Shocker: Oregon Loses Money by Taxing the Rich

by The blogprof

Shocker: Oregon Loses Money by Taxing the Rich: "You get less of what you tax more. In this case, millionaires:

From Taxprof via Instapundit: Oregon’s Millionaire Tax Drives Millionaires Out Of The State

Wall Street Journal editorial, Ducking Higher Taxes: Oregon's Vanishing Millionaires:

Oregon raised its income tax on the richest 2% of its residents last year to fix its budget hole, but now the state treasury admits it collected nearly one-third less revenue than the bean counters projected. ...

As usual, liberal economists make the fatal mistake of keeping all other variables static thereby ignoring the proven fact that taxes do affect behavior.

In 2009 the state legislature raised the tax rate to 10.8% on joint-filer income of between $250,000 and $500,000, and to 11% on income above $500,000. Only New York City's rate is higher. Oregon's liberal voters ratified the tax increase on individuals and another on businesses in January of this year, no doubt feeling good about their 'shared sacrifice.'

...One reason revenues are so low is that about one-quarter of the rich tax filers seem to have gone missing. The state expected 38,000 Oregonians to pay the higher tax, but only 28,000 did. Funny how that always happens. These numbers are in line with a Cascade Policy Institute study, based on interstate migration patterns, predicting that the tax surcharge would lead to 80,000 fewer wealthy tax filers in Oregon over the next decade. ...

The biggest loss of revenues came from capital gains receipts. The new 11% top tax rate applies to stock and asset sales, which means that Oregonians now pay virtually the highest capital gains tax in North America. Instead of $3.5 billion of capital gains in 2009, there was only $2 billion to tax—43% less. Successful entrepreneurs like Nike owner Phil Knight don't get rich by being fools with their money. They don't sell tens of millions of dollars of assets when capital gains taxes go up. ...

All of this is an instant replay of what happened in Maryland in 2008 when the legislature in Annapolis instituted a millionaire tax. There roughly one-third of the state's millionaire households vanished from the tax rolls after rates went up.

If Salem officials want to find where the millionaires went, they might start the search in Texas, the state that leads the nation in job creation—and has a top income and capital gains tax rate 11 percentage points lower than Oregon's.

As in ZERO. And surprise, surprise: Census shift to hurt Obama in 2012 as people flee blue states for red. Texas to pick up 3 House seats, electoral college votes, Michigan to lose one seat. Texas actually ended up getting 4. We in MI lost one. New York and Ohio 2 each. And history continues to repeat itself.

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