Why taxing the rich may backfire
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Oregon state legislators are busy working to pass bills that they hope will generate $800 million income tax dollars from wealthy individuals and corporations.
The personal income tax bill would impose higher tax rates on households with taxable income above $250,000 along with single filers whose income tops $125,000. Supporters think they can raise about $500 million over two years, but that’s only if economic realities don’t get in the way.
As the Wall Street Journal recently pointed out, the state of Maryland tried something similar last year. It created a “millionaire tax bracket” and the Baltimore Sun predicted the rich would “grin and bear it.” We’ll, they didn’t. The number of millionaire returns dropped by a third, in part because lots of incomes were down in the recession, but also because it’s the wealthy who find it easiest to move to less tax-burdensome states.
Still, one Oregon tax advocate argues that the rich “can’t just not show up.”
But arguing that we should tax the rich more because they have to “show up” and therefore pay up won’t sit well with most fair-minded Oregonians. They know that most high income earners work hard for their money, just like the rest of us, and many of them are business owners who employ other Oregonians. And virtually all Oregonians, fair-minded or not, know that the rich are more able than most of us to avoid excess taxation by moving; just look at all those rich former Portlander’s now enjoying life on the other side of the Columbia River.