Rising Taxes and the Migration of the Wealthy; How Common Are Phil Mickelsons?

With the wealthy facing higher taxes as a result of recent changes to federal and state law, the possibility that they will flock to low-tax states is increasingly being discussed.  Texas governor Rick Perry recently visited California in the hope of persuading California businesses to migrate to low-tax and low-regulation Texas.  Athletes such as golfer Tiger Woods have left California for states such as Florida, which has no state income tax.  Phil Mickelson recently complained of a combined federal and state tax rate of “62, 63 percent” and suggested that he would have to make “drastic changes,” perhaps even leaving California.  He later backtracked after receiving criticism for these remarks.

Several studies in the last few years concluded that changes in tax rates have little effect on the migration of millionaires.  But while authors of such studies may dismiss stories like Phil Mickelson’s as an outlier, other people believe that it is simple common sense for a millionaire to move when doing so dramatically lessens his or her tax bill.  And not just American millionaires- French actor Gerard Depardieu recently became a citizen of Russia, a move that apparently was motivated by France’s punitive income tax rates.