Wednesday, May 27, 2009

Maryland's Missing Millionaires

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 such cities 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."

Oh, really?

One year later, nobody's grinning.  One third of the millionaires have disappeared from Maryland's tax rolls. On those missing returns, the government collects nothing. Instead of the state coffers gaining an extra $106 million that politicians were predicting, millionaires paid $100 million less in taxes than they did last year.  Even at higher rates.

This is one example. Millionaires have also been escaping California, New York and New Jersey. The middle class is left behind to pay for grotesquely metastasizing government. Maryland, and other states soon to follow are becoming a vast, giant Detroit.

Of course, now they are saying that this can't happen at a federal level. You can't escape Obama's spread the wealth around economics by crossing state lines.

Wanna bet? 

Instead of crossing state lines, those with wealth and the companies that create wealth (at least the wealthiest with the most to lose) will be forced to leave the country. There are already tax havens in the Caribbean, South America and Europe for them to go. 

When that happens, we won't have them to oppress us with employment anymore. Instead, we will have Detroit from sea to shining sea.


Red May 27, 2009 at 12:53 PM  

People are going to run out of places to run. Folks need to stand their ground. Louisiana has 9% sales tax plus a state income tax and we've got zip to show for it. It is highway robbery.

James' Muse May 30, 2009 at 3:25 PM  

The Maryland Millionaires didn't leave.

...They just aren't millionaires anymore.

According to the analysis by the Institute on Taxation and Economic Policy (ITEP), Where Have All of Maryland’s Millionaires Gone? Nowhere – They’re Probably Just Not Millionaires Anymore. ITEP examined the preliminary tax return data released by the Maryland comptroller — who acknowledged that not all the data is in yet, particularly for high-income earners — and found that the data fail to support the Wall Street Journal’s claim:

[A]s a result of legislation enacted in 2007 and in 2008, income tax rates for affluent Marylanders were higher this past year, not just for residents with taxable incomes over $1 million, but for individuals with taxable incomes above $150,000 and for families with incomes over $200,000. Consequently, if it is the case that wealthier taxpayers respond to changes in income tax liability by changing their state of residence, one would expect to see that response not just for taxpayers with incomes above $1 million, but, to some degree, among all affected taxpayers. The Comptroller’s preliminary data suggest that this is not the case.
With the exception of “millionaires”, the number of returns in the affected ranges of taxable income appears to have grown between 2007 and 2008. Given recent economic events – and, in particular, the widely-anticipated decline in income from capital gains, which are received almost exclusively by the very wealthiest residents of each state – a far more likely explanation for the alleged disappearance of Maryland’s millionaires is that, for 2008 at least, they are no longer millionaires. Instead, their incomes may now fall in lower ranges of the distribution, thus potentially accounting for some portion of the increase in the number of returns in those ranges.

In other words, analysis of the preliminary data from Maryland fails to support the assertion that a tax increase on the wealthy will cause them to flee.

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