Maryland's millionaire exodus
Maryland's governor raised taxes on millionaires. Their response? Move.
Expatriation. It’s happening. Thousands of people are picking up stakes and leaving. They’re leaving their high-tax home states.Skip to next paragraph
Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning (dailyreckoning.com).
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“I’m outa here. I’ve had enough,” said a friend at dinner last week. “[Maryland Governor] O’Malley thinks he can tax us all he wants. But I don’t have to put up with it. I can move. We bought a place in Florida.
“He probably thinks it doesn’t matter. What’s a single taxpayer, more or less? That’s not going to change the outcome of an election. But I’m taking my business with me. I’ll set up shop in Florida. I don’t have to be in Maryland. I can get crab cakes in Miami too.”
What had set him off was an article in The Wall Street Journal. “Millionaires Go Missing: Maryland’s fleeced taxpayers fight back.”
Governor Martin O’Malley, a dedicated class warrior, declared that these richest 0.3% of filers were “willing and able to pay their fair share.” The Baltimore Sun predicted the rich would “grin and bear it.”
However, there were two things that Maryland politicians didn’t count on (1) a world-wide economic crisis decreasing the number of million dollar earners and (2) millionaires simply leaving (or taking in less income). “By April 2009, one-third of the millionaires have disappeared from Maryland tax rolls. On those missing returns, the government collects 6.25% of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year – even at higher rates.
What the WSJ failed to mention was that 6.25% isn’t the end of it. There are local taxes too. And in Baltimore City and Montgomery County, for example, the additional local taxes bring the total take up to nearly 10%.
If you have $100,000 of taxable income, in other words, you pay almost $10,000 for the dubious privilege of living in Baltimore rather than, say, some low-tax city in the Sunbelt.
In our own business, we have an office in Baltimore and one in Florida. We can’t move our entire business to Florida, but more and more we hear from employees in Baltimore who want to move to Florida. So the business moves…organically, naturally. And when we create new businesses we put them in Florida, rather than in Maryland.
We already see the results of this and similar policies in Baltimore. People who create wealth tend to live outside the city…or move out. In the city limits, zombies have taken over – with a high percentage of cities’ populations on government payrolls or various forms of welfare. They’re less interested in creating wealth than they are in redistributing it to the shuffling, mouth-breathing masses.
The city’s largest employer, for example, Johns Hopkins, is a private institution. And a great one, from what we’ve heard. But it is hardly independent of the zombies. Much of its research and operating budgets are funded by the government.
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