Author Topic: Here's a two-minute drill in soak-the-rich economics:  (Read 1975 times)

Desertdog

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Here's a two-minute drill in soak-the-rich economics:
« on: May 26, 2009, 01:51:41 PM »
I wonder how long it will take for the big tax states to realize that the rich have the ability to move to another state or overseas.

Millionaires Go Missing
Maryland's fleeced taxpayers fight back.
http://online.wsj.com/article/SB124329282377252471.html

Here's a two-minute drill in soak-the-rich economics:

Maryland couldn't balance its budget last year, so the state tried to close the shortfall by fleecing the wealthy. Politicians in Annapolis created a millionaire tax bracket, raising the top marginal income-tax rate to 6.25%. And because cities such as Baltimore and Bethesda also impose income taxes, the state-local tax rate can go as high as 9.45%. Governor Martin O'Malley, a dedicated class warrior, declared that these richest 0.3% of filers were "willing and able to pay their fair share." The Baltimore Sun predicted the rich would "grin and bear it."

One year later, nobody's grinning. One-third of the millionaires have disappeared from Maryland tax rolls. In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April. This year there were 2,000, which the state comptroller's office concedes is a "substantial decline." On those missing returns, the government collects 6.25% of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year -- even at higher rates.

No doubt the majority of that loss in millionaire filings results from the recession. However, this is one reason that depending on the rich to finance government is so ill-advised: Progressive tax rates create mountains of cash during good times that vanish during recessions. For evidence, consult California, New York and New Jersey (see here).


The Maryland state revenue office says it's "way too early" to tell how many millionaires moved out of the state when the tax rates rose. But no one disputes that some rich filers did leave. It's easier than the redistributionists think. Christopher Summers, president of the Maryland Public Policy Institute, notes: "Marylanders with high incomes typically own second homes in tax friendlier states like Florida, Delaware, South Carolina and Virginia. So it's easy for them to change their residency."

All of this means that the burden of paying for bloated government in Annapolis will fall on the middle class. Thanks to the futility of soaking the rich, these working families will now pay Mr. O'Malley's "fair share."

roo_ster

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Re: Here's a two-minute drill in soak-the-rich economics:
« Reply #1 on: May 26, 2009, 01:59:39 PM »
"What do you mean my static tax model does not accurately predict the results from changes in the tax code?"
Regards,

roo_ster

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HankB

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Re: Here's a two-minute drill in soak-the-rich economics:
« Reply #2 on: May 26, 2009, 02:43:54 PM »
Quote
On those missing returns, the government collects 6.25% of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year -- even at higher rates.
Well . . . duh.

I'd say this strongly suggests that a large subset of those with million-dollar-plus annual incomes are more mobile than Joe Sixpack & John Q. Public.

Wait for states to try and figure out how to assess "exit taxes" for people who leave.
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mtnbkr

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Re: Here's a two-minute drill in soak-the-rich economics:
« Reply #3 on: May 26, 2009, 02:50:37 PM »
I think they possibly lost quite a few "millionaires" in that timeframe as well.  The economy was in full blown downward spiral from early 2008 to early 2009.  How many of those folks lost enough income/wealth to no longer qualify?

Chris

makattak

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Re: Here's a two-minute drill in soak-the-rich economics:
« Reply #4 on: May 26, 2009, 03:00:01 PM »
I think they possibly lost quite a few "millionaires" in that timeframe as well.  The economy was in full blown downward spiral from early 2008 to early 2009.  How many of those folks lost enough income/wealth to no longer qualify?

Chris

That's a specific point in the article:

Quote
No doubt the majority of that loss in millionaire filings results from the recession. However, this is one reason that depending on the rich to finance government is so ill-advised: Progressive tax rates create mountains of cash during good times that vanish during recessions. For evidence, consult California, New York and New Jersey
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mtnbkr

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Re: Here's a two-minute drill in soak-the-rich economics:
« Reply #5 on: May 26, 2009, 03:01:56 PM »
I skimmed the article and missed that passage.

Chris

slingshot

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Re: Here's a two-minute drill in soak-the-rich economics:
« Reply #6 on: May 26, 2009, 03:16:57 PM »
Not a bad article on reality.  The wealthy do not have to play by the same rules as the middle and lower classes where often choices are limited.  As the article suggests, some just had a reduction in income due to the recession, but I bet some moved out of state too.  Rush Limbaugh is an example for NYC.  Of course he already had a residence in FL, but he took eliminated what he had in NYC when they upped taxes.
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