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Wednesday, May 27, 2009
Millionaires Go Missing
Here's a two-minute drill in soak-the-rich economics:
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.
No doubt the majority of that loss in millionaire filings results from the recession. However, this is one reason that depending on the rich to finance government is so ill-advised: Progressive tax rates create mountains of cash during good times that vanish during recessions. For evidence, consult California, New York and New Jersey (see here).
The Maryland state revenue office says it's "way too early" to tell how many millionaires moved out of the state when the tax rates rose. But no one disputes that some rich filers did leave. It's easier than the redistributionists think. Christopher Summers, president of the Maryland Public Policy Institute, notes: "Marylanders with high incomes typically own second homes in tax friendlier states like Florida, Delaware, South Carolina and Virginia. So it's easy for them to change their residency."
All of this means that the burden of paying for bloated government in Annapolis will fall on the middle class. Thanks to the futility of soaking the rich, these working families will now pay Mr. O'Malley's "fair share."
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13 comments:
This is the #1 reason why I am not a democrat. This theory has been proven in the past and yet they keep raising taxes on the rich. This is only the local level, you wait and see what happens on the federal level. the rich are rich for a reason.
de de dee....
This debate is so over. A rising tide does lift all boats. Every state that has tried otherwise is in shambles (California, New Jersey, New York etc). We are all much better off when we keep our money in our pockets.
Grow government enough and you will "run out of the other guys money".
“We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”
Winston Churchill
The Fed Govt is mulling a VAT tax (national sales tax) to pay for deficient and health care reform a federal example of the MD problem mentioned in the article above.
http://www.washingtonpost.com/wp-dyn/content/article/2009/05/26/AR2009052602909_pf.html
The same thing is happening in New York and California. It will be the middle class taypayers who will feel the brunt of Obama/Democrat controlled Congress obscene spending programs on ACORN, Unions etc. Meanwhile they cut missile defense budget just as North Korea is cranking up. Most brill-yunt POTUS evah!!!
If you've risked everything in spite of the gov't increasingly regulating and taxing you what makes you think you're gonna stick around and take more abuse. Wealthy people don't pay as much in taxes because they're incomes aren't as large as their assets. Earners who have to work for a living really don't like being taken for granted. A tax system should be fair-not punish the earners, why would you bother earning?
Who would blame them? NOt me.
I am taxed to near death, everytime you turn aroune our taxes are being raised to support government worker.
Like teachers, police, fire and the local politicians pockets.
These positions we need , no doubt, but they are going to have to take a pay cut and lower there standard of living .
Laugh and call me stupid but watch and see if they dont the economy will continue to crumble.
At the current income of average working people around salisbury and wicomico area $7 or $8 bucks an hour, will not support $15 and $20 jobs.
Like GM , Chrysler who can buy 25000 and 30000 dollars cars. you already have an example.
Put it all in a DE LLC and then create more tax breaks. People aren't as dumb as they think. Caught them once on this - not again, if they know what's good for them.
....all the millionaires leaving and you are still here?
10:09 Thanks for posting that article.
Now do you dumbfounded liberals see why we went to the tea parties.... We know where the current administration was head and it does not include lower taxes.
They are talking about adding a 25% Value Added Tax on the transfer of goods and services that would increase the cost of just about everything, from a carton of eggs to a visit with a lawyer.
Joe you should consider linking to the article on your main page.
When will these Lie-berals ever learn? Tax too much and income taxes will fall.
Look around...the most liberal high-taxing states are the ones in the most trouble. Wake up voters of Maryland!
The rich are fleeing. The poor are getting poorer and stuck in this state. And, the politicians are riding on the coat-tails of the middle class. Maryland is just a corrupt, uncaring and really don't give a damn about the legal residents of this state.
Gee, who'd've thunk it?
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