Effects of taxing the top wage earners

[jreeves]

One of Maryland's budget-balancing tactics - asking millionaires to pay more money to the state - appears to be backfiring as the number of the highest-earning taxpayers dwindles with the flagging economy.

A year ago, Maryland became one of the first states in the nation to create a higher tax bracket for millionaires as part of a broader package of maneuvers intended to help balance the state's finances and make the tax code more progressive.

But as the state comptroller's office sifts through this year's returns, it is finding that the number of Marylanders with more than $1 million in taxable income who filed by the end of April has fallen by one-third, to about 2,000. Taxes collected from those returns as of last month have declined by roughly $100 million.

Many taxpayers in that bracket likely filed an extension and won't complete their returns until October, but a trend is emerging that indicates a "substantial decline" in the number of residents and small businesses with that kind of income, Comptroller Peter Franchot wrote in a letter to Gov. Martin O'Malley and legislative leaders.

and more at Maryland plan to tax millionaires backfires -- baltimoresun.com


When are liberals going to learn, you can't pay for everything by taxing the top wage earners? You will inevitably dry up revenue if you tax too heavily.

 

[Skull Pilot]

Soak the Rich, Lose the Rich - WSJ.com

Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts.

More recently, Barry W. Poulson of the University of Colorado last year examined many factors that explain why some states grew richer than others from 1964 to 2004 and found "a significant negative impact of higher marginal tax rates on state economic growth." In other words, soaking the rich doesn't work. To the contrary, middle-class workers end up taking the hit.

Those who disapprove of tax competition complain that lower state taxes only create a zero-sum competition where states "race to the bottom" and cut services to the poor as taxes fall to zero. They say that tax cutting inevitably means lower quality schools and police protection as lower tax rates mean starvation of public services.

They're wrong, and New Hampshire is our favorite illustration. The Live Free or Die State has no income or sales tax, yet it has high-quality schools and excellent public services. Students in New Hampshire public schools achieve the fourth-highest test scores in the nation -- even though the state spends about $1,000 a year less per resident on state and local government than the average state and, incredibly, $5,000 less per person than New York. And on the other side of the ledger, California in 2007 had the highest-paid classroom teachers in the nation, and yet the Golden State had the second-lowest test scores.

 

[editec]

I know at least two formerly uber-liberals scions who, when it was apparently that their parents were on their way out, moved to New Hampshire to avoid income taxes.

Now, ironically, they both bitch about how high the real estate taxes in New Hamspire are.

My heart so totally bleeds for them.

 

[Skull Pilot]

I know at least two formerly uber-liberals scions who, when it was apparently that their parents were on their way out, moved to New Hampshire to avoid income taxes.

Now, ironically, they both bitch about how high the real estate taxes in New Hamspire are.

My heart so totally bleeds for them.

In reality the higher property taxes in NH are still, in the aggregate, less than the total tax burden of many other states.

the problem is that you actually see what your real estate taxes are where income, sales and other taxes are not felt as much.

 

[Diuretic]

"The revenue figures are ugly," Franchot said in an interview. "Right now, we're digging through a pile of tax returns and trying to understand this."

The recession provides an obvious explanation. Capital gains have become almost nonexistent as stock markets have tanked. Corporate executives have seen their salaries slashed. And small businesses, many of whom file individual income tax returns, have seen their profits gouged by the economic downturn.

Another more debatable explanation would be that millionaires have simply fled the Free State. While some say they have heard anecdotal evidence of the wealthy packing it up, officials say there's no proof yet of such a development.

The real reason? Faced with having to pay taxes the rich are committing hari-kiri.

 

[GHook93]

Not just wage earns look at Corporations also! Taxing Corporations reckless like the US does drives them to places where they don't recklessly tax them and we hear lefties bitch about them leaving and then they simutaneously blame it on the Republicans!

 

[Iriemon]

It's a miracle the nation survived the great exodus of the 1950s and 1960s, when top tax rates up to 91% caused all the rich folks to leave in droves.

 

[Neubarth]

If Obama says to do it, let's do it! Right now he is on a roll. He can't do anything wrong. So, if he says tax all the rich until they qualify for food stamps let's ger er done. Look out rich people, your arses are grasses.

 

[Skull Pilot]

It's a miracle the nation survived the great exodus of the 1950s and 1960s, when top tax rates up to 91% caused all the rich folks to leave in droves.

There were a lot less people making 200K a year in earned income in the 50s and 60s than there are today.

and consider the fact that 200K in 1960 is equal to about 1.4 million today and tell me that raising taxes to 90% on people making more than 200K makes sense.

 

[Annie]

I know at least two formerly uber-liberals scions who, when it was apparently that their parents were on their way out, moved to New Hampshire to avoid income taxes.

Now, ironically, they both bitch about how high the real estate taxes in New Hamspire are.

My heart so totally bleeds for them.

I don't think the point was to make anyone's 'heart bleed for them,' rather they have options and chose to exercise them. Now I wouldn't be surprised to find the Obama solution would be to remove state taxes, have the feds increase across the board and 'return' some to the states-making for no 'tax free' states. The rich will still have options to relocate elsewhere, not the rest of us though.

The idea of punitive taxes on certain groups just doesn't work. The idea that the government actually control its spending still hasn't occurred, but better had, in a hurry.

 

[editec]

I know at least two formerly uber-liberals scions who, when it was apparently that their parents were on their way out, moved to New Hampshire to avoid income taxes.

Now, ironically, they both bitch about how high the real estate taxes in New Hamspire are.

My heart so totally bleeds for them.

I don't think the point was to make anyone's 'heart bleed for them,' rather they have options and chose to exercise them.

Yeah, sure without doubt. But given that these were uberliberals, evading taxation, you'll forgive me for feeling no sympathy for their pain, wouldn't you?

Now I wouldn't be surprised to find the Obama solution would be to remove state taxes, have the feds increase across the board and 'return' some to the states-making for no 'tax free' states. The rich will still have options to relocate elsewhere, not the rest of us though.

I would be surprised if Obama could so completely strip the states of their right to tax.

The idea of punitive taxes on certain groups just doesn't work.

They're not punitive taxes, they're merely taxes collected to pay the bills.

The idea that the government actually control its spending still hasn't occurred, but better had, in a hurry.

What a grand idea.

What shall we cut from the budget first?

 

[Skull Pilot]

I know at least two formerly uber-liberals scions who, when it was apparently that their parents were on their way out, moved to New Hampshire to avoid income taxes.

Now, ironically, they both bitch about how high the real estate taxes in New Hamspire are.

My heart so totally bleeds for them.

Yeah, sure without doubt. But given that these were uberliberals, evading taxation, you'll forgive me for feeling no sympathy for their pain, wouldn't you?





I would be surprised if Obama could so completely strip the states of their right to tax.



They're not punitive taxes, they're merely taxes collected to pay the bills.

The idea that the government actually control its spending still hasn't occurred, but better had, in a hurry.

What a grand idea.

What shall we cut from the budget first?

Start Here. Citizens Against Government Waste:

 

[Agnapostate]

I don't believe I've encountered a single rightist familiar with so banal an economic concept as marginal utility.

 

[Skull Pilot]

the concept of diminishing marginal utility as i understand it, refers to the satisfaction derived from the acquisition of additional units of goods.

An all you can eat buffet is a good example. Your first plate of food ranks high on the satisfaction (utility scale) while each additional plate of food ranks lower because of decreasing marginal utility.

You are applying this to money or rather the ability of money to purchase goods and not to the goods themselves.

You believe that a value judgment of what "enough" money is should be a key point in determining how much of one's money one gets to keep. Or in other words, if one guy has enough money to but 100 cars, he should have that money taken away because the marginal utility of each additional car he buys is less for him than for the guy who can barely afford one car.

I happen to disagree. it is not up to the government to decide how useful my money or what I buy with that money is to me. I and i alone should be the judge of that.

 

[Agnapostate]

I happen to disagree. it is not up to the government to decide how useful my money or what I buy with that money is to me. I and i alone should be the judge of that.

I suspect that's merely inconsistent rhetoric, unless you wouldn't object to individual determinations of the right to not pay taxes at all despite utilization of all the fruits of the *public commonwealth.*

Acknowledgment of so basic an economic principle and matching incorporation into an appropriately progressive taxation policy is merely an element in the maintenance of capitalism. Welfare programs funded through progressive taxation maintain the physical efficiency of the workforce (and deter worker militancy), while not depriving the wealthy of anything of comparable significance. It would simply be irrational to maintain a policy that ignored so basic a concept as marginal utility.

 

[editec]

It would simply be irrational to maintain a policy that ignored so basic a concept as marginal utility.

Well irrationality is what the extreme anti-government/anti-taxation folks thrive on, isn't it?

If they were rational, they'd realize what they are demanding regards taxation is basically impossible in a capitalistic economy.

They're not rational...which is what makes them extremeists.

 

[Agnapostate]

I'm an anti-government/anti-taxation extremist myself, of course. Both stabilize capitalism.

 

[Skull Pilot]

It would simply be irrational to maintain a policy that ignored so basic a concept as marginal utility.

Well irrationality is what the extreme anti-government/anti-taxation folks thrive on, isn't it?

If they were rational, they'd realize what they are demanding regards taxation is basically impossible in a capitalistic economy.

They're not rational...which is what makes them extremeists.

i have never been anti tax.

I am a believer in usage taxes. if i use public roads, I expect to pay for that privilege. if i use State or town provided water and sewage utilities, i expect to pay for those as well.

I expect to pay for the defense of this country and for the enforcement of the constitutional laws of this country.

I do not expect to pay for someone else's kid to go to college. I do not expect to pay for someone else's housing or medical care. I do not expect to pay for schools to hand out birth control to teenagers.

I am not anti tax I am anti waste graft nepotism and corruption which makes government more expensive than it should be.

It is not for you, or the government to assign a value of the usefulness of the money I earn and on that judgment decide how much I should be able to keep.

 

[American Horse]

It's a miracle the nation survived the great exodus of the 1950s and 1960s, when top tax rates up to 91% caused all the rich folks to leave in droves.

You mock Iriemon! There's a huge difference between high tax rates isolated in states, and high Federal tax rates from which you can't easily escape. With high state taxes, a rebellious tax payer can leave for a state with a lower tax rate, as is shown by the emigration from California, New York, Connecticut, Delaware, Illinois, Minnesota, New Jersey, New York, and Oregon; with a high Federal tax rate it's a much bigger decision because you'd have to leave the country, not just move across a state line.

As stated in post#2 above, From the above mentioned 9-states, between 1998-2007 more than 1,100 - every day, including Sundays and holidays - people moved out of those states to mostly tax haven states.

 

[editec]

I'm an anti-government/anti-taxation extremist myself, of course. Both stabilize capitalism.

Yes, I know...my point stands.

You're one of the brighter lights on this board, Agna, but your inability to grasp why human nature will scuttle your proposed anarchistic system indicates that you really ought to get out more, I suspect.

No political/economic system, however well devised, however fair, however well intentioned, cannot be turned into a nightmare society by human perfidity that is motivated by human greed and fear.

Perhaps, if we were setting out from day one to create a society, your proposed system would work fairly well.

Sadly, there isn't a chance in hell that we're going to turn the world we have now into the brave new world you envision.

Maybe after the complete breakdown of the existing civilization, the survivers of that disaster might be able to cobble together such a system as you describe.

That system will last a generation or two before the bastards among us will pervert it into something far less rational and with far less social justice than what you have in mind.

One thing that the Judeo-christians got right was the concept of original sin.

It is, really, the root cause of all human injustice.