Group says Kim Kardashian isn't paying her fair share in taxes

Political activists want reality TV star Kim Kardashian and other rich Californians to pay a "millionaires tax." / Lisa Maree Williams/Getty Images

COMMENTARY Kim Kardashian may be famous for her curves, but it's her flat taxes that are attracting attention of late.

Advocates of a proposed tax hike on the wealthy in California say the reality TV star made more than $12 million last year, yet paid only slightly higher state income taxes -- at a rate of 10.3 percent -- than did middle class residents, who paid 9.3 percent. With California facing spending cuts in education, health care and other social services to close a $2.2 billion budget gap, the group Courage Campaign says Kardashian symbolizes how the state's tax system favors the rich. Courage Campaign is pushing for a so-called millionaires tax.

The grass-roots organization, joined by labor unions, education activists and community groups, wants to raise taxes by 3 percent for Californians with incomes of $1-2 million per year and by 5 percent for those earning more than $2 million. That would boost state tax receipts by $6 billion a year, Courage Campaign claims, allowing California to create jobs by repairing transportation infrastructure, reverse increases in college tuition, and restore essential services to the elderly and to children.

California Gov. Jerry Brown also wants to boost taxes on the rich: He is expected next year to urge voters to approve a plan to temporarily raise taxes on people with annual income of more than $250,000. The state's sales tax would rise, too, hitting all consumers. Brown says the combined hikes would raise $7 billion a year.

Channeling the conventional wisdom among political conservatives, some financial pundits contend that states that increase taxes on the rich will chase high-income earners to lower-tax parts of the country. Tax expert Daniel Mitchell of the Cato Institute, a think-tank that supports a flat-tax, writes in Forbes that "higher tax rates would accelerate the emigration of investors, entrepreneurs, small business owners and other rich taxpayers to zero-tax states such as Nevada."

And here is The Wall Street Journal's William McGurn coming to Kardashian's defense this week and bashing Courage Campaign's push to raise taxes on affluent Californians:

[I]f Ms. Kardashian responded to the millionaires tax by relocating, then instead of gaining an additional few hundred thousand in revenue, the state would be out the more than $1 million she's now paying (assuming the $12 million that Courage Campaign lists is all taxable income).

But is Kardashian likely to trade Southern California's Orange County for one of the nine U.S. states with no income tax? Hardly, according to the Center on Budget and Policy Priorities, which concluded in an August report that state tax increases have a negligible impact on people's decision to migrate to other states. Indeed, found the think-tank, the impact is small enough so that states that boost taxes on the wealthiest households can expect a significant gain in government revenue.

Other states' track records seem to bear that out. After New Jersey raised taxes on residents with annual income exceeding $500,000 in 2004, for instance, only 70 filers earning $200,000-$500,000 left the state over the next three years because of the tax hike, researchers found. Although those departed residents cost the state $16 million in tax revenue, that was a fraction of the $3.8 billion gain the state generated by raising taxes.

Why don't rich people flee to lower-tax states? For one, most people have strong ties to their state through jobs, family and the community -- whatever their income. On average, fewer than 2 percent of U.S. residents moved from one state to another per year between 2001 and 2010. Over a person's lifetime, only about 30 percent of native-born Americans change their state of residence.

It may seem intuitive to think that the rich, with their greater financial resources, are more open to pulling up the stakes when faced with higher taxes than less upwardly mobile people. Not so. Considerable research shows that many of the factors that discourage people from moving are most common among affluent households, CBPP notes. For instance, wealthier individuals are more likely to own homes, which makes it harder and pricier to relocate. Married couples, which generally have higher incomes than singles, are also often reluctant to move if both spouses work, while parents with children tend to value the stability that comes from staying in their homes state.

Here's another reason state tax increases don't send richer residents fleeing for greener pastures: They like the government services that tax revenues buy. As Jeffrey Thompson, an economist at the University of Massachusetts Amherst, says in a statement touching on the impact of taxes on migration in New England:

Regardless of how they feel about the tax itself, people value the public services paid for with those taxes. Most important for the issue of migration, though, is the job opportunities that the state government creates by spending that tax revenue. [T]axes have no measurable impact on people's decisions to leave a state. Once households have decided to relocate -- because of job loss, divorce or whatever other reason -- they seen to be slightly influenced by the taxes in their potential destination states. Even in choosing a destination state, though, the impact of taxes is relatively small and outweighed by job opportunities and other conditions.

So rest easy, Californians. As long as Kardashian's career prospects are better in the O.C. than in, say, Nome, Alaska, a modest tax increase is unlikely to send her packing.

[richrider]

Actually, a California individual making $47K would pay only a tiny fraction of the claimed amount (9.3%) -- down to and INCLUDING zero California income tax. That's because the state gives away HUGE tax credits for personal exemptions, provides a "standard itemized deduction," and the tax code is "progressive" with people making less than $47K paying at FAR lower income tax bracket rates. To see more on how little middle income Californians REALLY pay in state income tax, go to:
http://open.salon.com/blog/richard_rider/2011/12/29/the_liberals_kim_kardashian_con_job_on_ca_income_taxes

[Doc-8404]

I know it is improper to defend "the rich" in these days of class warfare, but what would be her "fair" share for taxing? Using the numbers cited, if she pays 10.3% on $12 million, then her tax bill would be $1,236,000. Compare this to a taxk bill of $6975 for a person making $75K at 9.3%, or $4650 on an income of $50K. Now, using simple math, that means Ms. K is making 160 times the income of those making $75k and 240 time the $50K range, but paying 177 time the tax of the $75K and 266 times the tax of the $50K. If she was paying a "fair share", her tax bill would be LESS.

People in this country, starting with the politicians, need to quit this class warfare crap and start fixing the problems. They love to praise the "99%' for their views, than take vacations to HI that cost thousands or millions. (and this is not just the Pols, Hollywood folks are praising the occu-punks, then running off to HI for New Years). We need to quit damning those who have made something of them selves and start figuring out how they did it. No, I would NEVER wish any of my children to act like ANY Kardashian, but Ms. K is employing people at her stores, sellig products that people wish to pay for. How many people have the protestors hired? All thay have done is make work for the PWD workers and police while costing cities and states money to clean up their mess.

[SergeSF]

I agree wholeheartedly with you on this. When I first read this article, I was also perplexed as to why she is being targeted when she contributes an extremely large amount to the tax pool? You are completely correct that when people talk about "fair share" it would mean that many wealthy people need to start paying less.

I've been disappointed lately with the attitudes of people towards those who are doing better than them financially. Whining and trying to knock down others a peg is not going to fix our problems.

[credibility2]

My comment was deleted...if Kim is filing legally and taking every deduction legally, then no one should complain. Sounds like more sour grapes by those who complain. Oddly enough, whys isn't there this much complaining by the general public and especially the media when it comes to overpaid and under-taxed athletes, entertainers, news anchors, etc. Buffet paid little in tax two because of legal deductions and methods for reporting.

[chefsteve421]

I'm sure Kim doesn't pay all she should in Taxes, but what about the other people in her state that make way more then she does. I'm talking about those actors and actresses that make in the billions, like Oprah, those are the people that need to step up to the plate for their taxes. I mean Really!! How much money do you need in one lifetime. Or how about 5 lifetimes. Our country is in need of help, and these people whoever they are, have been making money off the people of the country for years, you don't think now is the time to pay back a little. Well if not pay back, then how about pay forward? We need help now, we can sort it out later.