The lawsuit, filed in Boston federal court, was prompted by a U.S. Supreme Court ruling in 2013 in a case involving the University of Texas’ admissions practices. The court didn’t invalidate the Texas system, but it sent the case back to lower courts with an admonition that race had to truly be only one of several factors in weighing close calls in admission decisions — not the crucial factor.

The Harvard lawsuit, launched by the Project on Fair Representation and the Students for Fair Admissions, targets the same practice that has drawn fire at UCLA and UC Berkeley: a “holistic” evaluation of applicants’ merits that considers how much they have had to overcome and their personal qualities, among other factors.

In his recent book, “Cheating: An Insider’s Report on the Use of Race in Admissions at UCLA,” UCLA political science professor Tim Groseclose found black students were three times as likely as white students and twice as likely as Asian students to gain admission under “holistic” grounds. Proposition 209 sponsor Ward Connerly, a former UC regent, has long charged that UCLA, UC Berkeley and other UC campuses manipulate admissions to get around the race-neutral requirement of his 1996 law.

The numbers in the Harvard case seem to suggest that an Asian student quota exists. Over the past 20 years, Asian-Americans have comprised 20 percent of the freshman class with little variation.  As the Project on Fair Admissions — sponsor of the Harvard suit  — notes, over the past 20 years, the number of high-performing Asian-American high school students has doubled.

But Harvard’s freshman admissions suggest quotas for all races. In recent years, blacks have made up around 12 percent of freshmen, Latinos around 13 percent and whites and decline to state students a little more than half.

The numbers for UC’s top schools also suggest a de facto quota system. At UCLA, Asian-Americans consistently make up one-third of freshmen; whites about 27 percent; Latinos about 20 percent; and blacks about 4 percent. At Berkeley, Asian-Americans consistently make up about 40 percent of freshmen; whites about 30 percent; Latinos about 12 percent; and blacks about 3 percent. (The UC numbers don’t add up to 100 percent because they don’t have racial breakdowns for international student admissions.)

Asian-American state lawmakers seem satisfied with this status quo and strongly opposed Latino and African-American lawmakers’ interest in weakening Proposition 209 last year. But Groseclose’s research found an interesting fact that could someday become a hot potato in California politics. “Holistic” admissions policies are supposed to weigh to a big degree on the disadvantages facing potential enrollees. Yet …

… race outweighs socioeconomic status, according to Groseclose. For instance, black applicants whose families had incomes exceeding $100,000 were about twice as likely to be accepted in round two [after holistic reviews] as Asian and white kids whose families make just $30,000 and had similar test scores, grades and essays.

While Harvard is a private institution, it receives tens of millions of dollars in federal funding with strings attached, making it vulnerable to lawsuits over admissions. Thus, virtually all U.S. universities are at risk of being sued over practices that appear discriminatory.

The Project on Fair Representation intends to sue other universities over what it sees as rigid racial quotas.

It’s interesting to note that incoming freshmen at Yale are also 20 percent Asian-American, as are those at Princeton.

In the most recent numbers from Stanford, Asian-Americans made up 23 percent of the undergraduate student body.

The first case in which the U.S. Supreme Court weighed in on affirmative action in college admissions was the 1978 Bakke case, involving the University of California. More information on Bakke is here. The court found affirmative action to be constitutional — but not the use of racial quotas.

By Wayne Lusvardi

When hosting TV game show “Family Feud,” the late host Richard Dawson made famous his line: “Survey says!”

There’s a new study out on how millionaires react to tax increases. What does the survey say?

“Millionaire Migration in California: The Impact of Top Tax Rates” is by Charles Varner and Cristobal Young, both of the Stanford University Center on Poverty and Inequality.

The study says:

* The flight of millionaires from California due to higher income tax rates from pending Proposition 30 is likely to be minuscule.  Only a maximum of 120 millionaires a year could leave or 1,200 over ten years. (Proposition 30 would raise the state income tax on those making $250,000 or more a year, with the top rate rising 3 percentage points, to 13.3 percent.)

* The highest income Californians were less likely to leave the state when the Mental Health Services Tax was passed in 2005.

* The number of non-resident millionaires who pay some taxes in California did not rise when the Mental Health tax was imposed.

* The 1996 state tax cuts did not have a consistent and substantial effect on retaining residents in California or attracting in-migrants from other states.

* The strongest out-migration factor was marital divorce.  Tax policies are “modest when compared to the life impact of marital dissolution.”

* Most millionaires fall into the highest tax bracket because of a peak year of earnings, such as real estate brokers, during the Mortgage Bubble.  So millionaires are not as likely to move if Prop. 30 passes, and their top income tax rate toes from 10.3 percent to 13.3 percent on a peak year of earnings.

Left out

Briefly, here is what the study didn’t say, or didn’t interpret properly:

* The largest out-migrations of Californians of all income levels have occurred during real estate booms such as the Mortgage Bubble, not during economic recessions. The largest net out-migration of California millionaires was in 2004, during the Mortgage Bubble, with 63 leaving (Stanford study, Page 22, Table 3.1).

* In-migration of millionaires from other states offsets the number of California millionaire out-migrations in most years. The larger problem is that the number of millionaires in California has declined by 61,410 since 2002. If this trend continues to 2019, when Prop. 30 expires, any tax increase on millionaires would be on 71,645 fewer millionaires than in 2012

* The percentage of those with incomes from $500,000 to $1 million that migrated out of California during the Mortgage Bubble from 2005 to 2007 rose 74 percent on average compared to the recessionary years of 2001 to 2004.

Divorce

* There were 150,180 divorces in California in 2003-04.  In that same year, only 857 millionaires and 63 net millionaires moved out of California. The gross number of millionaire out-migrants (0.5 percent) and the net number of out-migrants (0.4 percent) are too small to be of statistical significance to generalize that divorce is the main cause of millionaire tax flight.  Most statisticians warn that such small numbers can lead to hasty generalization.

* Divorce rates for the middle class tend to fall during recessions and rise during booms, albeit the data are mixed.  Divorce rates dropped during the Great Depression of the 1930s.  Divorce does not appear to be the main driver of relocation out of state unless it is related to home foreclosure, mainly for those in lower income brackets.  The Stanford study confuses a symptom for a cause and tends to reduce the reasons for out-migration to psychological marital incompatibility. Divorce is not the main driver for people to move to California, nor to move out.

* The imposition of the state Mental Health Tax during the Mortgage Bubble is not a valid indicator for tax flight during a prolonged managed depression.

* To conduct a valid scientific study about millionaire tax flight, a comparison needs to be made between millionaires who left the state and those that did not. Instead, the Stanford study made a comparison of a so-called “Control Group” of those in the $500,000 to $1,000,000 income bracket with a “Treatment Group” in the $1,000,001 to $1 billion income bracket.  This is obviously not a valid apples-to-apples comparison (see Table 3.3).

* Low tax rates and business regulations appear to have a significant bearing on choice of state to relocate to.  All the “sender states” with the largest number of in-migrants to California have unfavorable tax and business climates; and all the “destination states” have better tax and business rankings by a factor of two (2 X).  Even if size of state is considered, there is a much greater tendency for out-migrants to flee to low tax-low regulation states.

* If divorce were a large factor in out-migration, then we would expect out-migrants to tend to move back to old family and community ties in their states of origin rather than to low tax states.  But that is not the case.  Moreover, the researchers ignored what is called “strategic divorce,” or “postnuptial agreements” where wealthy couples divorce to protect assets when there is financial stress.

Out-migration

* A Mercatus Center 2011 study found that higher state income-tax rates cause a net out-migration of both higher income residents and all residents.

* Of course, all this controversy dodges the question: Will future millionaires avoid residing in California?

In conclusion regarding wealth redistribution by taxing the wealthy, as Nobel Laureate economist Milton Friedman wrote:

 “There is all the difference in the world, however, between two kinds of assistance through government that seem superficially similar: First, 90 percent of us agreeing to impose taxes on ourselves in order to help the bottom 10 percent, and second, 80 percent voting to impose taxes on the top 10 percent to help the bottom 10 percent.

“The first may be wise or unwise, an effective or ineffective way to help the disadvantaged — but it is consistent with belief in both equality of opportunity and liberty. The second seeks equality of outcome and is entirely antithetical to liberty.”