Our terrapin neighbors to the north had a budget shortfall last year, so in their infinite wisdom they decided the 3,000 millionaires in their state would be “willing and able to pay their fair share” with a tax hike. Well a year later, roughly a third of those millionaires are no longer paying taxes in Maryland.
A number of lessons here. First, the rich have the resources to figure out ways to protect their wealth. Second, increasing penalties decreases incentives. While the first two are obvious to many, the third is less understood. The U.S. Constitution allows the States to compete with and learn from one another. Instead of having one Federal “solution” to a problem, the States offer many alternatives. Whether it is marriage, gun control or taxes, the citizens have a choice and more influence on their local politicians, but when they are truly unhappy with a decision they can move to a state more of their liking. So what is Virginia going to do to attract those 1,000 millionaires fleeing Maryland?
