Exhibit B: Tax The Rich, Lose The Rich
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 cities such 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."
One year later, nobody's grinning. One-third of the millionaires have disappeared from Maryland tax rolls. In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April. This year there were 2,000, which the state comptroller's office concedes is a "substantial decline." On those missing returns, the government collects 6.25% of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year -- even at higher rates.
~Wall Street Journal (HT: Lee Coppock)
See Exhibit A here.
Read about The Laffer Curve here.
19 Comments:
The next sentence in the WSJ article is:
"No doubt the majority of that loss in millionaire filings results from the recession."
I think it's important to keep that in mind to have the proper perspective.
No doubt the proper perspective is important. One should keep both the whistler and the graveyard in the same frame.
I think it's important to keep that in mind to have the proper perspective.That's true, Bret. No point in moving out of the state if the tax no longer affects you.
We just need more noble rich like Warren Buffet. If he wants to pay as much as his secretary, maybe moving to Maryland might help him in that quest.
What are the thoughts of the community on this Detroit News poll regarding the notion of adding taxes to the rich?
http://detnews.com/article/20090527/METRO/905270331/Survey--Raise-taxes-on-wealthy
Either way, it doesn't mean you cater to the rich in the very way that you avoid with other classes.
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Lies, damned lies, and statistics.
I agree that Maryland's tax policies are dumb, but you're not helping the cause by throwing around worthless numbers.
The only way you have an "Exhibit B" is if you go through the names of the big filers, and see who filed in another state this year.
Seth, What do you mean by cater to the rich?
How are "other classes" not being catered to? How is an extremely low income tax rate for the bottom 50% of earners not catering? How is welfare NOT catering to the poor? How is government requirements for unionized contractors not catering to the (unionized) working class?
Seth, What do you mean by cater to the rich?
It's a matter of who gets demonized for suggesting it.
There is a problem when assistance that is focused towards the bottom is called socialism, and assistance to the top earners is simply called assistance.
Never mind their influence that has given them something close to "divine right".
Frankly Sethstorm, it would seem to me you would be happier in Venezuela. The reality is the reason most people are rich is they are smarter, being smarter they invent things, they create jobs for the rest of us. If you believe the head of the UAW helps to create jobs then look at the results. The only jobs Obama has created so far is Government jobs.
If you desire mediocrity then just say it and quit the class warfare stuff.
Here is another idea associated with "taxing the rich" which really amounts to increasing the taxes on those who pay taxes. Since we are in the era of bailouts and buyouts by the government we should insist that when they buyout a co. like GM and become majority owners (70% at last reading) we, the taxpayers should insist they take the value of the taxpayers payment and turn it into shares of stock. Those shares are to be disbursed to all of those who filed and paid taxes in 2008, proportional to their contribution.
Since we lent the money we should be the owners not the elected politicians.
Ralph Short said...Hardly.
My issue is with their actions, not their money. The question is, why does it seem fine to give to them what we take away from everyone else?
sethstorm,
You keep tossing unexplained little bits of your world into the real world where they don't make sense.
The top federal income tax rate in the 1950s in the US was 90 percent, on incomes of more than 200k.
We had good growth, low inflation, and paid down the federal debt.
I think that last point in important.
We need to pay down the federal debt, and it may take a 40 perent top federal tax rate, and gasoine taxes to do it.
The payoff will be for our grandchildren, who will inherit a debt-free nation. The Clinton years were great years too, and we paid down debt in that period.
I hate taxes, you hate taxes, that man behind that tree hates taxes.
But I hate debt even more.
Sethstorm, identify those individuals who are being stolen from to "give to the rich". It is certainly not the union members of the UAW, it is certainly not the people who do not pay taxes, so who is it?
Benjamin, you take one aspect of the 50's and 60's and turn it into a "cure all". That is a bankrupt idea. If you are not willing to look at all of the different variables since that time then what is the use of discussing this with you. Here are a few hints in case your curiosity factor increases, WW2 and Europe in ruins, WW2 and the cost of a world war, America totally ascendent, a work force that was many times that of retirees and welfare recipients.
The bottom line is one little detail does not make a successful diagnosis of the issue. Also, the reality is we have so many little parasitic organizations looking for taxpayer money along with professional politicians with lifetime jobs the rate of taxes will increase and our Grandchildren will still be poorer even if you raise taxes to 100%.
Ralph Short-
Of course, there are infinite variables, in comparing any period to another period. The work ethic, wars, technology etc.
Until recently, we enjoyed a global capital glut--a far cry from the "crowding out" scenarios of the 1960s capital amrkets (federal borrowing sopped up too much capital). That is a huge difference.
Yes, there are wasteful federal programs. Personally, I would wipe out the Dept. of Agriculture (the R-Party subsidy machine) and HUD (the D-Party subsidy machine).
But when all is said and done, we needed to have run mostly balanced budgets in the Bush years and we did not. Clinton ran surpluses.
We are paying the price for our lack of resolve now, and our children will be for generations. No, Obama is no better than Bush, although at least he has the excuse of inheriting a very bad hand.
Really, we are becoming a pauper nation, deeply indebted. I actually think the best advice is to consider moving to a Norway or Thailand or some country where they run surpluses but mostly honor individual rights.
The inanity of it all is that people like sethstorm can easily rationalize that good, old 'progressive' taxation system but can't offer a rational reason why someone who is productive and is paid for his/her productivity should have MORE money extorted from them via the tax system than those who make less?
Andrew Carnegie, the great builder of steel mills, on the other hand, thought all inherited wealth should be taxed away. He believed inheriting money created a weak, feeble class.
Who cares what Andrew Carnegie thought. If he wants to give away all his money, that's his business. It doesn't give you the right to take my private property.
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