Across the country, Democrats are moving forward with millionaire taxes to tap wealthy taxpayers to address budget shortfalls. We have previously discussed how such wealth taxes are unconstitutional (in my view) in the federal system. However, state constitutions have been interpreted to allow such taxes. More importantly, there is no constitutional barrier to imposing huge increases in income taxes on wealthy taxpayers. That is what just happened in Washington as Democratic legislators seek to reproduce the exodus of wealth from California. Virginia is also moving toward a 10% millionaire’s tax as part of a slew of new taxes introduced after Democrats retook power in Richmond. (They also voted themselves close to a 300% raise).I have long been a critic of such taxes which have proven failures that end up shrinking the tax base by chasing any rational taxpayers out of a state. Democrats often treat high-paying taxpayers as a type of canned hunt, ignoring that both the wealth and the wealthy are mobile.
Take Washington’s massive tax increase. Democrats just approved a 9.9 percent tax on income above $1 million. If you stay in Washington, you’ll pay a combined rate with the top income tax (37 percent) of over 46 percent. It will make Washington the state with the highest tax rate in the United States. With California next door, that is no small feat.
Many taxpayers are joining figures like Jeff Bezos and various businesses heading to low-tax states. Washington is already one of the states with the highest levels of migration out of the state, so Democrats are rushing to offer new reasons to leave.
The solution proposed by some Democratic politicians, like Rep. Ro Khanna, is to call for a national wealth tax that would force the rich to either move out of the country or pony up more money. The problem is that, even if the Supreme Court upholds a wealth tax, it has already been tried with disastrous results. France imposed such taxes on its wealthiest citizens, who promptly left France. Many came to the United States.
Some will not be sticking around to experience that joy of wealth redistribution in Washington state. Starbucks founder Howard Schultz just announced that he is leaving the state that launched his iconic brand. In his letter to Seattle, Schultz wrote “It is our hope that Washington will remain a place for business and entrepreneurship to thrive, creating essential opportunity for those in Seattle and the surrounding areas.” Schultz cited various reasons for leaving, including their “enter[ing] the ‘retirement’ phase of our lives.” However, for top taxpayers in the state, there are fewer and fewer reasons to stay.
Where is Schultz going? You guessed it . . . Florida.
The net result of these recent tax provisions (not just in Washington), with the exodus of the rich, will serve to create the US becoming a bunch of highly populated and taxed, third-world states vs a smaller group of highly productive states with relatively low taxes. This is civil war country.
No it will not. Just because a couple rich guys decided to move from CA or WA, obviously has nothing to do with recent tax laws there. Have you spoken with Howard Schultz, or has anyone, asked him why he moved. Or is planning to move. No you have not. You’re not even guessing, just shooting off your uniformed mouth.
Well this is just more state nonsense. There is more than enough evidence that raising taxes seldom really recoups the money that states or nations think they will get by raising taxes whether they be wealth taxes or income taxes. The wealthy, such as Mr Schultz, can move, as Prof Turley has pointed out. It seems as if these states never go and talk to or survey the states where people move to after leaving.
I would suggest they do so. Texas, Florida, Georgia, Tennessee, South Carolina all have done well with legal migrants from other states. Like a successful company, one should study successful states and learn from them. To repeat the same errors would suggest concrete thinking that is incapable of doing analysis.
They almost act like a suicidal individual who sees no options or pathways out of their depression or condition. The disease has eliminated the ability to widen one’s view and to see those options.
It would appear that they can never understand that so many of the wealthy create wealth for themselves and often for anyone else who wants to hook their wagon on to the success train.
One wonders if these states are blind, stupid, lazy, or just insane and collectively suicidal.
I suppose these states had been successful enough in the past when they had discipline and assets like beauty and wilderness, nice weather and beaches and competition from other states was minimal or ineffective but that is no longer true. It is going to be their continuing loss.
The taxation system of the individual 50 states coupled with the federal government’s is highly complex. You have no idea except for a few bombastic headlines you garnered, what the issues are pertaining to the high income taxpayers in the 50 states; more than you can possibly comprehend. Knowledge individual state tax laws, which you pretend to know intimately, is laughable. Suggest you stay away from the daily headlines. You are not an economist or a CPA. Your insight, or better said, the lack of it, is telling. Stick to what you know. Whatever that is.
Isn’t it unconstitutional to levy a tax on only certain individuals regardless of the income?
Yep Barb
But the dems have total control of the state along with their high court. Rules mean nothing to them.
Plus. Mr Starbucks himself is leaving for Florida.
Its in Turley’s opinion. Good catch dustoff.