[1] http://taxfoundation.org/article/2016-tax-brackets

[2] http://www.forbes.com/sites/robertwood/2015/03/25/u-s-capita...

[3] http://taxfoundation.org/blog/how-high-are-capital-gains-tax...

I'm sure that Zuckerberg et al have brilliant tax accountants, but this is one thing that has never made sense to me. Volunteering to pay an extra 13% simply for the privilege of living in Northern California seems insane to me. Any of these guys could move a few hours down the road to Tahoe or Reno and save themselves billions of dollars in state taxes, even if they left the company headquarters in CA.

I'd also like to see Pricenomics do a study measuring the market cap impact of California's high corporate income tax rates on major publicly traded Silicon Valley companies. I'm guessing investors would be sickened by the results.

[1] http://www.reuters.com/article/us-usa-campaign-romney-ira-id...

No place is wonderful enough to pay billions of dollars in extra taxes just to live there. If you are a top engineer making $500K/yr, you're only paying ~$65K/yr in CA taxes, and you wouldn't make anywhere close to $500K in other cities. So the decision to live in CA makes perfect financial sense in that scenario. But in the case of a billionaire founder, it simply doesn't make any sense to sell shares while living as a California resident. You're essentially volunteering to pay a ~65% increase in total capital gains taxes over what they would be in a tax-free state.

If Mark has to stay 183 nights in NV (or stay in NV more nights than anywhere else), that might be more of a personal burden and inconvenience than paying CA tax. And if it harms his ability to lead his company, it might ultimately be more expensive as well...

If he wants to give $1 billion in cash away, there are alot better uses than to give it to state government bureaucrats. For example, he could have moved to Nevada, saved the $1 billion, and taken 50,000 homeless people off the streets for a year for that much money (which, by the way is ~10% of the entire homeless population in the United States - imagine the positive social impact of doing such a thing).

The point is that federal taxes are inescapable, while state taxes are not. It makes no financial sense for someone with nine or ten figure tax liabilities to be living in high tax states.

[1] http://www.forbes.com/sites/robertwood/2013/12/20/mark-zucke...

They'd have to move the company HQ to Reno/Tahoe to avoid the taxes.

I mean, I accept that it will have a negative marginal effect, and I accept that people will shift their behavior to avoid the tax, but I don't accept that they will start stuffing their money in the mattress because they only get to keep some of the profits of their investments.

If the strongest businesses are based in the US, the US can force investors to play by the rules they want. It's just another part of the equation.

Also, there's an additional hidden loss. I earn $30k last year, with a tax break of $3k, this year I earn nothing because I take the year off to have a baby, I lost $3k in tax break. When I work next year I don't get a $6k tax break. I can't ever make that back. Just because it's hidden, doesn't mean it's not there.

And that's far more expensive than it is to someone taking extreme risks with capital that they can lose/earn $100k in a year.

Also, you already tax your gamblers in the US...

I'm usually calling out for a progressive tax system, however, the parent is right. Investment doesn't work the way you describe. You are asking people to risk capital in order to gain some reward. A particular investment may not pan out for years and then give a windfall. I'm going to go out on a limb and say this: typically, the longer term payoff kind of things benefit society more.

As someone who has very little capital, I too get unhappy when I see regressive tax regimes. The increase in inequality is one of the great problems of our age. That said, we must take care not to throw out the baby with the bathwater. Our current standard of living would not be possible without investment.

Your example about taking time off for the baby is an interesting one. Perhaps the tax system needs to take account of people taking sabbaticals and such.