Chasing Paper

For years now conservatives have been railing against New England and mid-Atlantic states with separate tax brackets for millionaires, saying these higher tax rates simply chase the rich away from those states, reduce revenues and cause budget shortfalls.  It's the main argument conservatives warn for why we can never, ever raise taxes on the rich ever at the federal level, or they'll just leave the country altogether...despite the fact the marginal tax rate on the richest individuals has been at historic lows for a decade now and as a result, our national debt has skyrocketed.  The last time taxes were this low?  Right before the Great Depression...and the Ryan Unicorn Plan wants to return to that 25% pre-Depression rate.

But hey, it turns out that whole "the rich have left those states in droves!" argument?  Complete hogwash.

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.

Gosh, you mean that doing what Clinton did at the national level to balance the budget didn't cause a massive outflux of America's precious millionaires?   That the country only got in real trouble when Bush and the Republicans cut the top tax rate and piled on trillion dollar wars that last nine years or more?

It's like mathematics works or something.  Go figure.

Can we raise taxes on the people who have seen their incomes quadruple since the start of the millennium, please?