Obama Tax Plan Will Drive Wealth From U.S.
Barack Obama may get a lot of electoral mileage pitting everyone against rich people, but if he is able to covert his rhetoric into tax policy, we may simply end up with fewer rich people.
A report says that nearly two-thirds of Britain’s millionaires have left the country since the government established a 50% top tax rate. Is the U.S. about to repeat the same mistake?
According to the London Telegraph, the number of British taxpayers who earned more than 1 million pounds a year fell from more than 16,000 in the 2009-10 tax year to 6,000 “after Gordon Brown introduced the new 50% top rate of income tax shortly before the last general election.”
“It is believed,” reports the Telegraph, “that rich Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes.”
This is certainly not without precedent here. In fact, the record is clear:
Between 2004 and 2008, more than $70 billion in wealth left New Jersey, according to a study by Boston College’s Center on Wealth and Philanthropy. Increases in taxes on income, sales, property and millionaires all contributed to the exit.
Down the coast in Maryland, there was a net loss of 31,000 residents from 2007 to 2010, “the largest taxpayer exodus of any state in the region” in that period, says Change Maryland, the group that reported the data.
And where did they go? Change Maryland says 11,500 Marylanders have moved to Virginia.
And why? Change Maryland says that “since 2007, taxes and fees have been raised 24 times” in Maryland. Meanwhile the sales tax in Maryland is 6%, in Virginia it’s 5%; the top personal income tax rate is 9% in Maryland while in Virginia it’s 5.75%; and the corporate rate is 2.25 percentage points higher in Maryland.
Wealthy residents in California, Illinois, New York and Ohio are also leaving due to the high burden of government. And like elsewhere, they take with them a large piece of tax revenue. They also pull needed investment capital and jobs out of states desperate for them.
And if we end up with fewer rich people, pray, tell, will we end up with . . .
A) more jobs for the rest of us, or
B) fewer jobs for the rest of us?
If you answered A, it is incumbent upon you to explain how. How will a flight of rich people from the U.S. bring the rest of MORE jobs, wealth, or opportunity? What is the precise economic mechanism that will make that happen?