Rich People Fleeing High Tax States

The economic news is not good overall. The economy is contracting, not expanding. Sure, people are making money, but there are fewer people working. This means that companies have cut back on employment, trimmed costs, passed on extra costs to their employees, and cut perks. After the fiscal meltdown in 2008, one of the companies I am involved with made drastic cuts. The first thing I did was fire my wife and took a pay cut.

When that wasn’t enough, I let go half the work force and no longer took a salary. We are now lean and mean. We get more done with a smaller workforce. I’m doing multiple jobs, as is everybody else. It’s like it was when I first joined the company. As a result, I was able to raise the pay of the remaining employees.

Liberals don’t get it. As I’ve written before, money is a coward. It goes where it’s safe. In order to keep more of your money, you have to create a safe environment for it. The problem is, there are external forces, mainly government, that muck up the best laid economic plans of the disciplined business owner.

It’s been in the news that millionaire athletes are pulling out of high taxing states and moving where their money will be safe. A lot of envious people will slam them for taking care of what rightly belongs to them. If you want to succeed in life, the first thing you must do is not be jealous or envious of what’s in someone else’s bank account.

Not only is it immoral to tax people at ever higher rates; it’s also stupid. California passed a 13.3 percent income tax on top earners.

“This prompted golfer Phil Mickelson to say earlier this month he was considering a move, and according to the accountants who advise millionaire athletes, he was just saying what a lot of jocks were already thinking. Federal taxes on the top income bracket just rose by roughly 5 percent, and, while there’s nothing rich athletes can do about that, they are paying attention to which states dip into their game checks — and how much they take.

Politicians are motivated to tax the rich because it’s popular with the people who vote them into office. “Tax those rich SOBs,” their voters tell them. Taxing the rich is punitive. It’s designed to punish. The people who vote for higher taxes rarely benefit directly by the high tax rates. They remain in the same economic condition after the higher tax rate went into effect. In some cases, it’s a worse condition because the producers look for greener pastures. “California takes 13.3 percent on income above $1 million, but states like Florida, Nevada and Texas are among seven that take nothing.” So where do you think a lot of rich athletes go?

The unintended consequences of higher taxes on the wealthy can be seen in as study of what happened in Maryland after the legislature rammed through a special tax on the wealthy:

“A new report says wealthy Maryland residents may be moving out due to recent tax hikes – a finding that is sure to escalate the battle over taxing the American rich.

“The study, by the anti-tax group Change Maryland, says that a net 31,000 residents left the state between 2007 and 2010, the tenure of a ‘millionaire’s tax’ pushed through by Gov. Martin O’Malley. The tax, which expired in 2010, imposed a rate of 6.25 percent on incomes of more than $1 million a year.

“The Change Maryland study found that the tax cost Maryland $1.7 billion in lost tax revenues. A county-by-county analysis by Change Maryland also found that the state’s wealthiest counties also had some of the largest population outflows.”

This is only the first step. Low tax states will also get new businesses. It may be time to think about moving as an economic and social revolution begins to foment.