A Cold California
By Mitch Berg
Mark Dayton wants to raise state income taxes on people who make over $500K a year (adjusted gross income) to just shy of 14% – to finance
But this has been tried before:
To close its $3.8 billion FY 2010- FY 2011 projected budget gap, Oregon has relied on an evaporating stimulus, budget cuts of roughly 9 percent and tax increases. The state’s income tax was raised with a new top rate of 11 percent. However the tax on the richest two percent of residents hasn’t performed as expected. Last year the new tax rate brought in $180 million. This year collections dropped to $130 million. The Wall Street Journal writes this shouldn’t be suprising. A full quarter of “rich tax filers seem to have gone missing.” it’s likely millionaires will be looking for other places to domicile. The tax applies to stocks and capital which means Oregon has “virtually the highest capital gains tax in North America.”
You can’t tax and spend your way out of a recession.
February 16th, 2011 at 7:30 am
A certain commenter will point out that people won’t move away or take action to avoid the new higher tax rate (aka-their ‘fair share’). Your pull quote and links prove other wise, yet, that commenter and people who think like her will (like Gov. JimBeam & staff) persist in the idea that only wealthy wingnuts do such things… How about these wingnuts certain commenter?
http://deceiver.com/2011/02/10/barbra-streisand-stars-in-the-way-we-were-evading-taxes/ ;
http://deceiver.com/2011/01/26/alec-baldwins-fair-share-of-taxes-is-more-fair-than-others/ ;
http://deceiver.com/2010/07/23/john-kerry-prefers-flip-flops-over-boat-shoes-on-his-yacht/
February 16th, 2011 at 8:06 am
I stumbled across WDFL’s Pat Kessler and his “Reality Check(?)” segment last night trying to justify this idiocy. Obviously, no one asks him why he shelters all of his money in SD and then Frankie boy says the GOP rhetoric prevailed in their response, while airing of Kurt Zellers speaking, while identifying him as Geoff Michel! Journalistic standards be damned!
February 16th, 2011 at 8:07 am
“no one asks him
“him” being Mad Mark Dayton, the poster boy for tax dodging.
February 16th, 2011 at 8:24 am
People tend to forget that there is a fundamental difference between a guy making $50,000 and a guy making $500,000.
The $50,000 guy works for W-2 wages at a plant that’s based in Minnesota. He can’t just up and move to a tax-friendly state because his job is physically located here. For him, the question is: “Do I stay or do I quit my job and hope to find another and can I afford to take that risk?”
The $500,000 guy owns the plant. He can buy a plant in Texas, close the Minnesota plant, and move the jobs out of state. For him, the question is much simpler: “Which makes me more money: paying higher taxes to stay or paying moving expenses to go?”
Raising Minnesota taxes on the plant owner makes it easier for him to tip the scales toward “Go.” We lose the tax he already pays and the taxes his laid-off employees now pay, plus we start paying out unemployment to those laid-off employees, a double-whammy to the state budget.
Dayton’s rationale was used to justify the Luxury Tax tried in the 1980’s, and will have the same result. That cure is worse than the disease.
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February 16th, 2011 at 8:56 am
“Which makes me more money: paying higher taxes to stay or paying moving expenses to go?”
Moving taxes are one-time AND a business deduction. Higher taxes are forever. It’s a no-brainer unless you’re a liberal.
February 16th, 2011 at 9:25 am
Nate offers a good example of what can and does happen in these tax rate increase schemes (I’m being precise in my language as taxes – as in revenue collected by the state – goes down). If you are an absentee plant owner, you may not move the plant, but if you are clipping >500K off the top in income as a MN resident, you change your residency status to FLA, and direct deposit your income into your bank account in FLA.
Another example is simply income earners up and moving out of MN. If you’re a one man/woman business (maybe you have a couple of assistants or associates) and you’re making >500G’s as a consultant telling businesses what they should already know or you give motivational seminars or you are a syndicated radio talk show host – who says you can’t give up your Lake Minnetonka manse as your primary residence, lease it to your business, and stay there when you visit clients in the Cities when you wing it into New Richmond in your G-5? I don’t want to throw words like insanity around Gov. JimBeam too much, but isn’t that what continuing to do something that is known not to work is?
February 16th, 2011 at 9:57 am
Bad enough to make the WSJ take notice:
http://online.wsj.com/article/SB10001424052748703312904576146582278553472.html
‘Republicans said tax increases would drive high-income residents and businesses out of Minnesota. Mr. Dayton said he believed “the wealthiest people in this state are better than that.”‘
Yeah, I guess they can easily shelter most of their income. *shrug*
February 16th, 2011 at 12:31 pm
Oh come now Troy. Mr. Dayton plays canasta with “the wealthiest people in this state” every Saturday. He should know.
February 16th, 2011 at 9:02 pm
[…] Shot in the Dark » Blog Archive » A Cold California Quote:"To close its $3.8 billion FY 2010- FY 2011 projected budget gap, Oregon has relied on an evaporating stimulus, budget cuts of roughly 9 percent and tax increases. The state’s income tax was raised with a new top rate of 11 percent. However the tax on the richest two percent of residents hasn’t performed as expected. Last year the new tax rate brought in $180 million. This year collections dropped to $130 million. The Wall Street Journal writes this shouldn’t be suprising. A full quarter of “rich tax filers seem to have gone missing.” […]