To evaluate motives, follow the money. This is true for salaries, incentive compensation programs, and corruption.
This phenomenon is observed among citizens of some high-tax states. People have alternatives when they are weary of bureaucracy, hefty taxes, and incompetent budgetary management. They are able to load a U-Haul, get in their vehicle, and relocate. Some leaders of major states are oblivious to this reality.
The major offenders are California, New York, and Illinois. More than 300,000 individuals left California and New York in 2022 alone. Illinois witnessed the departure of 140,000 taxpayers. Comparable movement from New Jersey, Massachusetts, and Pennsylvania is occurring.
Mathematics helps explain why individuals are so driven. With existing and planned municipal, state, and federal taxes, rich Californians face a total tax rate of around 57.9%. New Yorkers in the highest tax bracket will pay combined taxes of over 60%.
Contemporary contention stems from the desire of high-tax governments to impose an annual tax on unrealized capital gains. Hence, if the states with the highest tax rates had their way, many of the wonderful firms we admire today may not exist.
Amazon is a prime illustration. Between 1996 and 2015, Jeff Bezos labored to construct the e-commerce behemoth. Throughout this period, however, Bezos put the cash flows back into the firm. Amazon earned essentially little net income for 20 years. Despite the fact that Bezos developed this company with forethought, a wealth tax would have impeded Amazon’s current existence.
Some states are currently considering levying a 1% to 1.5% yearly “wealth tax” on rich persons. Hence, even if Amazon had no net revenue, affluent owners (such as Bezos) would have to borrow money or sell firm assets to pay wealth taxes.
Last year, Amazon employed around 1.5 million individuals. Amazon’s expansion of job possibilities has improved the quality of life in the United States. It is difficult to say how much of the retailer’s growth would have been erased if Bezos had been subjected to a 1% wealth tax from the start.
A 1% wealth tax may not seem like much, particularly when it is used to target billionaires. Nevertheless, this is not only a dialogue between billionaires.
Employment is an essential component of success in a capitalist society. 69% of the United States Gross Domestic Product (total sales) is comprised of consumer expenditure. When people are unemployed, they have little disposable income. Without expenditure, GDP fails and the nation as a whole suffers.
The majority of our country’s wealth is produced by first-generation entrepreneurs. Entrepreneurs can relocate to any state that values their contributions the greatest, particularly in technologically sophisticated societies. Capital flows to where it is distributed most efficiently. This consists of states.
Moreover, many tone-deaf state officials fail to comprehend that in a “work-from-home” atmosphere, individuals might maintain employment yet relocate to a different state. This implies that states must be even more flexible in order to retain local residents.
While attacking billionaires, keep in mind that they possess substantial resources to move. Furthermore, millionaires do not burden the welfare system. Billions of dollars are spent on taxes and maintaining a beautiful environment. Thus, communities gain greatly from having affluent residents.
Where are individuals heading? Texas welcomed 470,000 new citizens in 2012, while Florida welcomed 444,000. Each of the Carolinas, Tennessee, and Georgia gained a minimum of 80,000 new people.
To combat this migration of people and capital, California’s plan for a wealth tax includes an “exit tax.” In addition to stating that you will be taxed if you remain, they want to tax wealth regardless of where it is housed internationally.
The haughtiness is astounding. The states with high taxes are causing a stampede to leave. This results in even less economic growth, investment, and innovation in these states. This plan will be extremely difficult to navigate and implement. In addition, experts feel this will violate the Commerce Clause of the United States Constitution and the right to travel.
States should examine the success of business-friendly, low-tax states, such as Texas and Florida, as opposed to keeping entrepreneurs, company owners, and rich individuals hostage with a tax jail. Entrepreneurship and capitalism should be supported and fostered at all levels for their success. The prosperity of capitalism continues to be the rising tide that raises all boats.
Network Hype Team