There’s a good news story on the front page of the San Diego U-T about Denny Sanford, a philanthropist who just gave $100 MILLION to UCSD for medical research. A genuinely generous man with a vacation home in La Jolla, his avowed goal is to give away his billion+ dollar fortune during his lifetime.

Such generosity is not at all uncommon among the truly rich, though many wait until they die to dispense such gifts. Frankly I think Sanford has the right idea — why not get the heartfelt thanks for such generosity while still alive, and live to see the good that such donations do? He’s EARNED it!

But there’s one aspect of the story that most will probably overlook. Sanford was born and raised in high tax Minnesota. Many years ago after some financial success he decided to buy a small bank business in South Dakota and to move to Sioux Falls. He took that 80 employee bank company and expanded it into the credit card business — two companies that today employ over 3,000 people. With no South Dakota state individual or corporate income tax, Sanford was able to accumulate more (and create more jobs) than he could have in a high tax state.

Since his South Dakota-based success, Sanford has given huge amounts of money to primarily South Dakota charities ($400+ million for the Sioux Indians alone), plus other charities in other states. He has vacation homes in Scottsdale, Arizona, La Jolla and Vail. But he keeps his permanent home in South Dakota.

Two matters to consider:

1. South Dakota’s tax and regulatory climate. It’s VERY good. A new Tax Foundation survey lists South Dakota as having the second best business climate in the nation. It has no corporate income tax. For Sanford’s particular business, the South Dakota laws concerning credit card rates and terms are particularly attractive. And apparently the Mount Rushmore State is not the “judicial hellhole” that it is the pejorative nickname for California and its rapacious litigation environment.

2. The South Dakota personal income tax rate is zero. It’s one of seven states in the nation with no income tax.

So it’s no surprise that Sanford remains a South Dakota resident. I’m sure he loves Scottsdale, La Jolla and Vail, but he LOVES legally residing in freezing Sioux Falls, South Dakota.

Contrast the South Dakota tableau that welcomes business with California’s hostile, anti-wealth mindset. Apparently most Californians HATE people like Denny Sanford — and successful, employee-hiring businesses. The majority has chosen to punish such evil rich folks and corporations precisely because they have more than most of us. The majority of voters want to shift ever higher financial burdens (OUR financial burdens) onto the broad shoulders of these wealthy “culprits.”

Assuming that Sanford no longer needs to spend much time running his South Dakota businesses, why doesn’t he want to make his permanent home La Jolla? Surely La Jolla is preferable to windy, snowy, buggy South Dakota.

Moreover, if Sanford is such a generous man, why not demonstrate that generosity by choosing to pay California’s 13.3% state income tax?

Why indeed! The answer is important, and multifaceted.

1. Most important, Sanford wants to direct his philanthropy (his MONEY) to where he thinks it will do the most good — and meet the needs he deems to be HIS highest priorities. Dumping money into the gaping maw of state government meets neither criteria. In fact, it’s hard to think of a more wasteful outlay of one’s funds than pouring it into a government’s general fund.

2. I suspect that Sanford’s experience paying taxes mirrors everyone else’s. Speaking personally, I’ve never gotten so much as a perfunctory thank you note for any of the taxes I’ve so generously paid. But I DO get helpful reminders (and threats, and fines) from taxing agencies if I’m remiss in either the timing or the quantity of my submissions.

3. The paperwork and process of giving money away to charities is incredibly simple. Contrast that with paying California income taxes. Mounds of dangerous paperwork with commensurate cost, nebulous and contradictory interpretations of what the law is and even RETROACTIVE tax increases loom large for anyone choosing to pay CA income taxes.

So for the foreseeable future, CA will do as much as possible to drive away our California 1% and their businesses, while continuing our Golden State’s ceaseless efforts to discourage such greedy rich people from migrating to California. Brilliant.

Cross-posted at Flashreport.