Can additional funding improve mental health outcomes? Evidence from a synthetic control analysis of California’s millionaire tax

Abstract

California is the only one of its peers with a state-wide tax earmarked for mental health programs. The voter-approved levy applies to personal income above $1 million and has generated over $20 billion since 2005. But whether the additional funding improved population mental health remains unknown. This study applies the synthetic control method to the CDC’s National Vital Statistics System data to determine how the tax affected suicide deaths in California. Findings show that the state’s suicide mortality rate increased more gradually after the tax’s implementation than it would have otherwise. By 2019, the cumulative impact was approximately 5,500 avoided deaths. Multiple robustness and sensitivity checks confirm that result. However, the effect did not appear immediately, nor was it present within all demographic groups. Nevertheless, additional revenue was associated with improved mental health in California. Other governments may likewise yield beneficial outcomes.