Millionaires Are–or Perhaps Aren’t–Leaving California

nyt-logoThe early headline on a New York Times story (2/7/13) by Adam Nagourney was, “Millionaires Consider Leaving California Over Taxes.” At some point they changed the headline, probably because there’s nothing in the article that would support it.

But the problems with the piece remain. The story it’s trying to tell is about a new tax increase on income over $1 million. Combined with federal/state taxes, the tax bill can really start to add up for the super wealthy–an “unpleasant surprise for the rich.”

I feel as bad for them as you do, no doubt. The point of the article, corrected headline or not, is that they’re maybe going to flee. Or maybe not; the piece has one millionaire golfer complaining about the change in tax law, but he seems to back off. Media mogul David Geffen is also quoted, and he says he’s not going anywhere.

The strongest case Nagourney comes up with is that another reporter is looking for the same tax-fleeing millionaires as he:

“Are you looking to leave California because of the recent tax increase?” a CNN Money correspondent posted online in an inquiry this week. “You could be profiled in an upcoming story.”

When the piece gets around to actual evidence, readers learn that some research suggests rich people tend not to flee their homes when their taxes increase a bit:

Cristobal Young, an assistant professor of sociology with the Center on Poverty and Inequality at Stanford, conducted a study last fall that concluded that tax rates had little effect on where millionaires choose to live.

Mr. Young said he suspected that few, if any, millionaires would leave or stay away because of the tax increase. More likely, he said, they would find ways of reducing their tax burden, with loopholes or income avoidance, or simply reduce their work.

Millionaires aren’t likely to move away from, say, their beachfront Malibu home to the suburbs of Nevada in order to reduce their income tax rates.

But, perhaps for the sake of balance, Nagourney gets Bradley R. Schiller, an economics professor in Nevada, to explain that rich people are motivated to move when their taxes go up–otherwise they’d be stupid. Celebrities might not want to attract the negative publicity, but for the rest of them the logic is inescapable:

“Taxes have to be a very important of the equation,” Mr. Schiller said. “If you are talking about an income tax of 13 percent on a millionaire in California and an income tax rate of zero percent on a millionaire in Nevada, to argue that it doesn’t affect a millionaire’s locations decision is to say all millionaires must be stupid.”

Most of us can’t say for certain whether millionaires are dumb. But by this logic you wouldn’t see many rich people living in California, or New York City, or anywhere else where tax rates are higher than, say, Florida.

The Times seems to want us to believe that the wealthy can’t bear any additional tax burden, no matter that there’s no real evidence for this.


About Peter Hart

Activism Director and and Co-producer of CounterSpinPeter Hart is the activism director at FAIR. He writes for FAIR's magazine Extra! and is also a co-host and producer of FAIR's syndicated radio show CounterSpin. He is the author of The Oh Really? Factor: Unspinning Fox News Channel's Bill O'Reilly (Seven Stories Press, 2003). Hart has been interviewed by a number of media outlets, including NBC Nightly News, Fox News Channel's O'Reilly Factor, the Los Angeles Times, Newsday and the Associated Press. He has also appeared on Showtime and in the movie Outfoxed. Follow Peter on Twitter at @peterfhart.