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The results of tax the rich? Ask CA
Posted by: McQ on Thursday, February 21, 2008

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.
 
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There is lots of movement among the states. A significant part of it is a more favorable economy (lower taxes etc.) as you pointed out. There are other factors too. Forgive the self-reference, but this post — Population Growth By State — covers what is going on:
 
Written By: Kurt Brouwer
URL: http://www.fundmasteryblog.com
The problem is the some people leaving Cali because of high taxes, it seems to me, do not realize *why* their taxes were so high in the first place. They then promptly relocate to say Colorado (personal experience and the death of Colorados TBOR) and begin to agitate for all of the same government programs they had in Cali, starting the problem all over in a new location.
 
Written By: JamesT
URL: http://
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.
Which, of course, accounts for the fact that the South is the richest and most economically vibrant area of the nation.
 
Written By: Retief
URL: http://
We exited Cali after 43 years for central Texas. Socialism and it’s policies were the primary reason, although urban clutter contributed. Although we’re retired, for young working families the environment here appears better. The "Lone Star State" may be the last bastion of republicanism ( in the original context or the word)
 
Written By: RiverRat
URL: http://
Which, of course, accounts for the fact that the South is the richest and most economically vibrant area of the nation.
I think a much better measure would be to compare the rate of change of populations and economies rather than a snapshot of economies at the present time.
 
Written By: Is
URL: http://
Call me cynical, but The Heartland Institute?

Worldnet Daily?

And how’s this for the story’s linked to this one...
Related offers:

Get the inside story on the plan to integrate the U.S., Mexico and Canada – "The Late Great USA" by Jerome Corsi.

Why do liberals do the things they do? Top psychiatrist explains they are mentally ill.

Say it while you still can: "I love America"
It’s a rational argument, but there are lots of rational arguments that are not born out by facts, and with sourcing like this, I’d say the "facts" are circumspect at best.

Living in Colorado, I know many people who moved from Cali, and they do not cite taxes or jobs, and some of them are fairly wealthy. Now this is anecdotal of course, but then assuming that people are leaving Cali because of taxes without asking them is less than anecdotal, but anecdotally, they left because of the real estate arbitrage. People living in a big townhouse in LA could cash out and buy an 6 acre spread with a 5 bedroom house in Colorado, and assuming they could make a comparable income, that is like a massive pay increase for doing nothing but changing states.
Why do liberals do the things they do? Top psychiatrist explains they are mentally ill.
LMAO
 
Written By: Captin Sarcastic
URL: http://
Captin S.: don’t forget the role that property taxes have on real estate arbitrage (as you call it).

And it is, after all, California which calls one of its tax collecting agencies the Board of "Equalization".

Regarding the main article:
"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."

That dog don’t hunt as well as you think. That claim works out to saying that 5,000 households were the source of 7 billion dollars in taxes. All by themselves. That works out to each family being taxed roughly $1.4 million dollars each.

Now, if I were being taxed at that rate, I would certainly look for a new jurisdiction. But I suspect if I were taxed at that rate, I’d have enough money to buy a private island and create my own d*mn jurisdiction.

But in the meantime, I have to think that emigration to other states is not responsible for as much of the falloff in tax collections as the article seems to say.
 
Written By: kishnevi
URL: http://
Keep in mind its not just the families moving. Say you are planning to open a West Coast distribution center for your imported products. You open it in Nevada. You do not open it in California, because of workman’s comp, etc.

Now, let’s say 5,000 of those individuals owned movable companies...maybe that’s where the tax revenue lost comes from.
 
Written By: Harun
URL: http://
Retief, the South is becoming more vibrant; that’s the point. Of course, that’s flyover country, so the MSM doesn’t visit.... nor do you, I’ll wager.


Oh, and kish, your analogy fails to take into account the trickle down effect. You know, like when BJ and the Hildebeeste decided a luxury tax on yachts was an excellent idea.... after all, there’s not that many built. Until 6 digits worth of people were thrown out of work by the ripples.
 
Written By: SDN
URL: http://
"That works out to each family being taxed roughly $1.4 million dollars each."
Absolutely true. There are many extremely wealthy people in CA.
 
Written By: Grimshaw
URL: http://

 
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