What’s an effective means of limiting an economy’s opportunity for growth, and crowding out investment? Even further, what is an effective means for encouraging capital flight and outright migration? The millionaire’s tax certainly accomplishes this feat. This particular tax is being proposed by state governments across the country as a solution for ailing budget deficits. But is this a sound, long term solution to contracting state debt?
Recently, New York Assembly Speaker Sheldon Silver, has recommended the implementation of a millionaire’s tax, which would fall on the shoulders of 75-85 thousand New Yorkers who pull in (before being subject to an array of high level taxes of course) $1 million per year. This millionaire’s tax would be compounded on New York’s already existent millionaire’s tax. This particular tax, at its core, is no more than a fiscally punitive action taken against hard working Americans. The millionaire’s tax, simply put, derives from a lack of budgetary prowess on behalf of state legislators. This lack of budgetary prowess then forces top earning, taxpaying Americans, who are already paying an exorbitant amount in taxes, to shoulder a large portion of the state’s fiscal burden.
Given that the state of New York’s cumulative exodus level was 1.7 million people between 1999-2008 (and the highest in the country), it is no secret that hard working Americans have been, and cotninue to be serious about dodging poorly justified tax hikes for the sake of settling where taxes are lower and fewer.
According to MyFoxNy:
The plan would jack up a current millionaires tax another 11-percent.
Furthermore, regarding this new millionaire’s tax rate, MyFoxNy reports:
The current "millionaire's tax" actually starts affecting people who have incomes over $200,000. High income tax earners would pay more than 13-percent of their salary in local taxes.
Ultimately, the millionaire’s tax is just another method for draining the private markets of capital, and for holding many fiscally responsible households accountable for the mismanagement of state funds on behalf of state governments. This millionaire’s tax, in the context of New York, would function as a substitute for budget cuts in multiple areas. Therefore, this millionaire’s tax simply perpetuates the unfortunate, fiscally irrational trend (especially when in the midst of a recession), of tax and spend. We can only hope that state governments across the country can come to see this prescriptive approach as a deeply flawed and therefore nonsensical prescriptive approach. State legislators relying heavily on progressive income taxes is a slippery slope because this means more volatility when it comes to state revenues. In a situation where state governments aim to rely on an extremely marginal percentage of taxpayer revenues, when the volatile revenues of these top earners declines, state revenues respectively decline as well. Clearly, this is not a brilliant way to fund a state government's budget. This justifies why a millionaire’s tax is a budgetary tactic on stilts; lacking stability and therefore ensuring some form of collapse in the future.