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California tax increase may send top wage-earners from state

By Catholic Online (NEWS CONSORTIUM)
December 23rd, 2012
Catholic Online (www.catholic.org)

Some say that a new tax initiative, approved last month which will make the citizens of California pay the highest taxes in the nations will backfire. Just as the top money-earners in some European nations are required to pay as much as 70 percent of their income, who in turn flee to nearby countries with much lower tax rates, so will California's biggest breadwinners flee to neighboring Nevada, they argue.

LOS ANGELES, CA (Catholic Online) - Democratic Governor Jerry Brown championed the tax increase by suggesting that high-earners must shoulder the largest burden in bailing out the state. Chief among them is California's notoriously cash-strapped public school system.

Steep unemployment and government debt have already sent many Californians fleeing in large numbers. The state has seen an estimated 225,000 annually over the last decade.

With the new tax increase for families making more than $250,000 annually, the tax base could shrink even further for California, whose 2012 budget deficit is projected to hit $28 billion.

"More is never enough for these people," Kris Vosburgh, executive director of the Howard Jarvis Taxpayers Association says. "It's hard to believe people will not leave.

"With high taxes and heavy regulations, it's just difficult to produce those widgets at a lower price than somebody in, say, Texas," he told FoxNews.com last week.

"California politicians can fleece people in 2012, but there's no guarantee they can do the same in 2013 and later years. People can leave," Syndicated columnist Walter E. Williams wrote in The Orange County Register.

The California exodus has seen money flowing into neighboring state's coffers. California expatriates already put roughly $5.67 billion into Nevada's economy as well as $4.96 billion into Arizona and $4.07 billion in Texas over the past decade.

These figures are offered in the Manhattan Institute study entitled "The Great California Exodus: A Closer Look."

Based on data from the state and such federal agencies as the Internal Revenue Service, the study also argues that "chronic economic adversity," including powerful unions, has driven away businesses.

The California Budget Project, a liberal-leaning think tank has declined to talk about the issue but points to a study that concluded Hollywood executives, Silicon Valley entrepreneurs or other higher-earning Californians will not leave, based on the aftermath of a 2005 so-called "millionaires tax" increase.

The California tax increases approved last month, known as Proposition 30, are expected to generate at least an additional $6 billion annually - and lay claim to 2012 income.

The rate hikes range from 9.3 percent to 10.3 percent for families making $250,000 to 10.3 percent to 13.3 percent for families making at least $1 million annually.

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