Yesterday Art Laffer and Stephen Moore wrote in the Wall Street Journal:
Lawmakers in California, Connecticut, Delaware, Illinois, Minnesota, New Jersey, New York and Oregon want to raise income tax rates on the top 1% or 2% or 5% of their citizens. New Illinois Gov. Patrick Quinn wants a 50% increase in the income tax rate on the wealthy because this is the "fair" way to close his state's gaping deficit...
Here's the problem for states that want to pry more money out of the wallets of rich people. It never works because people, investment capital and businesses are mobile: They can leave tax-unfriendly states and move to tax-friendly states...
Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts.
Did the greater prosperity in low-tax states happen by chance? Is it coincidence that the two highest tax-rate states in the nation, California and New York, have the biggest fiscal holes to repair? No.
Prescient, no, given this report on
New York Florida billionaire B. Thomas Golisano?
Golisano said this year's state budget - which increased income taxes on upper wage earners from 6.85 percent to 8.97 percent - was the final straw. His moving to Florida will save him $5 million in state income taxes. The billionaire founder of Paychex, a payroll processing company, has already registered to vote and gotten his driver's license in Florida, and signed the homestead exemption paperwork that will cap his annual property tax increases to 3 percent a year there.
"I'm sorry Mr. Golisano feels that he has to change his residence at this time," Gov. David Paterson said today. "I understand the people moving out of this state is one of the reasons we don't want to raise personal income taxes as we did."
Paterson warned legislative leaders that raising the income tax would drive people out, but he bowed to pressure from Democratic leaders in the two houses to implement the tax, which will raise $4 billion a year.
Golisano, who for now will keep his Buffalo Sabres hockey team, isn't buying Paterson's promise:
"I'm sorry, that kind of statement doesn't render much confidence in me that it's going to change. They get used to a level of spending and they just can't back off from it," Golisano said of the governor and lawmakers.