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Please note!
This fact brief was originally published as an experiment to test the concepts behind fact briefs.
Readers should be aware that while there is still a lot of useful information in fact briefs like this one, not all of them reflect Gigafact's current methods and standards for fact briefs. If you come across any that you feel are out of date, don't hesitate to contact us at support@gigafact.org.

Did a 2012 California income tax boost chase away high-earning residents?

By Allegra Taylor
YES

A 2012 California tax increase on high earners increased the likelihood of a wealthy resident moving from the state by about 40%. A study published last year found that the higher-than-anticipated departures contributed to 45.2% less revenue than expected the first year after the increase, and 60.9% less after two years.

That was a more pronounced reaction than found in earlier studies of so-called "millionaire tax flight." The California increase, approved in a ballot initiative, raised marginal rates to 13.3% for incomes over $1 million.

A study of earlier, more modest state increases found the scale of responses to be insignificant. U.S. tax law changes in 2017 have limited the deductibility of state and local taxes from federal obligations, increasing the impact of higher state tax rates.

This fact brief is responsive to conversations such as this one.
ABOUT THE CONTRIBUTOR
Between 2020 and 2022, under close editorial supervision, Gigafact contracted a group of freelance writers and editors to test the concepts for fact briefs and provide inputs to our software development process. We call this effort Gigafact Foundry. Over the course of these two years, Gigafact Foundry writers published over 1500 fact briefs in response to claims they found online. Their important work forms the basis of Gigafact formats and editorial guidelines, and is available to the public on Gigafact.org. Readers should be aware that while there is still a lot of relevant information to be found, not all fact briefs produced by Gigafact Foundry reflect Gigafact's current methods and standards for fact briefs. If you come across any that you feel are out of date and need to be looked at with fresh eyes, don't hesitate to contact us at support@gigafact.org.
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