High taxes chases out the rich? Not true.

[winnipegjets]

Do high state taxes chase out millionaires?

Media reports are filled with stories of wealthy New Yorkers and pro golfers in California threatening to move to escape high taxes.

Travis Brown, author of "How Money Walks," said there is a "mass exodus" of money from high tax to low tax states. He said New York is losing $7,100 a minute in income to Florida.

And anecdotally, there is plenty of evidence that the wealthy are just not going to take it anymore. Golfer Phil Mickelson spoke for many pro athletes when he said he was "going to have to make some changes" after California's tax hikes.

(Read more: 'Stop bashing the rich,' says London's mayor)

But new data on the population of millionaires suggest little connection between tax rates and a state's population of millionaires. If millionaires are moving out, many more are moving in—or being created.

A new state-by-state count of multimillionaires shows that some of the highest tax states created the most millionaires. The study, from UBS and Wealth-X, ranked states by their populations of people worth $30 million or more—presumably the most mobile part of the wealth chain and the most sensitive to taxes.

California was the top producer of multimillionaires over the past year, gaining more than 1,600 people worth $30 million or more. The state also has the nation's highest tax rate—13.3 percent—for people making $1 million or more.

Yes, California has the largest population. But even on a percentage basis, several high tax states had big millionaire gains. The number one gainer of multimillionaires on a percentage basis was Massachusetts, aka "Taxachusetts" because of its tax rates.

(Read more: Meet the 'average' global billionaire)

New York City, which has a combined city and state tax of over 12 percent, was the number one city for adding multimillionaires worth $30 million or more over the past year. That's largely thanks to financial markets, no doubt.

This is not to say that low tax states don't also gain millionaires. Of the top 10 states that gained the most millionaires, two don't have state income taxes: number two-ranked Texas, and number-three ranked Florida.

On a percentage basis, Tennessee, which has no income tax (except for a levy on certain capital gains and dividends) came in second place, behind Massachusetts.

Meanwhile, some of the biggest losers of multimillionaires had low taxes while some had high. The biggest losers on a percentage basis included Connecticut and New Jersey, which have high taxes. But the losers also included Kansas, which has lower taxes.

In short, the report shows that a state's tax rate doesn't correlate to its net gain or loss of multimillionaires—a finding that echoes other research on the effect of tax rates on millionaire migration. Broader economic factors seem to matter as much or more than taxes for millionaire counts—like economic growth, business environment, the role of finance in the economy and the type of local industry.

"There are many reasons people settle in certain states," said Kim Rueben, an expert on state and local public finance with the nonpartisan Tax Policy Center. "Creating a functioning business takes much more than low marginal tax rates."

Demographics may also play a role. While older millionaires may be moving out of California and other high tax states, younger millionaires are being added through high-tech and other fast-growth businesses.

"You might have movement with people retiring," Rueben said. "But you have people trying to make their fortunes figuring out what the best environment is to be in business."

—By CNBC's Robert Frank. Follow him on Twitter

@robtfrank

 

[eatshitndie]

new york city, boston, the bay area and certain locations in the los angeles area are exceptions. because these locations have critical mass of technologists, brainiacs, expertise, specialists, artistes, enterpreneurs, professionals, financiers, lawyers, investors and fellow millionaires that anyone aspiring to be successful cannot afford to be remote, alone and expect to raise funds and be seen and heard.

 

[OldFart]

Read that many French rich are leaving the country because tax is to be increased over 50% level. Cannot blame them can you?

 

[winnipegjets]

new york city, boston, the bay area and certain locations in the los angeles area are exceptions. because these locations have critical mass of technologists, brainiacs, expertise, specialists, artistes, enterpreneurs, professionals, financiers, lawyers, investors and fellow millionaires that anyone aspiring to be successful cannot afford to be remote, alone and expect to raise funds and be seen and heard.

Precisely ...so higher taxes would not drive rich people away when there are so many other factors to consider.

 

[winnipegjets]

Read that many French rich are leaving the country because tax is to be increased over 50% level. Cannot blame them can you?

How many?

When the burden of taxation is passed from the rich to the poor is being reversed, the former screams. Let them leave, eventually they will return as the era of tax cuts for the rich will soon come to an end. The big gap between the rich and the working class is unsustainable for society to remain stable.

 

[Capano2121]

UK never existed!

 

[Asterix]

How many?

When the burden of taxation is passed from the rich to the poor is being reversed, the former screams. Let them leave, eventually they will return as the era of tax cuts for the rich will soon come to an end. The big gap between the rich and the working class is unsustainable for society to remain stable.

Not many and those that have are treated
With disapproval and disgust by the French
For they have managed to create a nation
While Old Fart only created a corporation


The Economist explains
Why do the French tolerate such high taxes?

THE French are steeling themselves for yet more tax increases when the finance minister, Pierre Moscovici, unveils the 2014 budget on September 25th. The government is planning an extra €3 billion ($4 billion) of taxes next year, which will push up the overall tax take in the economy to 46.5% and make 2014 the fifth consecutive year that the tax burden in France has grown. François Hollande, the Socialist president, was elected last year on a promise to tax the rich, with a scheme for a top income-tax rate of 75%. But the tax bill is now wearing holes in the pockets of not just the rich but the rest, too. Why do the French put up with paying so much tax?
*
France now has a higher tax burden than any other country in the euro zone apart from Belgium. Germany’s overall tax take is fully six percentage points lower, and Britain’s over eight points behind. Even Sweden, emblem of the Scandinavian high-tax model, takes less in taxes than France. Historically, the French have tolerated high taxes as the price of decent public services and a proper universal safety-net. All those fast trains, first-rate hospitals and public crèches do not come for nothing, and the French are the first to defend a way of life subsidised by the public purse that can often only be bought privately in Britain or America. Moreover, the French make a firm distinction between taxes and social-insurance contributions. Only half of households have to pay income tax, but everybody pays social charges. If the French pay so much, goes the line, it is because of the insurance principle: generous unemployment benefits, for instance, are not a gesture of largesse by the French state but an insurance entitlement. Indeed, the longstanding tolerance for taxes has underpinned the solidity of French sovereign debt, since it is a fair bet that France’s government can efficiently collect the taxes it needs. When Gérard Depardieu, a film star, announced last year that he was leaving high-tax France, most of the French disapproved.

This social contract, however, could be on the verge of breaking down. Over the past year, as taxes on beer and cigarettes have risen, tax-free overtime abolished, tax deductions squeezed and tax-band thresholds frozen, even the French have started to grumble. Polls suggest that tax increases have become the top worry among voters, and chief reason for Mr Hollande’s calamitous popularity ratings. The sharp rise in taxes, which began under Nicolas Sarkozy, the previous president, as part of an effort to reduce the government’s budget deficit, is all the more resented at a time when the French are no longer convinced that their public services—underperforming state schools, overcrowded commuter trains—are so much better than those that cost less in other countries. What is the point of paying Swedish-style taxes (or more) if you do not receive Scandinavian-style public services in return?

The new mood has not passed the politicians by. Mr Moscovici acknowledged recently that the French are “fed up” with taxes. Mr Hollande even conceded in a television interview that tax increases have been “too much”. Most of the effort to reduce the budget deficit in 2014 will now fall not on tax increases but public-spending cuts. Mr Hollande has promised a “tax pause”, which will be part of the message in the 2014 budget. The idea of a pause, however, has not been defined. There is no talk of tax cuts. Instead, it seems to mean a slowing down of the rate of increase. So, if the government had been planning €6 billion of new taxes in 2014, an increase of only half that amount in today’s budget is to be regarded as good news. An unlimited French tolerance of taxes? Voters will deliver their verdict at local and European elections in six months' time.

http://www.economist.com/blogs/economist-explains/2013/09/economist-explains-13