It’s not uncommon for state and local elections to get lost in the shuffle of a presidential election year. That might alarm America’s Founding Fathers, who no doubt expected us to pay far more attention to local elections than federal, but that’s another story altogether. The reality is that state elections have significant implications for the rest of the country in the way they can affect economic activity and create incentives — both intended and unintended.
It seems California took advantage of the opportunity this year to create some incentives for both businesses and individuals … to move elsewhere. As readers may already know, California voters passed propositions to raise a host of taxes, including income taxes, sales taxes and business taxes (in the form of closing loopholes out-of-state businesses were using to lower their overall tax burden).
Let’s take these in turn, starting with income taxes. Proposition 30 creates four high-income tax brackets with increasing marginal rates: 10.3% on taxable income between $250,000 and $300,000, 11.3% on taxable income between $300,000 and $500,000, 12.3% on taxable income between $500,000 and $1 million and 13.3% on taxable income over $1 million. Read