It’s an old adage but I think it’s important to point out how often people tend to overlook it:
If you tax it, you’ll get less of it.
Politicians forget this all the time.
A case can be made that raising income tax rates at the state level won’t force people, en mass, to move. Or, that if you reduce state income tax rates, people will move in. I agree with this; people fundamentally chase jobs, not tax rates. This is for people however, not corporations.
When you tax corporations at a rate that is so high that businesses begin to move to avoid those taxes, people will move too. Further, the higher the “income” chain you go, the more able that individual is free to move.
Own your own internet widget company and live in CA. Pay too much in taxes? Move to Nevada, or Texas. Are ya a gazzilionaire and just live off dividends? Pay too much taxes? Move to Florida.
The point is, the higher the income stream, the greater the desire to tax it. And the greater the ability to avoid it. These people did not amass great wealth because they are careless or foolish. And they certainly didn’t amass that wealth in order to have it stolen from them.
They’ll move. And when they do, the revenue expected from them will be less:
LOS ANGELES — California’s budget problems show no signs of abating.
A report released by state budget analysts on Wednesday forecasts a sharp decline in revenue for this fiscal year, which could set off more than $2 billion in new cuts in state spending in January, including a seven-day reduction in the school year for public school students.
The report by the Legislative Analyst’s Office projected that the state would fall $3.7 billion short of the $88.5 billion in revenues and transfers that was anticipated in the 2011-12 state budget approved in June. Under the terms of that budget, automatic reductions — known as trigger cuts, and specified in some detail in the budget — go into effect if revenues fall $1 billion or more short of projections.
California is a state blessed by weather and geography. And people are fleeing the place.