Maryland's Millionaire Surtax
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There are two schools of thought. Conservatives feel that by lowering taxes you encourage people to make more money, thus the government ends up collecting more in taxes. Liberals think raising tax rates will increase “revenues” but, really, you just end up demotivating people and/or forcing them elsewhere (the Rolling Stones don’t pay taxes in England because they left and France’s Johnny Holiday did the same thing):
We reported in May that after passing a millionaire surtax nearly one-third of Maryland’s millionaires had gone missing, thus contributing to a decline in state revenues. The politicians in Annapolis had said they’d collect $106 million by raising its income tax rate on millionaire households to 6.25% from 4.75%. In cities like Baltimore and Bethesda, which apply add-on income taxes, the top tax rate with the surcharge now reaches as high as 9.3%—fifth highest in the nation. Liberals said this was based on incomplete data and that rich Marylanders hadn’t fled the state.
Well, the state comptroller’s office now has the final tax return data for 2008, the first year that the higher tax rates applied. The number of millionaire tax returns fell sharply to 5,529 from 7,898 in 2007, a 30% tumble. The taxes paid by rich filers fell by 22%, and instead of their payments increasing by $106 million, they fell by some $257 million.
Whoops!
Here’s a recent list of U.S. states with the highest unemployment rates… guess which party runs almost all of those states?
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10:23 PM
Do they have any evidence that millionaires actually left. Or is it possible that many who were millionaires in 2007 became non-millionaires in 2008 due to collapse in stock markets and real estate markets etc.
I am not disagreeing with the premise of the post. If I was a millionaire, I wouldn’t stick around. After all, I would have the means to move if I wanted to.
I am just curious if we know if people actually fled.
Similar things happened in Kalifornia. You guys had your sales taxes raised and like clockwork, tax receipts dropped as people spent less money.
.-= burro´s last blog ..Love, tWoo Love: The Independent Bloghorn gets a new theme =-.
11:31 AM
If you read the article from the WSJ they do take account how many millionaires left vs. ones that simply lost their money.
1:49 PM
You can beat a statist about the head and shoulders for an enterniy and he will ALWAYS apply a static model to forecasting tax revenue from a change in the tax rate. If the statist says he is going raise personal income tax rates 8% he will always…. always tell you that will generate 8% more tax revnues and he will always…. always be wrong.