TThe Quinnipiac Poll was not all about Rell and Dodd — they also touched upon the effects of taxing the “rich.” (See it here: http://www.quinnipiac.edu/x1296.xml?ReleaseID=1352 )
The key points are these: “By a 60 – 30 percent margin, Connecticut voters would rather cut services than raise taxes to balance the state budget. But voters support 71 – 27 percent raising the state income tax for individuals making at least $265,000 per year and couples making at least $500,000. The measure wins 90 – 9 percent support from Democrats and 71 – 26 percent support from independent voters, while Republicans oppose it 57 – 40 percent. Voters reject 55 – 42 percent the argument that raising taxes will force wealthier residents to move out of Connecticut. Voters also support 51 – 45 percent raising taxes on corporations….”
Interestingly, most voters want to cut spending to balance the budget, but then think that raising taxes is OK, especially on the rich. Why? Because expert after expert has told legislature after legislature, across the counrty, that raising taxes on the rich does not motivate them to leave a state.
Now, let’s state some facts. We all know that tax policy is both a motivator and a de-motivator. That is why if we like something (e.g., green cars), we lower taxes on them and of we don’t like something (e.g., cigarettes) we raise taxes on them. Clear as day. Liberals and Conservatives alike, by now, seem to understand this feedback relationship.
But time and again, experts (usually pro-tax-hike experts, of course), tell us of that of all people, wealthy people’s behavior is not particularly impacted by tax policy effecting them. I would rejoin that, of all people, those who have worked hard and made some money are those who are especially likely to want to protect their nest egg.
Now, we have data proving this to be the case.
First, we all know California’s and New York’s reputation as high-tax states, along with Massachusetts. If you have a look at this data from the Census Bureau, you will see that indeed, the out-migratiom from those states is alarming. In one year, 2007, alone, more people moved out of California and New York than live in Bridgeport, Hartford, New Haven and Stamford combined!
See it here: http://www.census.gov/population/www/socdemo/state-to-state.html (Click on Domestic Migration Flows for States 2005 Tables, that is the most recent full national data).
That list tells us a lot — the high-tax (NY, CA, MA, etc.), or slow-growth (MI, OH, etc.) states have sent their residents fleeing in droves.
Now, we have much more recent data, too. This Wall Street Journal article – http://online.wsj.com/article/SB124329282377252471.html
details how a recent increase in taxes on the “rich” in MD led to less income from the million-dolar-plus income level. Now, some of it was due to the financial meltdown of Sept. 2008, but some of it has to do with the proximity of Maryland to Delaware, Virginia and the Carolinas. In short, people voted with their feet – they left, establishing residency in states with lower taxes, and thus depriving Maryland of ANY support at all.
Thus my thesis, raising taxes on high-earners is counter-productve, for one simple reason – wealthy people are more mobile than poor folks, and they can catch a plane to Boca and buy a house pretty quick, and Boom! That’s it — one less rich girl or guy to lay a tax bat on. (More on Maryland here: http://www.aipnews.com/talk/forums/thread-view.asp?tid=4891
The same goes for corporations – they are by nature mobile, so if you whack them hard enough, they will eventually find their way to a low-tax haven as surely as water finds it level. (Thus, the population growth through in-migration in states like South Carolina, Florida, Arizona, Delaware, etc. And for those of you who found some data showing those states have similar tax burdens to CT or MA, get over it — the property taxes in SC or FL, for example, are often less than 10% of what they would be here in the Northeast. People are moving there directly because of the contrast in tax policies.)
So to those voters who suggest balancing the budget through spending cuts rather than tax increases, I agree because I want keep our people and our businesses in this state. And to those who say it’s just fine to whack some rich folks in Greenwich or Litchfield, procede with caution, lest you find those guys have moved to Hilton Head, and the state received less, not more, from them.