Important WSJ report:
https://www.wsj.com/opinion/progressive-states-taxes-jobs-business-8e3d507b?mod=opinion_trendingnow_article_pos2
The Growing State Tax and Jobs Divide
On April 15, see how job growth has changed in high- and low-tax states.
April 15 is the deadline for filing taxes in most states in addition to federal returns. If you live in Portland or New York City, you might be thinking long and hard about moving to a lower tax clime.
The dirty little secret of progressive states is they tax their rich and middle classes more. They also wallop small businesses, which typically pay tax at their state’s individual rate. The more businesses pay in tax, the less they can invest and hire.
Eight states—Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas and Wyoming—have no income tax. On the other end of the spectrum are New York (top state and local individual rate 14.8%), Oregon (13.9%), California (13.3%), Hawaii (11%), Minnesota (10.85%), New Jersey (10.75%), Massachusetts (9%), Washington (9%) and Vermont (8.75%). All have top state-and-local tax rates that are double those of most states.
Maine and Rhode Island are poised to join them since their Democratic Governors recently endorsed surcharges on millionaires that would raise their top tax rates to 9.15% and 8.99%, respectively. The problem that Democratic-run states are running into is there aren’t enough rich to fund their promises to public unions and inexorable spending appetites.
Democrats then invariably dig into the pockets of the middle class and small businesses. Minnesota’s 9.85% rate hits at $203,150, and Vermont’s 8.75% at $249,700. New York City residents pay a 9.9% marginal rate on income over $80,650, and 10.7% above $215,400. Individuals who make more than $225,000 in Hawaii pay a 9% marginal rate.
California’s 9.3% tax bracket starts at $72,724, which is less than the median income in the state for a single earner ($76,190). A worker earning $90,000 could save $4,264 in income tax a year by moving to Nevada or Texas, or $2,408 by relocating to Arizona (flat 2.5% tax).
Voters in Portland’s Multnomah County in 2020 approved surtaxes on top of the state’s top 9.9% rate (which hits at $125,000 for individuals) to fund homeless housing and universal pre-school. Portlandians pay a top rate of 12.4% on income over $125,000 and 13.9% over $250,000. Since 2020 homelessness has increased while employment has declined.
During the pandemic, many professionals in high-tax states relocated to places with lower taxes and costs of living (and less crime and public disorder). At the same time, extended lockdowns by Democratic-run states forced small businesses to shut down. After the pandemic ended, high taxes suppressed new business formation and job growth.
Private job growth outside of social assistance and healthcare—which rely heavily on government funds—has been paltry in these states since January 2020: Hawaii (-3.8%), Oregon (-3%), Vermont (-1.7%), Massachusetts (-1.4%), New York (-1.3%), California (-1.2%) and Minnesota (-1%). See the nearby chart for comparisons.
Individual tax rates have also fueled corporate migration. Since 2021, Chevron, Tesla, Schwab, Oracle and SpaceX have vamoosed to Texas from California. For every Fortune 500 company that moves from a high to low-tax state, there are many more small and mid-sized businesses that do the same.
Democrats want to pretend that taxes don’t matter, but these numbers don’t lie.
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