f0462 BC-US-CaliforniaMigrati 1stLd-Writethru 07-10 0536

Poor leave Calif. at higher rate than rich

Eds: UPDATES throughout with more details; ADDS quotes from researcher. CLARIFIES that report based on data from American Community Survey produced by the U.S. Census. ADDS years. Moving on general news and financial services.


Associated Press Writer

SACRAMENTO, Calif. (AP) — The poor are more likely to leave California than the rich, despite concerns that the state’s relatively high income tax rate is driving away the wealthy, a new study shows.


The report released Friday by the Public Policy Institute of California determined the poorest 20 percent California residents are twice as likely to leave the state as the richest 20 percent.

Factors such as cheaper rent and home prices outside the Golden State seem to edge out income taxes when people of all incomes decide whether to stay or go, said institute researcher Jed Kolko, who authored the report.

"It does not look like rich people are leaving California in order to avoid income taxes," Kolko said.

Tax critics often claim the state’s high cost of living and tax structure drive high-income earners out.

The study found that the rich — those in the top 20 percent of income earners — leave California at only a slightly higher rate than those who arrive. For those with incomes above $200,0000, the departure rate is only 1.09 households for every one household that arrives, the report said.

Meanwhile, 1.73 households with annual incomes of $22,000 or less depart California each year for every one out-of-state arrival.

States with no income tax such as Nevada, Texas and Washington are among the top five destinations for people of all incomes. Texas and Washington also export some of their wealthiest residents to California.

"States without income taxes are cheaper than California in other ways — housing costs, for example — that matter to all types of households, not only to those with the highest incomes," the report said.


A few industries such as technology and entertainment that tend to offer better paying jobs are still strongly linked to California, and it’s unlikely those workers could get jobs of the same quality in another state, Kolko said.

By comparison, many of the jobs held by people at the lower end of the distribution are not tied to California, he said.

Overall, California loses about 1.5 households for every household that arrives from other states. But its population, now about 37 million, keeps growing because of in-state births and international migration.

The report on peoples’ motives for leaving the state was based on 2004-2007 data from the annual American Community Survey produced by the U.S. Census. The data about migrants’ origin and destinations includes a wider span, from 2001 to 2007.

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