rich

Reporting from Sacramento — Are rich people fleeing California to escape astronomical state income taxes? That’s the word. But it’s fake news.

In fact, more wealthy people are moving to California than leaving, research indicates. It’s the poor and middle class who are departing.

It makes sense. If you’re getting rich in California and can afford to live comfortably here in this balmy climate, there’s little incentive to leave — except to stick it to the tax collector in Sacramento.

“If you’ve got your business here and you’re making money, it’s hard to leave,” says Allan Zaremberg, president of the California Chamber of Commerce.

“And if you’re making money in California, you’re still going to get taxed here even if you live in Texas,” he said. “You get taxed where you make the money, regardless of where you live.”

Loren Kaye, president of the California Foundation for Commerce and Education, a chamber affiliate, cautions: “You can’t shelter your income simply by moving out of state. If your business or work is in California, that’s where you’re taxed. California very aggressively collects taxes.”

But, he adds: “If you’re retired or living off of investments, that’s different.”

You can move to Nevada, where there’s no state income tax, and live off a California public pension without paying either Sacramento or Carson City.

The long-speculated California tax escape was mentioned in lots of emails last week after I wrote about superstar baseball slugger Bryce Harper. He rejected competitive offers from the Dodgers and San Francisco Giants and signed a 13-year, $330-million contract with the Philadelphia Phillies in low-tax Pennsylvania.

Avoiding California’s highest-in-the-nation 13.3% income tax rate was just one of several reasons Harper signed with the Phillies. He also liked their hitter-friendly ballpark. And he felt comfortable playing in the National League East, where he has spent his entire major league career.

But Harper will save many millions in taxes by not playing for a California team, a strong inducement despite his hometown being nearby Las Vegas.

More from George Skelton »

California’s income tax has become even more burdensome for the wealthy and many middle-class residents because of new federal so-called reforms. President Trump and the previous Republican Congress stripped our ability to deduct all state income and local property taxes on federal returns. There’s now a $10,000 limit.

Harper’s avoidance of this state seemed symbolic of the California tax-flight tale that has circulated for years. But apparently it’s mostly made up.

Sure, there are anecdotes galore. Everyone seems to know someone who has fled California to dodge its high taxes. But there’s no wholesale bolting of the rich.

“Substantially more rich people are moving into California than moving out,” says Cristobal Young, a Cornell University sociology professor. He teamed with others at Stanford University’s Center on Poverty and Inequality to write a research paper on “Millionaire Migration in California.”

“They want to be where the action is,” Young says. “There’s more opportunity in California. There are a lot of ways to make a lot of money in California, more than other places. A lot of that is tech, but it’s a diverse economy….

“People who want to make money tend to live where other high-income people are. It’s one thing to say, ‘I’m going to leave California to save money on taxes.’ But that means leaving clients, collaborators, investors, friends….

“It’s not that rich people are moving to Reno and Nevada,” Young adds. “They’re moving to San Francisco and making living costs miserable for a lot of people.

Coverage of California politics »

“California has a net out-migration of low-income folks who can’t afford to live in their state and are being pushed out by high-income homeowners. And there’s a whole other story of middle-class people struggling to pay their bills and the housing shortage hitting them hard.”

The Stanford report concludes that California has “consistently become a more attractive place for millionaires,” adding that perhaps this is because California has become “a winner-take-all economy.”

Similar findings have been reported by other organizations.

“Although California has had net out-migration among most demographic groups, it has gained among those with higher incomes ($110,000 per year or more) and higher levels of education (graduate degrees),” the state Legislative Analyst’s Office determined last year.

Next 10, a public policy think tank, found that “the main driver for net out-migration appears to be high housing costs since migration rates are highest for those at lower-wage levels…. The vast majority of people who moved out of California were concentrated in lower-skilled, lower-paying fields.”

State demographers, digging into federal census data, found that significantly more people earning above $125,000 were moving into California than were leaving. And more earning less than $75,000 were taking off.

In the January state budget document, there also was this observation: “Over time the state…has become more educated on average due to outward migration of less educated residents…and inward migration of more educated people.”

So the wealthy are not fleeing California in droves even though they’re being hammered by state income taxes. The top 5% of earners pays two-thirds of the tax. The bottom 80% pays less than 11%. That’s just bad tax policy because it leans too heavily on rich people’s capital gains that plummet during a recession.

Fortunately the rich are staying with us, fueling the economy and funding state government. And they keep arriving.

george.skelton@latimes.com

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“Crazy Rich Asians” will officially be back on screen, with some familiar faces joining for the ride.

HBO announced on Thursday that it had ordered an original drama series of the same name based on author Kevin Kwan’s book series eight years after director Jon M. Chu’s “Crazy Rich Asians” film adaptation marked a watershed moment for Asian representation in Hollywood. The series will see stars Constance Wu and Henry Golding reprise their roles as lovebirds Rachel Chu and Nick Young; Ronny Chieng as Nick’s cousin Eddie Cheng and Oscar winner Michelle Yeoh as the hard-to-please Young family matriarch, Eleanor.

Although not exactly the movie sequel some fans were hoping for, the series will pick up after the events of the 2018 film and will be based on Kwan’s books, HBO announced. Adele Lim, who co-wrote Chu’s 2018 film, will serve as showrunner and will executive produce the series alongside Kwan, Chu and “Crazy Rich Asians” movie producers Nina Jacobson and Brad Simpson.

HBO announced its series order just days after parent company Warner Bros. Discovery closed its $111-billion deal with Paramount Skydance.

The official series order comes more than a year after Golding shared that he and some of his “Crazy Rich Asians” collaborators had reunited to discuss the future of the franchise, including a meeting with Lim. The Times confirmed last year that the series was in early development.

The “Crazy Rich Asians” series could fill the void left by the onetime promise of a “Crazy Rich Asians” sequel. Prospects of a sequel crumbled in 2019 when the Hollywood Reporter broke news that Lim left the sequel over pay disparity.

The slate of statewide measures on the Nov. 3 ballot provides voters two opportunities to tax the rich, which in past years has proved tantalizing to California’s left-leaning electorate.

Only one of those measures has strong voter support, however, and it’s not the proposition that’s attracted nationwide attention, ignited a nearly quarter-billion-dollar political slugfest and created a rift among top leaders in the Democratic Party.

Likely voters expressed middling support for Proposition 40, a one-time 5% tax on billionaires’ assets intended to compensate for an impending $100 billion in federal healthcare funding cuts. They were far more likely to back Proposition 3, a ballot measure that would make permanent a tax increase on the wealthy that funds schools and healthcare, according to a poll released Friday by UC Berkeley’s Institute of Governmental Studies that is co-sponsored by The Times.

Proposition 3 appears to be a much less controversial endeavor, which may explain why it has more voter support. The ballot measure would extend a tax enacted in 2012 on individuals who earn at least $360,000 a year that is set to expire in 2031. Proposition 40 proposes a brand-new tax on billionaires and is opposed by Gov. Gavin Newsom, who fears that it could hurt the state’s finances in the long run.

“When you’re going about taxing the billionaires’ assets, I mean that’s something kind of new and different, and it’s risky, and the governor’s against it, and you know a lot of people are expressing caution about it,” said Mark DiCamillo, director of the poll.

Voters are deeply concerned about income disparity but also skeptical about the unusual approach of the billionaire tax.

Proposition 40 has drawn the greatest attention and campaign spending of the 14 ballot measures voters will decide on Nov. 3.

In the poll, 45% of likely voters support the proposal, while 42% oppose it and 13% are undecided. That’s a decline in support compared with six weeks ago, when 48% of likely voters supported it while 41% opposed it, and comes after nearly $100 million of spending on television ads, social media messages and mailers, largely from opponents.

The billionaire tax was crafted by a healthcare union in response to legislation passed by congressional Republicans and signed by President Trump last year that could result in millions of Californians losing Medi-Cal coverage, rural hospitals shuttering and other healthcare services being slashed unless a new funding source is found.

The proposal would retroactively apply to billionaires who lived in California as of Jan. 1, prompting some to preemptively move out of the state. Ninety percent of the revenue would fund healthcare programs, and the remaining funds would be spent on education programs and food assistance.

There are two counterproposals on the ballot that would nullify the wealth tax if either receives more votes than Proposition 40, and they have raised $144 million. Voters are torn about Proposition 41, which would prohibit any new state taxes from being excluded from a voter-approved cap that restricts how much tax revenue the state can spend each year. The billionaire tax would have such an exclusion. Voters also are divided on Proposition 42, which would prohibit new taxes on personal property, intellectual property, retirement accounts and other assets and would limit situations in which a ballot measure or state lawmakers can impose or raise taxes retroactively — both of which are essential parts of the billionaire tax initiative.

Proposition 42 has greater support, with 43% backing it, 34% opposing it and the remainder undecided, according to the poll. Even more voters were uncertain about Proposition 41: 3 in 10 said they were undecided, while 37% said they supported it and 33% said they planned to vote against it.

The large number of undecided voters this close to the election points to voters being overwhelmed by the sheer number of statewide ballot measures, DiCamillo said.

“It’s confusion,” he said, adding that many voters may make a decision once they receive more ballot information.

That said, the fact that none of these proposals has the support of more than 50% of likely voters doesn’t bode well for their prospects, DiCamillo said.

Ballots will begin arriving in the mailboxes of the state’s 23.2 million voters in days.

Democratic voters outnumber Republicans by nearly 2 to 1 in California, but the party’s leaders are deeply divided about the billionaire tax, given the volatile state budget’s reliance on the wealthy. Newsom, who is pondering a 2028 presidential campaign, and the two men vying to replace him — Democrat Xavier Becerra and Republican Steve Hilton — oppose it. Rep. Ro Khanna (D-Fremont), a potential 2028 White House contender, supports it, as does the California Democratic Party.

Additionally, Dave Regan, president of Service Employees International Union-United Healthcare Workers West and architect of the ballot measure, has come under scrutiny. Regan has been accused of threatening and intimidating women who worked for the union’s parent organization, and of physically assaulting one, according to reporting by The Times. He was also accused of trying to extort SEIU’s state council, suggesting that it could face an investigation over “governance issues” if it did not support Proposition 40, according to an investigation commissioned by SEIU.

Regan has denied these claims, describing them as a “smear” campaign orchestrated by Proposition 40 opponents.

Much less attention has been paid to Proposition 3. Californians who earn more than $360,000 now are subject to a 10.3% tax, while those who earn more than $721,000 face a 12.3% levy. The vast majority of the billions raised through this tax go to K-12 schools, while the remainder is spent on community colleges and healthcare.

The other ballot measure that is receiving national attention is Proposition 39, which would require voters to present a government-issued identification document to cast a ballot or provide a PIN or the last four digits of their Social Security number when submitting mail-in ballots.

The measure also would require the California secretary of state and county election officials to verify that registered voters are U.S. citizens by “using government data,” which according to supporters could include information in the federal Social Security Administration database, jury summons information and other government records.

The proposal comes as Trump has continued to make claims that elections, notably in California, are being rigged by Democrats. Americans are increasingly alarmed about the security and sanctity of voting, and growing fears about intimidation efforts at polling places in the midterm elections.

Fifty-two percent of likely California voters oppose the voter ID proposal, while 39% support it and 9% are undecided, according to the poll.

“It doesn’t look like it’s in a strong position,” DiCamillo said, noting that while voters have opposed it in prior polls, the opposition has grown.

Nearly one-third of voters were undecided about two other propositions:

• Likely voters were evenly split about Proposition 4, which would repeal a ban on public funding of campaigns, with 35% supporting it and 35% opposing it, and the remainder undecided.
• Four out of 10 likely voters opposed Proposition 43, which would increase the threshold necessary to pass local taxes from a simple majority to two-thirds, while 31% supported measure and 29% were undecided.

Voters will also face questions about environmental policy, housing, recall elections and other matters, as well as statewide, congressional and local elections. Californians are fatigued by the length of the ballot.

The Berkeley IGS/Times poll findings are based on an online survey in English and Spanish of 6,989 registered California voters, 4,512 of whom are considered likely voters, on Sept. 15-20. The results are estimated to have a margin of error of about 2 percentage points in either direction in the overall sample, and larger numbers for subgroups.