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*