The only thing more stunning than the kleptomania of tax-hiking politicians is their unswerving faith that taxpayers, especially wealthy ones, simply will smile and surrender even more of their money. This fundamental misunderstanding of human nature is impervious to mounting evidence that taxpayers go where taxes are low.
French President Francois Hollande thought he could impose a 75 percent top tax rate and watch revenues flow into Paris like the Seine. Instead, actor Gérard Depardieu rushed into the loving arms of Vladimir Putin and Russia’s 13 percent flat tax. Former French president Nicolas Sarkozy, of all people, reportedly may move to London to escape Hollande’s thievery. (Potential fraud charges also may fuel Sarkozy’s wanderlust.)
Last year, a record 1,788 Americans renounced their citizenship, mainly in favor of countries with lower taxes and friendlier political rhetoric.
Golf great Phil Mickelson generated headlines this week when he suggested that high taxes might drive him from California — or perhaps America.
“There are going to be some drastic changes for me,” Mickelson said.
“If you add up all the federal [levies], the disability, the unemployment, the Social Security, and the state, my tax rate’s 62, 63 percent.” Imagine keeping just 37 cents of every dollar you earn. Is that a fair share?
Before President Obama, Washington Democrats, and even some invertebrate Republicans boost taxes any higher, they should read How Money Walks. Author Travis Brown demonstrates how Americans between 1995 and 2010 shifted some $2 trillion in wealth by abandoning California, Illinois, New Jersey, and other high-tax states and unpacking in low-tax states such as Florida, Nevada, and Texas.
“After spending several years mapping and analyzing these data, one correlation keeps popping up: Income moves to where it is most welcome, tax-wise,” Brown writes. “Money walks because opportunity talks.”
As I observe in an essay for Brown’s book, this reality is undeniable among the Empire State and its neighbors.
While New York City’s bright lights and endless excitement still lure people, Gotham also has watched many of its denizens decamp. While this state’s steep living expenses and anti-business tone repel potential residents, painful tax obligations lead too many New Yorkers to cry “Uncle!” — just before they hire moving vans.
“I have identified the most compelling incentive of all: a major tax break immediately available to all New Yorkers,” explained Tom Golisano, chairman of Paychex, Inc. “To be eligible, you need do only one thing: move out of New York State.” As he wrote in “Adios, New York,” a New York Post op-ed in May 2009, Golisano spent about 90 minutes transferring his voter registration, driver’s license, and domicile certificate from New York State to Florida. “Combined with spending 184 days a year outside New York, these simple procedures will save me over $5 million in New York taxes annually,” Golisano calculated. “By domiciling in Florida, which has no personal-income tax, I will save $13,800 every day. That’s a pretty strong incentive.”
“I left New York in 1997 strictly to get away from the onerous taxation,” Rush Limbaugh declared on his national radio program, soon after Golisano spoke up. “I don’t want to talk numbers, but it was humongous. . . . So I used my mobility and I moved.” Limbaugh landed in income-tax-free Florida.