Rich People Have Legs

6 10 2009

move

One of the Left’s many willful blind spots is this:

Like you and me and the rest of humanity, rich people are self-interested. They want to keep as much of what they have and, if they are singled out for punitive taxes, they will vote with their feet by moving!

Those states — such as New York, California, New Jersey, Maryland, Vermont, and Hawaii — which adopted “millionaire taxes” on high earners (usually those making $250,000 or more a year) to solve their budget shortfall are learning that lesson.

Early data from New York show the higher tax rates for the wealthy have yielded lower-than-expected state wealth. Gov. David Paterson recently admitted that revenues from the income tax increases and other taxes enacted in April are running about 20% less than anticipated. So far this year, half of about $1 billion in expected revenue from New York’s 100 richest taxpayers is missing.

Maryland enacted higher tax rates for wealthier residents in 2008 to boost revenues but income from those taxes is down 6.7% so far this year. “Overall, as in most states, revenues are down at the higher income levels,” said Joseph Shapiro, spokesman for the Maryland Comptroller’s Office. In May, the most recent calculation available, Maryland reported that taxes collected from top earners fell by about $100 million. The number of Marylanders with more than $1 million in taxable income who filed by the end of April fell by one-third, to about 2,000.

The reason?

[Map of tax free states]
Mariko Jesse for Barron’s

More and more wealthy folks are pulling up stakes. They’re moving from high-tax states by the hundreds of thousands each year, and laying down roots in lower-tax locales like Wyoming, Tennessee, New Hampshire and Texas.

“People are voting with their feet,” says Richard Vedder, a professor of economics at Ohio University who studies U.S. migration. “These are mostly productive and wealthy people who don’t believe the services associated with high taxes are substantial enough to offset their burdens.”

This migration, which Vedder calls one of the most significant in U.S. history, is expected to swell in the coming years as taxes for the wealthy climb at both the state and federal levels, jobs become more mobile, and baby boomers scope out the best places to retire.

The number of folks on the move is staggering:

From 1997 through 2007, more than 1,100 people moved every day out of the nine states with the highest income taxes, including California, New York, New Jersey, and Ohio, according to a March study by Arthur Laffer, founder and chairman of Laffer Associates, an economic research and consulting firm in Nashville, and Stephen Moore, a senior economic writer for The Wall Street Journal.

The levies in high-tax states are likely to grow still heavier. “Even if the economy recovers soon, state revenues tend to lag behind the economy,” says Mark Robyn, economist at the Tax Foundation. “The stimulus money won’t be there anymore, there will be shortfalls, and states may be looking at increasing taxes.”

Sources:

  1. http://news.yahoo.com/s/ap/20090927/ap_on_re_us/us_taxing_the_rich
  2. http://online.barrons.com/article/SB125392413369542679.html

~Eowyn

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9 responses

6 10 2009
lizp4

No state income taxes in Alaska, either. They left my state off the map.

6 10 2009
giovanniworld

liz,

I wouldn’t be surprised to find out that someone left Alaska off on purpose. They just can’t stand the idea that the next president might be from Alaska!

Gio-

7 10 2009
littlemissmuffin

Florida has no state tax either.

7 10 2009
Glenn Neal

I liked “Rich People Have Legs.” The only thing I would add is “Rich People Have INTERNATIONAL legs.

WARNING TO MIDDLE CLASS AMERICA: When Obama talks about “redistributing wealth,” he is talking about redistributing YOUR wealth. Why? Because the poor have no wealth to redistribute; the wealthy have had their wealth long enough to know how to protect it–move it offshore, hire the best lawyers and accountants to find creative tax planning hedges, and to take advantage of of the bloated, convoluted tax code that few in the middle class can navigate or understand.

There is another factor. Obama’s plan to tax high-income earners and corporations is an illusion. Corporations, of course, don’t pay income taxes. To the uninitiated, they appear to; however, companies are not taxed on the cost of producing goods–labor, materials, local taxes, and other production costs are all deducted from gross income before Uncle Sam takes his cut. Companies then price their products to recoup any tax they may have paid.

So who pays corporate taxes? You do.

Then there is “the rich.”

The rich have mobility. They can move their wealth–and themselves–anywhere in the world. They are already moving out of high tax states like New York, New Jersey and California. And many of the rich don’t even have any personal income to tax. Much of their wealth comes from dividends, owner-ship interests in various properties, and tax-free bonds. The people who do get the big bucks (college presidents, corporate executives, wall street bankers, professional athletes etc.) are too few to pay for garguantuan government. The also have good tax lawyers and will not be the source of income taxes to pay for Obama’s expansive programs.

Who’s left? The middle class.

As the federal government redistributes your income you will pay more and more for less and less government services. You will pay to support poor people and you will pay for the corporate fat cats through pass through taxes and outright bailouts. You will pay government subsidies to millionaire farmers like Sam Donaldson, former CBS News guy, who now farmed the government farm subsidies.

For working people, “Tennessee” Earnie Ford used to sing “Ya’ load 16 tons and whadda’ ya’ get? Another day older and deeper in debt. . . .” Get ready, middle class. It’s coming to a neighborhood near you–your neighborhood.
– Show quoted text –

7 10 2009
giovanniworld

Glenn,

The only caveat I would throw into the mix is this… The top 1% pay 40% of the taxes in this country. You make it sound as if that 40% could be a lot higher.

Gio-

7 10 2009
Glenn Neal

Sorry if my intent was not clear. My point is, the rich are paying about all the taxes they are willing to pay–and they have options. Any significant tax increases will fall overwhelmingly on the middle class.

I remember when government tried to put a “luxury tax” on yachts. Rich people quit buring yachts and started to buy airplanes. The skilled craftsmen who built the yachts suddenly found themselves unemployed.

Glenn

7 10 2009
giovanniworld

Gotcha!

Once the rich feel as if they are tapped-out, our blood sucking government has no choice but to go after the middle class.

The administration we have in the WH could run into a problem if they get their Marxist way. Because they want to take from those who have, and give to those that don’t have, they could end up taking away from the middle class so much that instead of raising the poor up to the middle class, they end up dragging the middle class down to the poverty class. Then we end up with nothing but the few uber wealthy, and a huge population in poverty.

Geeesh, and I was just getting over a migraine…

Gio-

Gio-

7 10 2009
Dave

Most wealthy people didn’t get that way by being stoopid.

-Dave

7 10 2009
littlemissmuffin

Why can’t we just have a fair tax? That would simplify everything.

What was I thinking? Would Congress pass a bill that would make the members of Congress actually pay their taxes? Snark off now.

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