Wednesday, June 3, 2009

The last thing to do to revive a state's economy is tax the wealthy. Drives them out of state or they simply stop creating jobs.

The last thing which should be done during the current deep recession is the first thing many progressives/liberals want to do -- raise taxes on the wealthy. Why do they want to raise taxes? Because government programs are sacrosanct. Thus there's a push for revenue enhancements" or tax increases. And the easiest tax target is the wealthy, because there are so few of them.

Yet if one wants the economy to get rolling again the last people to tax are the wealthy. Why? Because small business owners are generally among the wealthy individuals and they are the ones who create jobs.

Where states have really gone after the wealthy it's been a major problem. In an article entitled: "millionaire" tax is causing millionaires to migrate out of the state. In an article entitled, "It's not Just Millionaires Fleeing Maryland Taxes":
Anyone taking Economics 101 could have predicted that those best able to avoid Maryland’s new 6.25 percent marginal tax rate on income over $1 million would. They are the ones best able to choose where to live and to pay accountants and lawyers to lower their tax burden.
Market losses no doubt contributed to one-third fewer people filing taxes in that income bracket in Maryland by April 15, as supporters of the legislation say. So did those filing extensions. But they and the Republicans yelling “I told you so” miss a bigger issue: Everyone is leaving Maryland, not just the rich.
The only bordering locale where more people moved to Maryland than away is the District of Columbia. My guess is that the inflow will slow since the Census results do not account for migration patterns since the slate of new taxes went into effect in 2008 that make Maryland more tax-heavy than Washington. Those new taxes mean Marylanders shoulder the fourth highest tax burden in the nation, according to the Tax Foundation.
Of President Obama wants to raise federal taxes on the wealthy and there's no state people can then flee to. However, some might well leave the country but another effect it is will diminish the willingness of people to invest and expand the economy. One can't violate Economics 101 and get away with it.

1 comment:

Elaine said...

By giving the rich the tax breaks and living by the republican views, we have bankruput our country both financially and morally. Its time for the moral conscience, and the political moderate, and the financial sturdy to take over. Which we have. And as soon as Franken is seated, you will not be able to filabuster us into anymore moral corrupt standards. your extremist, conforming, religious state, terroristic tatics, torture standards will have to take a backseat.