Not many flee because of taxes…Dow Jones gets real
by Linda Beale
Dow Jones video admits there’s not much other than anecdotal tales that even millionaires readily move from one state to another to avoid taxes
OK. Admittedly long title. But you get the point. The anti-tax gurus are forever saying that states (and countries) can’t increase taxes from our historically very low point because those that would pay them are the rich and the rich have the means of moving away.
But do they? There are lots of things that come into whether one is willing to move or not–from weather to family to friends to business to custom to, yes maybe, taxes. So if a gazillioinaire moves to another state and then is asked–did you do it to save on taxes?, he might say yes (he knows his views may influence policy inordinately) but it might not even have been a factor or it might have been a minor factor or it might even in unusual circumstances have been the primary factor.
So it’s good to see a Dow Jones/Wall Street Journal video that admits that is the case. Not unsurprisingly (since it is, after all, a Wall Street Journal video) the title is “millionaires fleeing taxes” (Aug. 27, 2012), and the blurb underneath states (as though it were fact) “when states raise taxes, millionaires move out”. But that isn’t really what the video interview says.
The video admits that there are no good studies that show that millionaires actually move from one state to another because of tax increases.
Yeah, elderly wealthy move to Florida, but that isn’t necessarily to avoid taxes and in fact may well not be related to taxes at all. Yeah, there are anecdotal stories that people move because of taxes, but there’s no real proof. The video acknowledges that there are many other reasons for choosing where to have one’s primary residence, and that manipulation of residence can create problems. As the video says, “You can show residency in a state by living there a certain amount of time. …. You have to be very very careful, though. States are being very aggressive about collecting from everybody and determining who actually lives there.”
cross posted with ataxingmatter
We have excellent evidence about the influence of tax rates over migration. But it’s about international migration, not inter-state migration.
Which shouldn’t be all that much of a surprise really, as migrating from one country to another can change your marginal tax rate from 98% to 0% (for example, leaving the UK to live in Monaco in 1978 would have done that. And we know that people did do that too).
Move from state to state in the US and you’ll still be paying the same federal taxes. So obviously the number of people doing it will be lower as the impact of doing so is lower.
This really isn’t rocket science you know.
yeah, here in RIland we lowered the top rate to bring more rich people in (as the governor reasoned then). The rich were going to create jobs you know.
Now we just layed off 50 people in the unemployment department. Really, laying off 50 people in the unemployment dept so that they can now collect!
Well Daniel, the idea that the “job creators” are the rich and that if you only lower their taxes enough they will create jobs is about the only job creation myth the GOP has. Unfortunately, it is believed by a lot of voters despite example after example of it not working. Here in Wisconsin where Walker originally got elected by promising to “create” 250,000 jobs in 4 years through lower taxes and tax breaks to the “job creators” he is about 235,000 jobs short as he approaches the half way point. lower tax rates are simply a race to the bottom. Essentially Walker’s unofficial slogan is ‘Just like Mississippi only colder” I have previously suggested that it should not offend the concept of comparative advantage underlying the free trade mantra for the U.S. to impose import tariffs based on the differential between the tax rates in the Exporting country as opposed to the U.S. For example if the corporate tax rate is 10% in Ireland and 25% in the U.S. then we will tack on 1.5% tariff on Irish lace assuming a 10% profit. This will drive up the cost a bit for consumers but I would dedicate the funds to shoreing up the Medicare and Social Security trust funds.
Terry
I wish you hadn’t added that bit about shoring up SS and Medicare.
SS and Medicare are not welfare and ought to be paid for by the workers themselves… and can be… forever.
SS already is worker paid, and Medicare could and should be.
IF there is a need for welfare… fine, but no need to destroy the programs that are not welfare and work better than welfare.
If there is a need to tax the rich, or runaway corporations… fine, but no need to tax them “to shore up” SS.
SS is fine just the way it is.
Worstall
there may be people who would rather live in Monaco than in England. Let them.
But if you are talking corporations, or people who make their money in England or America, then tax them a fair amount to pay for the benefits they get from those countries. If that has to be a tax on imports, so be it. Both England and America used to understand the importance of a tariff… until they became empires that benefitted from so called free trade.
Times have changed, and the benefits of so called free trade are no longer what they were.
Fleeing to a different state to pay cheaper taxes when you’re a millionaire is ridiculous.
Coberly, I knew you would oppose my thinking and I admire your purity of funding. The problem is that our current President has undermined that funding by looking to social security to stimulate the economy. More fundamentally, to the extent that jobs are created overseas instead of in this country or the wage rates in this country are depressed by overseas wages not due to comparitive advantage, but do to the Exporting countries tax policies, the effect is to diminish the revenues flowing to medicare and social security.
During the downturn there was a claim that taxes reduced the number of millionaires in MD because of moving out of state. In actual fact, MD has a lot of professional people working for the federal government. The scientists, engineers and doctors that work on contract or directly for the government often have retirement savings of $1M but not much more. Most of the millionaires were lost when the size of their savings/housing values plummeted.
But what does the truth matter when you can spin a lie out of the data? A lie is too valuable an asset to waste.
Terry
by all means tax the millionaires and use the money to improve the economy. just don’t tax them to pay for your retirement.
the principle that the workers pay for it themselves is important.
if we reach the point where workers can’t make enough money to pay for their own retirement, we might need to tax the corporations off shore earnings to help us out… but don’t call it Social Security. That was too good an idea to spoil by using its name to describe welfare… even if we become such a miserable country we all need welfare to get through life.
As far as I am concerned the nice people who are trying to turn SS into welfare are just as dishonest as the people who are trying to privatize it.
Mark Randall
It seems logical to you that millionaires would move to pay less taxes
because you have a very simple mind where “money” or more particularly “taxes”
is more important than anything else you can think of …
real human beings have family and friends and community and “mystic ties”
people like you have money… my money… all my beautiful money…
have fun in Monaco.
I was thinking of this
“The mystic chords of memory, stretching from every battlefield and patriot grave to every living heart and hearthstone all over this broad land, will yet swell the chorus of the Union, when again touched, as surely they will be, by the better angels of our nature.”[2]
But as we know, millionaires don’t have any mystic ties except to their money.
Though you would think that some of them had to stay in the country just to keep an eye on their business.