Crush Liberalism

Ramifications of taxing the rich

The rich don’t get that way by being stupid.  From QandO:

They may be rich, but they’re not dumb:

“When California faced a Mount Everest-sized $14 billion deficit in 2003, one of the major causes for the red ink was the stampede of millionaire households from the state,” says a report called “Rich States, Poor States” by economists Arthur Laffer and Stephen Moore. “Out of the 25,000 or so seven-figure-income families, more than 5,000 left in the early 2000s, and the loss of their tax payments accounted for about half the budget hole.”

They’re not the only ones leaving either. The report, published by the American Legislative Exchange Council points out that not all jobs are leaving the US, but many, if not most lost jobs simply move to other states.

“States are in direct competition with each other for human capital and business investment. State governments that think they can attract jobs and people, and grow their economies, by taxing their citizens at a higher rate than their neighbors are sadly mistaken,” said Democratic Arkansas state Sen. Steve Faris, ALEC’s 2008 national chairman. “Legislators should take a close look at where their state ranks in this book and use it as a tool to help them improve.”

In the meantime, for every loser, there’s a winner:

According to the findings, a record 8 million Americans moved from one state to another in 2006, revealing which states have the most dynamic and desirable economies and which are “has-been” states, according to Laffer and Moore.

And they moved for pretty obvious reasons:

The report provides economic competitiveness rankings for all 50 states based on 16 policy variables with a proven effect on the migration of people and investment capital in and out of states. States with the lowest tax, spending, and regulatory burdens win the competitiveness contest. These are primarily in the South and Southwest regions of the nation.

Huh. Sounds very similar to the reasons given for the British brain drain I noted here. 

States like CA have yet to learn their lesson, though, and their low-tax neighbors like NV have reaped the benefits of their economic ignorance.

February 21, 2008 - Posted by crushliberalism | California, economic ignorance, taxes