Conservatives get very excited when a state or country passes higher taxes and immediately publicity abounds that the wealthy people in that area are packing up and moving.
It’s an article of faith among low-tax advocates that income tax increases aimed at the rich simply drive them away. As Stuart Varney put it on Fox News: “Look at what happened in
. They raised the top tax
rate to 50 percent, and two-thirds of the millionaires disappeared in the next
tax year. Same things are happening in Britain . People are leaving where
the top tax rate is 75 percent. Same thing happened in France a few years ago. New millionaire’s
tax, the millionaires disappeared. You’ve got exactly the same thing in Maryland .” California
But financial writer James Stewart of the New York Times looked at some studies, and the conclusion is that the migration is just an urban myth. For example, in
But a study by the Institute on Taxation and Economic Policy, a nonprofit research group in Washington, found that nearly all the decline in millionaires was the result of a drop in incomes largely attributable to the stock market plunge and recession, and not to migration — “down and not out,” as the study put it.
Darn. Is there more evidence of the fallacy of the Conservatives’ position? You betcha.
Cristobal Young, an assistant professor of sociology at Stanford, studied the effects of recent tax increases in
New Jersey and . “It’s very
clear that, over all, modest changes in top tax rates do not affect millionaire
migration,” he told me this week. “Neither tax increases nor tax cuts on the
rich have affected their migration rates.” California
The notion of tax flight “is almost entirely bogus — it’s a myth,” said Jon Shure, director of state fiscal studies at the Center on Budget and Policy Priorities, a nonprofit research group in
“The anecdotal coverage makes it seem like people are leaving in droves because
of high taxes. They’re not. There are a lot of low-tax states, and you don’t
see millionaires flocking there.” Washington
This is not to say that no movement happens because of taxes, sure it does. But consider this.
Professor Young said his study looked at every millionaire tax record filed in
over the last
20 years, and “neither tax increases nor tax cuts on the rich have affected
their migration rates.” He said that the two major tax overhauls before the recent
increase didn’t have any effect on migration rates of millionaires. “Among the
very richest, people making more than $2 million, out-migration actually
declined slightly after the 2005 millionaire tax,” he said. California
Will any of this information change the minds of the virulently anti-tax crowd. No. Data and information is not something they base their opinions on, not when they can get their opinions conjured up out of thin air.