Taxation without Millionaire Representation

July 14, 2009

by Ethan Womble - A Woodward Report Columnist

The state of Maryland has recently received a crash-course in Macroeconomics 101. Amidst a budget deficit last year, the politicians in Annapolis created a new tax bracket for the wealthiest 0.3% of earners. The new millionaire tax bracket raised the top marginal income-tax rate for the state to 6.25%. Democrats praised the new tax, predicting that it would bring an additional $106 million to the state coffers. In true Marxist fashion, Governor Martin O’Malley declared that these taxpayers were "willing and able to pay their fair share."

A funny thing happened this past tax season, however. According to the state comptroller’s office, million-dollar income tax returns have decreased from 3,000 to 2,000, down one-third!

Naturally, some of this can be attributed to the economic downturn; but much of it is due to millionaires actually leaving the state. In this case, the grass really was greener on the other side. Instead of bringing in an extra $106 million, the state will now see an $100 million shortfall from the tax bracket—at the higher rate. The millionaire migration will be quite costly to Maryland by the time all is said and done.

Other states are facing similar budgetary problems. Governor Jon Corzine in New Jersey is searching for solutions to his state’s deficit while his next-door neighbor, David Patterson, proposes tax hike after tax hike in New York. One of the new taxes initiatives, the “iPod tax,” tacks on a fee for every “digitally delivered service,” including songs, movies, and e-books. The tax would also apply to sporting events, movie tickets, and satellite TV and radio. As if paying $15 to go see Sean Penn play a polyamorous gay man wasn’t a big enough waste of money.

Meanwhile, Governor Schwarzenegger spends most of his day writing IOUs to California’s creditors for the $24.3 billion deficit into which they’ve spent themselves. Note: That’s “billion” with a “b.”

People across the U.S. continue to leave states like California and New York for the more tax-friendly, small-government states of the South and Midwest. California is losing citizens by the tens of thousands every single month. Earlier this year, conservative radio giant Rush Limbaugh made headlines when he announced that he was leaving New York due to the increased tax burden.

On the national stage, our elected officials are figuring out how they can provide free healthcare to illegal immigrants instead of addressing our own budgetary insufficiencies. Recently, there have been talks among Democrats of needing another stimulus package. People forget that the $787 billion stimulus enacted by the President last February was the second stimulus—Bush enacted a $168 billion stimulus bill just a year ago. Both Presidents’ packages have failed to bring about the economic benefits that were promised. It is impossible to tax and spend your way out of a recession and President Obama could learn a lot by looking to some of his states’ mistakes before enacting the proposed $1 trillion in increased taxes over the next 10 years. Second Note: That’s “trillion” with a “t.”

For the past 7 years the only liberal mantra screamed louder than, “Tax Cuts for the Rich,” was “Bush Lied: People Died.” The only credible economic policies are advanced by the Right, and then, only rarely. Bush cut taxes and tax revenues increased as a result. If only libs could stop obsessing over Sarah Palin, they too might realize this and reverse course on this failed Keynesian economic experiment.