This year, California joined six other states in sending a message to America’s millionaires and billionaires: it’s time to pay up.
On Jan. 20, California Assembly member Alex Lee reintroduced a wealth tax proposal that would tax the state’s billionaires at a rate of 1.5% by 2024 and residents worth over $50 million at a rate of 1% by 2026. The move followed similar efforts by Democratic legislators in Connecticut, Hawaii, Illinois, Maryland, New York, and Washington to make up for the federal government’s lack of action in raising taxes on the rich.
Lee and his like-minded peers were immediately and predictably met with the familiar claim that higher taxes will cause rich residents of these states to flee to other lower-tax states. But make no mistake about it: that idea is a myth, an empty threat constantly laid down by millionaires across the country looking for a way to discourage state lawmakers from raising their taxes.
How do I know? Well, I’m a millionaire who just did the opposite–I recently moved from Florida, a low-tax state, to California, a high-tax state.
All of my friends and colleagues told me that I was crazy to pick up sticks and move somewhere where I would have a higher tax burden. Why on Earth would I willingly want to pay more in tax than I already do?
The answer is simple: California’s higher taxes on wealthy people like me are exactly what makes it the kind of state I want to live in.
States like California with progressive tax systems consistently, time and again, outperform their low-tax state counterparts on a variety of metrics. They have more robust economies with lower rates of unemployment and faster income growth. They have higher quality, more affordable, and more accessible healthcare systems. They have better public schools and see better educational outcomes among their children. They are demonstrably safer, with lower crime and incarceration rates. They also have cleaner natural environments, with less exposure to toxins and cleaner air and drinking water.
None of this is an accident. Higher, more progressive taxes are a precondition for a healthy, robust welfare state with a strong social safety net. It’s not the only precondition–these states need lawmakers with enough political courage to use revenue in the right ways for their constituents–but it’s certainly a critical and unavoidable one.
While I might be paying a bit more in taxes in California, I like to think that what I’m getting in return for it–cleaner air and water, better schools, better parks, better hospitals–is more than worth it. In fact, I’m wealthy enough that I really won’t even feel the extra squeeze on Tax Day in any noticeable way.
The notion of “millionaire tax flight”–the phenomenon of millionaires leaving high-tax states for low-tax ones–has been around for a while. Public threats to move from high-profile billionaires have certainly added fuel to the idea over the years. However, research shows the opposite.
After analyzing thirteen years of millionaire migration patterns for his book, The Myth of the Millionaire Tax Flight, Cornell University Professor Cristobal Young found that just 0.3% of millionaires move to low-tax states in a given year. That doesn’t really seem like a full-blown phenomenon to me. In my experience anyway, wealthy people are far more likely to move to be closer to their kids and grandkids than for any economic reasons.
In short, state lawmakers don’t have to worry about millionaires leaving if they institute more progressive taxes, as all evidence points to the contrary. Instead, what they should worry about is joining the ranks of low-tax states that offer poor quality of life to their residents. If they don’t get their act together, they may well face a very different problem: millionaires following my lead and trekking to high-tax states for a better quality of life.
In a 2010 speech to the New Jersey state legislature, then-governor Chris Christie famously quipped, “Ladies and gentlemen, if you tax them, they will leave.”
To any lawmaker afraid to tax me, I say the opposite: ladies and gentlemen, if you tax me, I’ll come. And I’ll stay for a better quality of life.
David Nixon recently relocated to Pasadena, CA from St. Pete Beach, FL. He is an entrepreneur currently leading an applied genomics company and a member of the Patriotic Millionaires.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
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