Tax 'Em Until They Leave...And Take Their Money With Them

It seems the Progressive Powers That Be are going to prove Einstein right yet again – “Insanity is defined as doing the same thing over and over again, but expecting a different result this time.”

Their latest insanity? Four Blue states (California, Hawaii, New Jersey, and New York) could see a total tax burden on the wealthy rise to ~60%, between city, state, and federal taxes. Do socialists in Congress honestly believe those same wealthy will take it lying down? It’s obvious they do.

For one thing, successful residents can simply move to another state. It is only the combination of high federal income taxes and high state-level income taxes that leads to these combined rates of nearly 60 percent. Yet some states, such as New Hampshire and Florida, have no income tax at all.

We’ve already seen an exodus of wealth, people, and major businesses from states like California, and that trend will only accelerate if taxes are sent even higher by this new plan. It’s only logical: states that heavily tax something are discouraging it, while states that don’t tax it at all are welcoming it. Why would anyone want to discourage income-earning?

Punitive taxation has ramifications for more than just the high-earning individuals and families directly impacted by higher tax rates. If they leave the state, they take with them jobs, investment funds, and spending that would otherwise go back into their communities.

It’s true that not all high-earners will flee states with these punitively high taxes. Some, for a variety of reasons, will stay. But even for these individuals, the high tax rates will backfire, because they’ll create perverse incentives and discourage economic activity above a certain level.

The wealthy didn’t get that way be being passive or stupid. Once they see how much of their money they’ll be shelling out because the Dems have better use for it than the people who earned it. Of course that “better use” usually has nothing to do with making things better...except for themselves.

So many of our “Spend money like there’s no tomorrow” Democrats don’t seem to understand heavy taxation tends to drive away the folks with the money. If they do that then they won’t have as many rich people to tax to death. It’s a vicious cycle, one that is too often ignored. These are the same “tax and spend” folks with no understanding of the Laffer Curve. They don’t comprehend that they’re on the backside of the curve where increasing the tax rates further decreases the revenues collected.

Only time is going to tell if they will learn the lesson this time around.

If history is any indicator, they probably won’t.