By Deroy Murdock
Friday, January 25, 2013
The only thing more stunning than the kleptomania of
tax-hiking politicians is their unswerving faith that taxpayers, especially
wealthy ones, simply will smile and surrender even more of their money. This
fundamental misunderstanding of human nature is impervious to mounting evidence
that taxpayers go where taxes are low.
French President Francois Hollande thought he could
impose a 75 percent top tax rate and watch revenues flow into Paris like the
Seine. Instead, actor Gérard Depardieu rushed into the loving arms of Vladimir
Putin and Russia’s 13 percent flat tax. Former French president Nicolas
Sarkozy, of all people, reportedly may move to London to escape Hollande’s
thievery. (Potential fraud charges also may fuel Sarkozy’s wanderlust.)
Last year, a record 1,788 Americans renounced their
citizenship, mainly in favor of countries with lower taxes and friendlier
political rhetoric.
Golf great Phil Mickelson generated headlines this week
when he suggested that high taxes might drive him from California — or perhaps
America.
“There are going to be some drastic changes for me,”
Mickelson said.
“If you add up all the federal [levies], the disability,
the unemployment, the Social Security, and the state, my tax rate’s 62, 63
percent.” Imagine keeping just 37 cents of every dollar you earn. Is that a
fair share?
Before President Obama, Washington Democrats, and even
some invertebrate Republicans boost taxes any higher, they should read How
Money Walks. Author Travis Brown demonstrates how Americans between 1995 and
2010 shifted some $2 trillion in wealth by abandoning California, Illinois, New
Jersey, and other high-tax states and unpacking in low-tax states such as
Florida, Nevada, and Texas.
“After spending several years mapping and analyzing these
data, one correlation keeps popping up: Income moves to where it is most
welcome, tax-wise,” Brown writes. “Money walks because opportunity talks.”
As I observe in an essay for Brown’s book, this reality
is undeniable among the Empire State and its neighbors.
While New York City’s bright lights and endless
excitement still lure people, Gotham also has watched many of its denizens
decamp. While this state’s steep living expenses and anti-business tone repel
potential residents, painful tax obligations lead too many New Yorkers to cry
“Uncle!” — just before they hire moving vans.
“I have identified the most compelling incentive of all:
a major tax break immediately available to all New Yorkers,” explained Tom
Golisano, chairman of Paychex, Inc. “To be eligible, you need do only one
thing: move out of New York State.” As he wrote in “Adios, New York,” a New
York Post op-ed in May 20009, Golisano spent about 90 minutes transferring his
voter registration, driver’s license, and domicile certificate from New York
State to Florida. “Combined with spending 184 days a year outside New York,
these simple procedures will save me over $5 million in New York taxes
annually,” Golisano calculated. “By domiciling in Florida, which has no
personal-income tax, I will save $13,800 every day. That’s a pretty strong
incentive.”
“I left New York in 1997 strictly to get away from the
onerous taxation,” Rush Limbaugh declared on his national radio program, soon
after Golisano spoke up. “I don’t want to talk numbers, but it was humongous. .
. . So I used my mobility and I moved.” Limbaugh landed in income-tax-free
Florida.
Unfortunately for the popular broadcaster, every day that
he works in New York State (which he sometimes visits), the authorities tax his
income proportionally. They do so despite Limbaugh’s protests and ongoing legal
challenges. “My number is $20,000 a day, every day I work in New York, $20,000
a day,” Limbaugh noted. “Sometimes 18, sometimes 20. My income changes year to
year, so I guess it averaged out $18,000 a day.”
One-way traffic from the Empire State to the Sunshine
State is so steady that Harrington Moving and Storage, Inc., specializes in
easing that exodus. “Our professionals work hard to ensure that you don’t have
to during your move from New York to Florida,” boasts the Maplewood, N.J.–based
company on its website. “You can rest assured knowing that your New York to
Florida move will be smooth, relaxing, and seamless throughout.”
Contiguous with the Empire State, Connecticut still is
smarting over the relocation of hedge-fund manager Edward Lampert. With an
estimated net worth of $3 billion, according to Forbes, Lampert was considered
the fifth-wealthiest man in the Nutmeg State. In August 2011, Connecticut
increased taxes by $875 million, retroactively to that January. It cut the
maximum property-tax credit from $500 to $300 and lifted its top state
income-tax rate from 6.5 percent to 6.7 percent. Then, on June 1, 2012, Lampert
moved his company, ESL Investments, to Florida. Lampert also took with him the
$10.6 billion that ESL reportedly controlled at that time.
“We are all aware that the changes to the tax structure
in Connecticut last year have given many people pause as to whether this is the
best place to do business and reside,” Greenwich first selectman Peter Tesei
told the Hartford Courant. “I am concerned about the departure of Mr. Lampert
and his firm, and would ask the state of Connecticut to take another look at
its policies.”
Supply-side economists Arthur Laffer and Stephen Moore
found similar unintended consequences just across the Hudson from New York. In
2004, New Jersey boosted its top tax rate from 6.35 percent to 8.97 percent. As
they wrote in the Wall Street Journal, “Examining data from a 2008 Princeton
study on the New Jersey tax hike on the wealthy, we found that there were 4,000
missing half-millionaires in New Jersey after that tax took effect.” State
deficits soon erupted like Jersey barriers beside a ditch.
“Since many rich people also tend to be successful
business owners, jobs leave with them or they never arrive in the first place,”
Laffer and Moore also pointed out. By definition, there is no way to measure,
for instance, the positions that a retail chain does not create when it never
opens stores in New York State because its owners prefer not to lose their
shirts by crossing the George Washington Bridge into Manhattan.
For now, put aside the talent that New York State’s high
taxes repel, the jobs and careers that they strangle in the crib, and the goods
and services that New Yorkers cannot enjoy when the entrepreneurs who generate
them vanish in disgust or simply stay out. Gotham’s and the Empire State’s
punitive taxes are most pathetic for their counterproductivity. New York’s
sadistic tax code almost certainly chases away more revenues than government
would collect if it lacked America’s gold medal among per capita state-tax
burdens.
Referring to local liberal Democrats who hope to succeed
him at City Hall and then jack up taxes on wealthy New Yorkers, Mayor Michael
Bloomberg said last October that this idea “is about as dumb a policy as I can
think of.” Just before the Columbus Day Parade, Bloomberg elaborated: “If you
want to drive out the 1 percent of the people who pay roughly 50 percent of the
taxes, or the 10 percent of the people who pay 70-odd percent of the taxes,
that’s as good a strategy as I know.” Bloomberg added: “That’s exactly the
[way] to do it, and then our revenue would go away, and we wouldn’t be able to
have cops to keep us safe, firefighters to rescue us, or teachers to educate
our kids.”
From class-warrior-in-chief Barack Obama to sticky-fingered
city councilmen, politicians always should remember that taxpayers are not oak
trees. Shake them too hard, and they and their money soon will be gone with the
wind.
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