Friday, April 29, 2011

Do taxes make us move?

There was an interesting thing on KGO this morning.  The topic was whether or not higher taxes cause "rich" folks to move out of the State (any state) to another State.  It turns out that studies on the topic show that this doesn't seem to happen.  The urban myth is that if you raise taxes on the well-to-do they will pick up and move to someplace where there are lower taxes.  Of course that doesn't happen.  Why would it?  The reason that they are living where they are is because they either like it, or they have to because of business reasons.

I think taxes aren't such a big deal to the "rich" (family income above $300,000 a year) because it generally comes out of discretionary money.  They aren't needing the money for any particular thing, so it isn't so important - not like it is for the poorer among us who have little or no discretionary money.  The richer they are, the more this applies.  For them higher taxes possibly means direct impacts on food, clothing, housing, transportation, health, education, etc.  For the rich folks it impacts none of these - in fact, there may be almost no personal impact at all.

I wouldn't be surprised if higher taxes draw richer folks to the area.  Not because they like to pay more money in taxes, but because they value the things that higher taxes can pay for (better parks, better infrastructure, less terrible poverty around them, better police and fire departments, better education, better prepared employees, etc).  It is just a whole lot better to live where the government has enough money to provide a good level of service to the community.   If I were to make that choice (which I guess I do), it would be to live where the government is functioning well, the schools are good and crime rates are down because not so many people are living on the edge.  I also like good looking cities, plenty of parks and open spaces, well maintained facilities, public agencies that are properly staffed, etc.  It is worth  paying extra to get those things - I can't purchase these things privately because they are related to society not to my personal living situation. 

There is much more to experience of living someplace than just how much money you can make.  And- while you might be able to wall yourself off from the "lower class" in the extreme situations, most "rich" people live in the community with us and like it to be nice, friendly, safe, comfortable, pretty and all that - which generally takes tax money, and they know it.   Most really rich folks (above about $10M per year income) are currently complaining that their taxes are too low - because it means that the society that they need to support their life style and their is crumbling. 

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