Oregon raises taxes on millionaires, they disappear. Surprise? Not really.
From the WSJ, Ducking Higher Taxes: Oregon’s Vanishing Millionaires:
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. …
In 2009 the state legislature raised the tax rate to 10.8% on joint-filer income of between $250,000 and $500,000, and to 11% on income above $500,000. Only New York City’s rate is higher. Oregon’s liberal voters ratified the tax increase on individuals and another on businesses in January of this year, no doubt feeling good about their “shared sacrifice.”
Congratulations. Instead of $180 million collected last year from the new tax, the state received $130 million. …
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.
The same thing happened in Maryland in 2008 (I blogged about it here):
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.
Update: It’s worth noting that Maryland and Oregon are among the bluest of blue states. I find it hard to believe that all of these fleeing millionaires are disciples of Friedman and Hayek. So who is leaving?