It is a mixed bag, but top U.S. earners will leave a location to avoid a new "wealth tax" if they have the freedom to do so. Research tells us that retirees and others who receive the bulk of their earnings from investments have no problem escaping. As expected, business owners and high-earners who are still on the job don't have as much flexibility. The bottom line indicates that such taxes are statistically insignificant as motivators for relocating. Perhaps the search for real meaning with this issue rests with finding the tipping point at which those business owners would indeed move. There are reports that southern California's tax policy may be driving businesses out, but taxation is only one of many variables at work there.
Regardless, yesterday's socialist victory in the presidential election in France should come with a warning to our Blue State tax-and-spenders. The victor, Francois Hollande, intends to impose a 75% tax on "annual incomes over one million euros ($1.3 million)." Well before his election, French inquiries about London homes priced above one million pounds increased as much as 30% while those from other European nations declined more than 15%. Because France taxes its citizens on a worldwide basis, these inquiries likely came from those willing to renounce their citizenship. Even pride has its limits.
This issue bears watching here as mobility is a significant American characteristic already compromised by a long, painful and seemingly endless recession.
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