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Watch California's rich flee now that voters soaked them

POSTED February 13, 2013 8:30 a.m.
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Elections have consequences.

When California voters decided to tax themselves with Proposition 30 last November - a move pushed by California teachers unions - they saw it as a good way to soak it to the wealthy. Let's say "successful" people because the term "wealthy" has been the leftist's code word for some kind of greedy person who trampled on others to get what they have.

Of course, Proposition 30 also raised sales taxes in the state that all pay. But nonetheless, embedded in the initiative was a higher tax on the wealthiest Californians.

I am not a wealthy man. We have paid off the house, but then again I haven't bought toys like I'd like to have. No RVs, no boats, no jet skis. But I don't think it's right to soak it to the rich because they have managed to make more than I have. That just inherently seems wrong and a taking of property by the government.

But there is a solution if you are rich. Move. In fact, millionaires who leave for Florida, where no income tax is charged, are giving themselves a 13.3 percent raise.

And it appears that some celebrities and other wealthy people are doing that, or planning to do that to escape California's excessive taxes. In fact, Ed Botowsky of Chapwood Investments who manages the finances of several professional athletes and high income Californians, said: "You'd be a fool not to leave California." Botowsky said some of his clients have already made the decision to leave California to avoid the tax crunch.

Good for them. Lawmakers who see rich people as cash cows should be taught a lesson: Whenever you tax something, you curtail that something. Tax the rich, watch them leave. That's also the American way. Remember the revolt of the colonies?

The state's overall tax rate on millionaires is now at 13.3 percent, the highest in the nation. Where could one flee to escape California's high tax rate? Well, seven states have no income tax system, including Florida, Texas, and Nevada. Moving them means great savings. Aside from leaving the great California weather behind, why wouldn't a millionaire move to save millions? I am sure Tiger Woods, who is leaving for Florida, will get used to the humidity for a savings of an estimated $7.5 million in taxes.

Woods' golf rival, Phil Mickelson, also suggested he may follow suit to save $8 million this year.

Enough of this rich man migration out of California could spell trouble for Gov. Jerry Brown and those who think they can tax themselves out of their budget mess. An estimated 62.7 percent of California's general revenue fund comes from personal income taxes. With roughly 41 percent of the state's entire revenue coming from the top 1 percent of California income-earners, the state is vulnerable to losing millions. Even a modest fluctuation in the migration of its millionaires could spoil Brown's plan to take aim at the $35 billion debt racked up by lawmakers in recent years. Brown wants to see $4.2 billion paid toward debt this year to whittle down the debt to $4.3 billion by the end of 2016-17.

Michael Genest, who once ran the Finance Department in the state Capitol, is worried what that if revenues fall Brown is "going to be right back where we were in 2008."

John Karaffa, president of ProSport CPA, a firm that represents nearly 300 professional athletes, predicts California will have an "exodus of people." He notes that California was "already a very high tax state and it's getting to a point where folks have to make a business decision as well as a lifestyle decision."

Rich athletes, movie stars, company CEOs and highly-paid professionals cannot escape the recent 5% federal tax increase on them, but they can - and probably should -- leave California high and dry. Why have an allegiance to a state that is punitive and does nothing to keep them around? Who can fault a person, rich or poor, for wanting to keep more of the money they earn? I certainly don't.

Before you smugly say, "Fine, don't let the door hit you on the way out" to all those successful people, just remember you lose too. Remember, too, that those millionaires will be buying granite counter tops and hiring laborers for their gardens and pools and housekeeping in the states they move to, further employing people in those states, not to mention enhancing sales tax coffers. Rich people employ people and they stimulate the economy.

It's too bad California lawmakers just don't get it.
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