Wednesday, October 6, 2010

Taxes: Does taxing the wealthy endanger individual prosperity?

As conservatives, anti-tax advocates, and anyone with wealth continue to assert that increasing taxes on high income earners (those making over $250,000 per year as defined by President Obama) will kill any economic recovery, there's new data to the contrary that effectively shoots this claim out of the water.  

Thanks to the watchful eyes of a progressive tax reform group, Citizens for Tax Justice (CTJ), they came across a Wall Street Journal article that more or less dispels the myth that when taxes are raised on high income earners, or places that have higher tax rates on the same group, that wealth flees for places with lower tax rates.

As reported by the Wall Street Journal's Robert Frank, according to an annual report by Phoenix Affluent Marketing Service, "the overall number of millionaire's in the U.S. rose 8% in 2010 to roughly 5.6 million households." 

States with the highest concentration of millionaire's, Maryland and Hawaii, had some of the highest state income taxes.  As a matter of fact, the report that the Phoenix Affluent Market Service pulled their information from was from the conservative tax policy think tank the Tax Foundation.  Among the top ten states with the highest individual income taxes were: 1) New York, 2) Maryland, 3) California, 4) New Jersey, 5) Ohio, 6) Oregon, 7) Hawaii, 8) Wisconsin, 9) Iowa, 10) Vermont.  Virginia ranked around 30 in the report. 

Out of the top ten individual income tax states listed above, "...the millionaire populations and the millionaire densities of Hawaii, Maryland, New Jersey, California and New York increased in 2010 from 2009. That suggests that the states gained more millionaires than they lost."  So what is so attractive about these states with their prosperity killing individual income taxes? 

According to the Wall Street Journal article these are,
"states with large concentrations of highly educated professionals and business owners, which are key ingredients to growing wealth,” according to David Thompson, Managing Director of the Phoenix Affluent Market.  Additionally, “in general, most high-net-worth households don’t base their living decision on tax rates, but on things like quality of life, access to good education, infrastructure and culture.”
In short, high taxes on the wealthy aren't killing their prosperity or driving them out of states with high individual income taxes.  The wealthy and anti-tax advocates are pushing a total myth

Links of interest:, 

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