From the “I Told You So” department…
You may remember an old post entitled “See, Even Rush Limbaugh Understands Incentives” where Rush was complaining about how he didn’t like the tax increases that he was facing as a New Yorker. To refresh your memory:
“Personal income taxes for the uhh…upper middle class and the rich are about to skyrocket 31 percent for all New Yorkers making more than $500,000 a year. So I’ll tell you what I’m gonna do, I’m gonna look for an alternative studio somewhere outside New York. I’ll sell my apartment, I’ll sell my condominium, I’m gonna get out of there totally because this is just absurd, and it’s ridiculous…”
An astute reader commented that “Time is money, and I really doubt Mr. Potato Head is going anywhere.” That may be true (and funny), but apparently some rich people in Maryland are more easily swayed. The Wall Street Journal reports that “Millionaires Go Missing” in Maryland, partially because people are less well off due to the economy but also because a significant number of wealthy Maryland households have changed their states of residence (either by physically moving or by claiming a vacation home as a primary residence) in order to avoid the recent tax increases. From the article:
“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.”
Hm…remember our friend the Laffer curve?
The government of Maryland seems to either a. not understand very much economics, or b. have seriously misjudged which part of the curve they were on. Whoops. But props to the people that are voting with their feet and dollars. *hat tip*
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12 responses so far ↓
1 econgirl // May 26, 2009 at 5:09 pm
I also like this quote regarding the proposed New Jersey flat (constant percent of income) tax:
“That’s a good idea that would give the Garden State the lowest tax rate in the Northeast after New Hampshire. Mr. Lonegan says this will ensure that when New Jersey incomes “move-up,” the residents “don’t move out.” Over the past decade, New Jersey has suffered the fourth highest rate of out-migration of all the states, with nearly half a million residents fleeing to the likes of Delaware, Florida and even New York.”
http://online.wsj.com/article/SB124329298290552503.html
2 jon // May 26, 2009 at 5:47 pm
marty o’malley he hates it when people call him marty,so plebeian , could try an iron curtain .
3 Mike H // May 26, 2009 at 6:14 pm
“An astute reader commented that “Time is money, and I really doubt Mr. Potato Head is going anywhere.” That may be true (and funny)…”
Actually, Rush now lives and broadcasts from Florida.
4 Bart M // May 26, 2009 at 9:10 pm
I was born and raised in Maryland and even got my Bachelors in Economics at the University of Maryland College Park and I can confidently say, yeah, we’re idiots.
5 Justin // May 27, 2009 at 6:20 am
How far do you think these millionaires would be willing to move to avoid taxes?
Would this kind of taxing on a national level force them to move to Canada or Europe? I think a few more might start grinning then.
Changing your primary residence costs nothing. I’ve done it before by filling out one sheet of paper. There might be a few more barriers to immigrating outside of the U.S. to avoid taxes.
6 Calixto // May 27, 2009 at 2:09 pm
Mike,
He’s been broadcasting from his residence in Palm Beach, or Command South or whatever for years. He didn’t move because of the proposed tax hikes that are coming down this year.
7 econgirl // May 27, 2009 at 2:18 pm
I am strangely pleased that I am not familiar with the details of Rush’s residence…but he’s extra blowhard-y to be complaining about New York taxes if he in fact has his primary residence in another state.
8 Wish I Know Something // May 29, 2009 at 10:04 pm
Florida has no state income. Rush is just a crybaby.
9 Wish I Know Something // May 29, 2009 at 10:20 pm
Correction:
Florida has no state income tax. Rush is just a crybaby.
10 Jinghao // Jun 7, 2009 at 1:45 am
It could also be that due to the financial debacle of the past year and half, there are just 33% fewer millionaires… That’s certainly a reasonable hypothesis.
Sure, some probably left because of the tax hike, but more reasonably, they’re just poorer–or that’s what they’re reporting.
11 jay // Jun 13, 2009 at 2:56 pm
I live in NJ and would welcome a flat tax as it sounds more efficient and fair than a marginal tax system, However I feel politics will get in the way of us ever realizing a flat system
12 Bill // Jun 13, 2009 at 5:05 pm
Econgirl, you should well know that Rush is subjected to annual NYS Dept of Revenue audits by virtue of the fact that he broadcasts his show a limited number of days from NY. It’s not “crying”, it’s simply bemoaning the fact that state governments are just as punitive as the Feds- and whether it’s Rush Limbaugh, some CEO like Golisano, or someone running a small business- we should all bemoan the fact that higher state taxes send successful people and job creators elsewhere.
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