Revenge of the Laffer Curve, Part II
An earlier post revealed that higher tax rates in Maryland were backfiring, leading to less revenue from upper-income taxpayers. It seems New York politicians are running into a similar problem. According to an AP report, the state’s 100 richest taxpayers have paid $1 billion less than expected following a big tax hike. The story notes that several rich people have left the state, and all three examples are about people who have redomiciled in Florida, which has no state income tax. For more background information on why higher taxes on the rich do not necessarily raise revenue, see this three-part Laffer Curve video series (here, here, and here):
Early data from New York show the higher tax rates for the wealthy have yielded lower-than-expected state wealth.
…[New York Governor David] Paterson said last week that revenues from the income tax increases and other taxes enacted in April are running about 20 percent less than anticipated.
…So far this year, half of about $1 billion in expected revenue from New York’s 100 richest taxpayers is missing.
…State officials say they don’t know how much of the missing revenue is because any wealthy New Yorkers simply left. But at least two high-profile defectors have sounded off on the tax changes: Buffalo Sabres owner Tom Golisano, the billionaire who ran for governor three times and who was paying $13,000 a day in New York income taxes, and radio talk-show host Rush Limbaugh.
…Donald Trump told Fox News earlier this year that several of his millionaire friends were talking about leaving the state over the latest taxes.
Not Waiting for Government
As Tad DeHaven mentioned the other day, CNN reported recently that business owners and residents on Hawaii’s Kauai island got together and made repairs to a state park — in eight days — that the state had said would cost $4 million and might not get done for months. Businesses were losing money since people couldn’t visit the park, so they decided to take matters into their own hands.
“We can wait around for the state or federal government to make this move, or we can go out and do our part,” [kayaking company owner Ivan] Slack said. “Just like everyone’s sitting around waiting for a stimulus check, we were waiting for this but decided we couldn’t wait anymore.”…
“We shouldn’t have to do this, but when it gets to a state level, it just gets so bureaucratic, something that took us eight days would have taken them years,” said Troy Martin of Martin Steel, who donated machinery and steel for the repairs. “So we got together — the community — and we got it done.”
It reminds me of the story 20 years ago of how Donald Trump got tired of watching the city of New York take six years to renovate a skating rink, so he just called up Mayor Ed Koch, offered to do it himself, and got the job done in less than four months. He got so enamored of the skating rink that he ended up getting the concession to run it.
And it also reminds me of the stories in James Tooley’s brand-new book, The Beautiful Tree: A Personal Journey Into How the World’s Poorest People Are Educating Themselves, which talks about how poor people in China, India, and Africa have set up schools for their children because government schools were absent or of poor quality.
If government would get out of the way, businesses, churches, charities, and individuals would solve a lot more social problems.
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