California added 37,010 million-dollar taxpayers in 5 years
”Survey says” looks at various rankings and scorecards judging geographic locations while noting these grades are best seen as a mix of artful interpretation and data.
Buzz: Despite all the talk about rich folks fleeing California, the number of million-dollar tax filings from the state grew 51% between 2021 and 2016.
Source: My trusty spreadsheet reviewed IRS data looking at where taxpayers with adjusted gross incomes of $1 million or more lived in 2021 (with incomes for the previous tax year) compared with the size of this top-earning cohort five years earlier.
Topline
In 2021, 109,480 Californians filed federal returns with million-dollar incomes – No. 1 among the states and 18% of the US total.
Next was New York at 54,370, Florida at 53,190, Texas at 49,420, and New Jersey at 23,950.
Looking back five years, California added 37,010 million-dollar filers – also tops among the states and 22% of the US total.
That jump was larger than the additions for the next two states combined: Florida, up 20,310, and Texas, up 11,660.
Details
How fast is California’s 51% growth rate for seven-figure filers? In these five years, this slice of wealth grew 39% nationally.
Yet California ranked only 17th-highest among the states, another signal that California’s economy is being matched or exceeded in numerous ways.
No. 1 was Idaho at 125% growth, then Utah at 107%, Washington at 97%, Montana at 90% and Maine at 87%.
Conversely, seven-figure filers grew slowest in Louisiana and Oklahoma at just 4% for five years, then North Dakota at 7%, West Virginia at 8%, and New York at 9%.
And California’s big economic rivals? Texas trails at No. 40 with 31% growth, while Florida was better at No. 9 at 62%.
Caveat
This club is exclusive. California’s million-dollar incomes were only 0.56% of the state’s 19.6 million IRS filers in tax year 2020 – that’s one out of 179 filers.
That share is higher than the nation’s 0.37%. It’s a concentration of wealth topped by only the District of Columbia at 0.76%, Connecticut at 0.69%, and Massachusetts at 0.63%.
By the way, where is it hardest to find a seven-figure filer? West Virginia at 0.09% – that’s one out of 1,111 – then Mississippi at 0.12% and New Mexico at 0.14%.
And California rivals? Texas had the 14th largest share at 0.36% and Florida was No. 8 at 0.47%.
Bottom line
California’s economy of the late 2010s was a fast-growth era after finally shaking off the Great Recession cobwebs. But that swift expansion ran into the pandemic lockdowns and stimulus of 2020.
And during this period, California’s overall population growth crawled to a halt with departures to other states on the rise.
Yet California seven-figure filers remained on the upswing. This 51% growth in million-dollars incomes is five times faster the 10% growth in total California filers.
Over these five years, California added seven-figure filers at a 7,400-a-year average pace. There was only one down year (2016) and the biggest one-year increase came in tax year 2020 at 15,360.
And do not forget the very, very rich folks are a tiny but critical cog in the Golden State economy. A prime example is their influence on government finances of California that are heavily dependent on state income taxes.
The very rich doing very well helped create huge government surpluses mid-pandemic. The state government’s current deficits suggest a turnabout for this million-dollar group.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
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