Silicon valley

Are High Taxes About to Make Silicon Valley Pack Up and Leave?

California Governor Jerry Brown is at it again.

He's cut a deal with the teachers' unions that would take the top rate of state income tax from 10.3% to 13.3%.

If passed on the November ballot, that would increase taxes on the top tier by a hefty 29%.

Since that would be the highest rate in the nation, it begs the question: How high would taxes have to go before Silicon Valley's zillionaires decided to make the great escape?

It's a very important question considering the condition of California's state budget.

After all, the Facebook IPO alone is expected to produce $2.5 billion in state tax revenue over the next five years. What if high tax rates set in motion the law of unintended consequences?

Like in the late 1990s when dot-com revenues enabled the state to go on a massive spending spree.

Not long after the tech bubble burst, the sudden budget crunch that followed in 2001-02 caused Governor Gray Davis to be recalled in a referendum.

It's a different set up this time, but the results could be the same.

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