The effects of state taxes

At the same time that NPR concludes that “Y’know, raising state taxes on the rich does not cause them to flee to lower-tax states,” Texas decides, in the middle of a fiscal crisis, to do without $1.4 million annually by giving a tax break to people buying yachts!

Now, I can kind of understand Texas’ decision on the grounds of economic stimulus, but this decision only applies to the ultra-wealthy. It means nothing to Joe or Jane regular-person. There are no stimulus measures that apply to non-millionaires. And yes, the NPR study appears to me to be entirely sensible. It concludes that wealthy people tend to have strong ties to the community as they tend to have established businesses with long-time customers and employees and tend to be involved in other community activities (The e-e-evil Koch brothers also give money to an impressive list of decent and worthwhile recipients), so no, wealthy people are not likely to up and leave because the state takes a bit more of their money than they did the year before.

Do state taxes affect whether or not they move into a state to begin with? Not really, as rich people move to where the customers are. If people are moving to California to take part in the Gold Rush, hey, someone’s got to sell them the pans, picks and shovels they’ll need to do their gold retrieval!

And what is the cause of Texas’ fiscal crisis? As we’re seeing with lots of other states (Specifically, California and the 1978 Proposition 13), the real problem is under-taxation. The wealthy aren’t paying nearly enough to cover the state bills.

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