SANTA CLARA - Gov. Jerry Brown, campaigning this afternoon for his ballot initiative to raise income taxes on upper-income earners, sought to debunk the idea that the increase would drive them out of the state.
He cited a study that says millionaires are more likely to leave California because of divorce than higher tax rates.
Presuming some millionaires were in the audience as he participated in a panel discussion at the Silicon Valley Leadership Group's annual public policy luncheon, Brown told them: "People are afraid that you're going to move, and I want you to stay. I want to write you a letter of commendation because you're doing well."
The Democratic governor said he read the study during the luncheon "while I was trying to finish that sandwich ... What it says is the biggest factor in millionaires moving out of California is divorce."
Brown, who also proposes to raise the state sales tax, called divorce a "50 percent tax hit," suggesting millionaires concern themselves less with California's tax rate and "pay attention to your spouse."
The study Brown cited was by Stanford University sociologist Cristobal Young and Princeton University sociologist Charles Varner, who studied the migration of millionaires out of California and the effect of a tax on millionaires adopted by California voters in 2004 to pay for mental health programs.
The authors said their research was initiated at the request of state Board of Equalization Member Betty Yee, a Democrat.
It concluded: "Divorce is something that has a very clear effect on migration; modest changes in the tax rate for high-income earners do not."
In addition to criticizing the volatility of income taxes on California's highest earners, critics of Proposition 30 have argued wealthy residents and business owners may leave California for states with lower tax burdens. Aaron McLear, a spokesman for the campaign against the proposition, said "small businesses, which are the job creators in this state, oppose Prop. 30 because it will limit their ability to create jobs."
Brown has been consumed for weeks with his campaign to raise taxes, but he was asked this afternoon about his priorities for next year.
He said "that term doesn't resonate quite at this moment" but that the state must "keep the spending under control" while pressing forward with renewable energy projects and a controversial effort to move water through the Sacramento-San Joaquin River Delta to the south.
Brown also said that if Proposition 30 passes, it may be easier to implement a school funding formula that would give more money to school districts with high poverty rates and other challenges. Brown said "it's easier to allocate the more than it is to allocate the less," and that his school funding proposal, which has so far failed to gain traction in the Legislature, "will be more easily digested" if his revenue measure succeeds.
Speaking with reporters after the event, Brown was asked about the study on millionaires and why people who divorce may leave the Golden State. He pulled out a copy of the study while standing at the back of his car.
"I don't know why they leave," Brown said. "Probably they don't want to make their payments."
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