Photo Credit: Jeff Durham/Bay Area News Group

I do not deny the fact that there are millionaires living in high tax states. Studies (1) have shown that millionaires do not simply move to low tax states to save on income taxes. That said, however, it actually depends on the type of millionaire you are.

If you have a pool-cleaning business generating a million dollar profit annually that caters to the super-wealthy in Hollywood, California (state tax of 10.55% on income over $1 million) you are obviously not going to move your business even a few hundred miles to Washington State (0% state income tax) where there are significantly fewer pools and 5 times fewer millionaires (2) just to save a hundred grand because you certainly won't earn the same million profit in Washington in the pool cleaning business.

On the other hand, suppose you are making that same million a year profit but from dividend income instead. Then it doesn't matter where your main residence is because you can have a second home in California but not be subject to their taxes (California taxes dividends the same as ordinary income). Now it does pay to move out of a high tax state.

So although tax & spend liberals can point to studies showing that many rich people stay put in high tax states, it is also true that many rich people leave. Take for example what happened in Maryland: In 2007 Maryland legislators approved a "millionaire's tax" of 6.25 percent on incomes of more than $1 million a year. The result? According to socialists, it should have been more tax revenues. The actual, real-world result: the state lost $100 million in tax revenues and ended up with a thousand fewer millionaires to fleece (3).

It may not pay those who make only a million dollars a year to flee the state or even the country, but if your income is from investments that make mucho millions then it's a no-brainer that the best thing is to renounce your citizenship and take residence in a no-tax or low-tax country. Eduardo Saverin would have been an idiot to pay hundreds of millions in taxes just so Obama could redistribute that money to an ever-growing number of moochers; see my post Obama and the Transformation of America.

And if the tax rate becomes confiscatory then even those making only a few million a year may find leaving their country more pleasant than sharing their wealth: for example, a third of the population of the Belgian village of Nechin is filled with French who have fled their country in advance of a 75% tax on all earnings over one million euros (4).

When I was 13 years old I grew crystals as a hobby. One of my favorites was potassium aluminum sulfate dodecahydrate crystal which formed an octahedron which looks like two pyramids stuck together at their bases. I noticed that I could dissolve this chemical in great quantities in hot water way beyond its normal saturation point by cooling the solution slowly. I could initiate the crystallization process with a trigger such as introducing a seed crystal or foreign object or shaking the beaker. All super-saturated solutions have a trigger, a tipping point beyond which they can't stand it anymore. They seem to have reached it in France with a 75% tax.

We wait to see what the tipping point will be here in America.