On with Dayton’s tax plan!

April 25th, 2011

dayton-shep2

Doggin’ the rich!  Good idea…

Dayton to Eliminate Surcharge, Restore Promise on Top-Tax Rate; Restore Funding for Seniors’ Long-term Care

And you know how everyone says, “OH, NO… CAN’T DO THAT, the rich will flee the state,” which we all know is a crock.

Tax Fairness Is Simply Fair from Growth & Justice

From the Minnesota Dept. of Revenue:

Minnesota 2011 Tax Incidence Study

Here’s a take on that from the voice of money, the Wall Street Journal:

“This suggests that the policy effect is close to zero,” the study says.

njmillion_d

Millionaire Tax Didn’t Chase the Rich From New Jersey, Study Says

By Robert Frank

Anti-tax advocates contend that higher taxes on the wealthy lead to millionaire flight. They say this has been seen in Maryland, Rhode Island, New Jersey and New York. The rich are mobile, they say. They can take their money, taxes and jobs wherever they are treated best.

But a new study focusing on New Jersey provides some of the most detailed evidence yet that so-called millionaire taxes have little effect on the movements of millionaires as a whole.

The study, by sociologists Cristobal Young at Stanford and  Charles Varner at Princeton, studied the migration patterns of New Jersey’s millionaires before and after 2004, when the state imposed a “millionaire’s tax” that raised rates on those earning $500,000 or more to 8.97% from 6.37%.

The study found that the overall population of millionaires increased during the tax period. Some millionaires moved out, of course. But they were more than offset by the creation of new millionaires.

The study dug deeper to figure out whether the millionaires who were moving out did so because of the tax. As a control group, they used New Jersey residents who earned $200,000 to $500,000–in other words, high-earners who weren’t subject to the tax. They found that the rate of out-migration among millionaires was in line with and rate of out-migration of submillionaires.  The tax rate, they concluded, had no measurable impact.

“This suggests that the policy effect is close to zero,” the study says.

Of course, not all millionaires are the same, and some are more likely to leave than others. The study found that New Jersey millionaires over the age of 65 and who live off their investments are the most likely to leave. Among those who earned their money  from investments, the tax raised migration rates by 27 people per thousand among the top 0.1% of earners.

Yet those who own their own businesses or earn their money in New York–groups that account for a large share of millionaires in New Jersey–are less likely to leave.

The study also found that New Jersey millionaire-earners are an ever-changing group, with people constantly moving on and off the top rung of the income ladder. Since there is no permanent top-earning class, the occasional top earners have less incentive to leave because of the tax.

“In summary, the new tax did not appreciably increase out-migration,” the study concluded.

Have you ever moved to avoid higher state taxes?

Posted by Carol A. Overland
Filed in Legislative & Policy
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