Expatriation. Itâ€™s happening. Thousands of people are picking up stakes and leaving. Theyâ€™re leaving their high-tax home states.
â€œIâ€™m outa here. Iâ€™ve had enough,â€ said a friend at dinner last week. â€œ[Maryland Governor] Oâ€™Malley thinks he can tax us all he wants. But I donâ€™t have to put up with it. I can move. We bought a place in Florida.
â€œHe probably thinks it doesnâ€™t matter. Whatâ€™s a single taxpayer, more or less? Thatâ€™s not going to change the outcome of an election. But Iâ€™m taking my business with me. Iâ€™ll set up shop in Florida. I donâ€™t have to be in Maryland. I can get crab cakes in Miami too.â€
What had set him off was an article in The Wall Street Journal. â€œMillionaires Go Missing: Marylandâ€™s fleeced taxpayers fight back.â€
Governor Martin Oâ€™Malley, a dedicated class warrior, declared that these richest 0.3% of filers were â€œwilling and able to pay their fair share.â€ The Baltimore Sun predicted the rich would â€œgrin and bear it.â€
However, there were two things that Maryland politicians didnâ€™t count on (1) a world-wide economic crisis decreasing the number of million dollar earners and (2) millionaires simply leaving (or taking in less income). â€œBy April 2009, one-third of the millionaires have disappeared from Maryland tax rolls. On those missing returns, the government collects 6.25% of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year â€“ even at higher rates.
What the WSJ failed to mention was that 6.25% isnâ€™t the end of it. There are local taxes too. And in Baltimore City and Montgomery County, for example, the additional local taxes bring the total take up to nearly 10%.
If you have $100,000 of taxable income, in other words, you pay almost $10,000 for the dubious privilege of living in Baltimore rather than, say, some low-tax city in the Sunbelt.
In our own business, we have an office in Baltimore and one in Florida. We canâ€™t move our entire business to Florida, but more and more we hear from employees in Baltimore who want to move to Florida. So the business moves…organically, naturally. And when we create new businesses we put them in Florida, rather than in Maryland.
We already see the results of this and similar policies in Baltimore. People who create wealth tend to live outside the city…or move out. In the city limits, zombies have taken over â€“ with a high percentage of citiesâ€™ populations on government payrolls or various forms of welfare. Theyâ€™re less interested in creating wealth than they are in redistributing it to the shuffling, mouth-breathing masses.
The cityâ€™s largest employer, for example, Johns Hopkins, is a private institution. And a great one, from what weâ€™ve heard. But it is hardly independent of the zombies. Much of its research and operating budgets are funded by the government.
The Maryland Millionaire Exodus originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”
Read more here:
The Maryland Millionaire Exodus
The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.