Remember when Charlie Gibson stunned Candidate Obama by pointing out that when capital gains tax rates go up,capital gains tax receipts go down? It was obviously new news to Obama who countered: “But, it should be done for fairness”.
Continues to amaze me that our crack legislators confuse “tax rates” with “tax revenue” … and refuse to accept the repeated empirical evidence that they are inversely related.
Excerpted from WSJ, Ducking Higher Taxes, Dec 21, 2010…
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.
Oregon’s liberal voters ratified a tax increase on individuals making more than $250,000 and another on businesses … no doubt feeling good about their “shared sacrifice.”
Congratulations. After the tax was raised “income tax and other revenue collections began plunging steeply. 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.
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.
