Monday, December 20, 2010

Oregon's Rich Go Missing After Tax Increase

From "Ducking Higher Taxes: Oregon's vanishing millionaires" in The Wall Street Journal:
Oregon raised its income tax on the richest 2% of its residents last year to fix its budget hole, but now the state treasury admits it collected nearly one-third less revenue than the bean counters projected.
One reason revenues are so low is that about one-quarter of the rich tax filers seem to have gone missing. The state expected 38,000 Oregonians to pay the higher tax, but only 28,000 did. Funny how that always happens.
All of this is an instant replay of what happened in Maryland in 2008 when the legislature in Annapolis instituted a millionaire tax. There roughly one-third of the state's millionaire households vanished from the tax rolls after rates went up.
If states expect to fund their overly generous unfunded state and municipal worker pension and healthcare liabilities through future tax increase, the states will be in for a big surprise. These future employee benefits are not affordable and are promises that will never be kept.

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