Posted on 12/28/2010 10:47:21 AM PST by Graybeard58
The left-leaning Institute on Taxation and Economic Policy and right-leaning Wall Street Journal editorial page are debating the whereabouts of thousands of missing millionaires. It seems that whenever a state government imposes a big tax increase on high-earning or wealthy taxpayers — they're not always one and the same — revenue projections turn up catastrophically wrong because the so-called millionaires are nowhere to be found.
For example, Maryland expected to raise $106 million in 2008 by increasing the income-tax rate on high earners from 4.75 percent to 6.25 percent. Instead, "taxes paid by rich filers fell by 22 percent, and instead of their payments increasing by $106 million, they fell by some $257 million," the Journal's editorial page observed March 17.
More recently, the Journal revisited the Maryland experience by way of Oregon. "In 2009 the state legislature raised the tax rate to 10.8 percent on joint-filer income of between $250,000 and $500,000, and to 11 percent on income above $500,000," the Journal noted Dec. 21. "Instead of $180 million collected last year from the new tax, the state received $130 million."
During the same period, the number of high-end filers declined from 38,000 to 28,000. That's where ITEP jumps in.
"There is a much simpler explanation for this discrepancy," it said in a Dec. 22 paper. "These 10,000 taxpayers earned less than the Legislative Revenue Office expected in 2009 as a result of the economic recession, and therefore fell below the income threshold at which the new brackets took effect."
Hmmm. All of them? So the Journal was wrong when it pointed out in March, "A lot of rich people have two homes," and not a single tycoon was moved to declare himself a legal resident of Florida?
What the tax-increasers and class-warfarists never seem to understand is that everybody — rich, poor and those in the middle — makes financial decisions based on rational evaluations of their circumstances.
A few years ago, a study found a poor person living in Connecticut, lacking skills and education, would have to earn $14 an hour by working to match the benefits, in cash and services, he received through various public-assistance programs. He's not lazy or stupid; quite the opposite. By not working, he's making a rational economic decision based on the fact he couldn't earn $14 an hour in the work force.
Of course, if those welfare benefits were withdrawn, he'd have to move to a state where welfare benefits were more generous or the cost of living was commensurate with the amount he could actually earn in a job. Such a circumstance would result in a better life for him and a lighter burden on taxpayers.
Is it any wonder wealthy people and high earners — again, not necessarily one and the same — respond in much the same way to economic stimuli and impositions by government?
This year, Connecticut lawmakers and the new governor, Dan Malloy, will have some tough decisions to make regarding taxes, spending and entitlements. They should be wary of solutions that send them down the same paths Oregon, and Maryland before it, followed, to their eventual dismay.
I knew he wasn’t asking a question just like I wasn’t.
It is a truth now that we have no good people in the government.
We are stuck now, all the productive are taxed to the limit. Soon to break.
These people left and stepped away and moved and just stopped earning. Or they moved into sheltered accounts and slowly faded away.
Consequences are never part of the liberal economic projections.
Liberals are too stupid to realize that, when it comes to money, everybody wants to keep as much of it as they can, whichever way they can, and that includes moving to an area with a lower cost of living, which is almost always coincidental with lower taxes and lesser government regulations.
It doesn’t matter whether one is a liberal or a conservative, everybody wants to keep as much as they can and to pay less in taxes. What everybody expects is that, the higher taxes will always come out of somebody else’s pockets.
Could he be related to John Galt?
And almost always excellent !
I’m in Washington and last November some lefties tried to help the poor folks with an income tax for the rich. The initiative went down in flames as it always does.
Even in blue Washington, we’re smart enough to know that it won’t be long before they think we’re all rich, and a 1% tax will inevitably turn into a 2% tax, then a 3% tax.
And, yes, we’ll take you wealthy, huddled masses, yearning to be free...
It is as simple as comparing taxation to mugging. People avoid neighborhoods where they think they will get robbed.
Unfortunately, the Quinn / Madigan cabal are still there to raise taxes next year.
Can you forgive me for being such a nitpicker?
As soon as I hit the send button, I was kicking myself in the a$$ for being such a goofball. FR has dozens of punctuation police and I don’t want to become one of them.
Your point was well made.
I’m an idiot.
"Raising taxes makes EVERYONE poorer!"
His “aulter” ego.
The congressional budget office is forbidden to make any adjustments when asked to score a tax cut or a new spending program.
splain yoself
obvious common sense to anyone who thinks. leaves out quite a large part of the population.
Really? /sarc
Re:Congressional Budget office
They have to use straight numbers without accounting for the fact that higher taxes will make people adjust their spending.
They also would assume because there are for example 10 million people that qualify for a new government giveaway, that only 10 million people would take advantage of it, when in reality 15 or 20 million would find a way to qualify.
They are forbidden to take into account that behavior may alter the true outcome of any program change.
Cause and effect.
Taxpayers will follow the path of less taxes, taking advantage of all benefits available.
For instance, knowing what I do about ‘collectivists/progressives’, I ceased operations on a small agriculture trailer production because it was going to become too expensive. I simply refused to continue to pay the 12% FET. (six figures revenue for Fed in 2008)
How about two contstitutional amendments.
1. outlaw any federal vat or sales tax.
2. cap all income taxes at 15% max
3. cap all corporate tax at 10% max with no double taxation.
What's the point?
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