase in state income taxes, according to a report released today by the San Diego-based National University System Institute for Policy Research (NUSIPR).
A scientific poll (n=401) conducted by Competitive Edge Research for the National University System Institute for Policy Research from March 4-6, 2013 shows that 13% of the state’s residents are somewhat considering a move, 12% are very seriously considering vacating the state, and 1% are already moving out to minimize their personal income tax burden.
The survey finds that these sentiments, while more often held by Republicans, conservatives and higher income residents, are not limited to them. In fact, the biggest factor in explaining whether or not someone is contemplating leaving the Golden State is whether they said they knew a family member or friend who had made a similar move. This social exposure factor is a stronger predictor of move consideration than any other factor, including income, support for conservative candidates, or the level of familiarity with the tax increase. This suggests the potential for a “snowball” effect: the few residents who initially leave create exponentially more who contemplate moving until a sizeable exodus occurs. The finding that social influence plays a big role in tax avoidance behavior is also exciting and dovetails with recent research on social networks.
The survey also found that residents are contemplating other strategies, such as increasing their charitable contributions and investing in more tax-free bonds, to reduce the impact of the increase in state income taxes.
In November of 2012 California voters passed Proposition 30 which temporarily increased the state’s sales tax rate and raised income taxes on individual Californians with incomes greater than $250,000 and families earning more than $500,000 in taxable income. Anecdotes throughout the state indicated a level of dissatisfaction, most notably comments from California resident and pro golfer Phil Mickelson ‘s comments prior to the Farmers Insurance Open golf tournament in January. NUSIPR undertook the research to find out just how prevalent such views were.
To focus the survey, NUSIPR used IRS records to target specific zip-codes in the state known to contain a high percentage of affluent taxpayers. More than 400 Californians were surveyed and the survey has a margin of sampling error of plus or minus 4.9%. NUSIPR’s full report and survey results can be found here (PDF): http://www.nusinstitute.org/assets/resources/pageResources/NUSIPR_CA_Tax_Burden.pdf
Source for the above: Press release posted today on on PR Newswire here.
Joseph Vranich of Spectrum Location Solutions helps companies find great locations in which to grow. Joe also is a keynote speaker on the challenges and benefits of business owners relocating out of high-tax, high-cost, over-regulated states. His recent focus has been on why commercial enterprises leave California. More information is available at Biography and Speaking Availability.