Taxing the rich has long been the dream and policy aim on the American left. Well, not “taxing” the rich. More like “soaking” them via layers of tax levies that expropriate their wealth and hand it to the noble, just and generous state.
But a funny thing happened on the way to the class war – the rich decided to pull up stakes and move to a less demanding locale.
Or at least one of the richest men in the world – Jeff Bezos – decided to leave Washington state and move to Florida…taking his wealth with him. As the Tax Foundation's Jared Walczak writes, Bezos will be missing out on paying Washington's high capital gains taxes, and in the future, its highest-in-the-nation estate taxes.
But that's not all:
Washington officials have spent recent years bandying about wealth tax proposals. Wealth taxes are uniquely economically damaging—but for those targeted by them at the state level, they can also be fairly easy to avoid. An early version of the wealth tax proposal, exclusively targeting billionaires, would have generated an estimated 97 percent of its revenue from five people from Amazon and Microsoft. The latest proposal, which imposes a 1 percent tax on tradeable net worth above $250 million, has a somewhat larger base—an estimated 700 people in total—but the bulk of the revenue still comes from a small handful of the state's wealthiest residents.
The state's economists projected that the wealth tax would raise about $3.2 billion a year once implemented. This estimate included assumptions that some share of high-net-worth households would move to avoid the tax, but a Bezos move is going to be particularly hard for the state to stomach. Based on his current net worth, which is mostly in publicly reported ownership of Amazon shares, Bezos would have been on the hook for about $1.44 billion a year under the proposed wealth tax—a full 45 percent of the projected total.
One might be tempted to laugh at the Washington pols who lusted after Bezos' wealth and spun schemes to grab a goodly portion of it for their use.
But the Bezos example illustrates a truism about high tax regimes and the localities that impose them:
It's not hard to understand the political appeal of targeting the wealthy for uniquely high levels of taxation. But as many states have learned to their detriment, there is a tipping point where too many of those high earners and high-net-worth individuals are driven away, depriving the state of all their tax revenue, and of the economic activity they otherwise would have bankrolled in the state.
There's a lesson here for national pols who have their eyes on wealth taxes, too. Try to grab too much of what was never yours, and you may end up with nothing at all.
The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.
READ NEXT: New York Ratepayers Learn The True Cost Of Green Energy, Are Politicians Next?
