I saw on news that the highest possible income tax rate in California is now 13.3%. That is huge and highest in the country. How will this impact startups/businesses specifically silicon valley ?
As an international tax lawyer based in California, I can tell you the obvious: it is chasing people and capital away from the State of California.
This apparently is not obvious to our fine friends in Sacramento. Or the people who vote for them.
They seem to have a static model of human behavior: humans do not react to economic stimuli under their model, so if taxes are raised the humans glumly accept their lot and pay more.
Except of course when it is time to hand out government cookies. Then the model of expected human behavior is active. We expect humans to respond to handouts and subsidies. (I'm looking directly at the junk that our local and State governments do to entice the movie industry to shoot on location in California).
You get less of what you tax. If you don't like rich people, tax them. They will go away. (They will not be less rich). If you don't like corporations, tax them. They, their capital, and their jobs will go away.
You get more of what you reward. Insert your favorite examples here.
"We're California! Everyone wants/has to be here!" This works until it doesn't. Then it craters amazingly fast. Kind of like RIMM.
This apparently is not obvious to our fine friends in Sacramento. Or the people who vote for them.
They seem to have a static model of human behavior: humans do not react to economic stimuli under their model, so if taxes are raised the humans glumly accept their lot and pay more.
Except of course when it is time to hand out government cookies. Then the model of expected human behavior is active. We expect humans to respond to handouts and subsidies. (I'm looking directly at the junk that our local and State governments do to entice the movie industry to shoot on location in California).
You get less of what you tax. If you don't like rich people, tax them. They will go away. (They will not be less rich). If you don't like corporations, tax them. They, their capital, and their jobs will go away.
You get more of what you reward. Insert your favorite examples here.
"We're California! Everyone wants/has to be here!" This works until it doesn't. Then it craters amazingly fast. Kind of like RIMM.