MILLIONAIRES GO MISSING
May 27, 2009
In 2008, Maryland was unable to balance its budget, so the state tried to close the shortfall by fleecing the wealthy. Politicians in Annapolis created a millionaire tax bracket, raising the top marginal income-tax rate to 6.25 percent. And because cities such as Baltimore and Bethesda also impose income taxes, the state-local tax rate can go as high as 9.45 percent. Gov. Martin O'Malley declared that these richest 0.3 percent of filers were "willing and able to pay their fair share."
A year later, nobody's grinning, says the Wall Street Journal:
- One-third of the millionaires have disappeared from Maryland tax rolls.
- In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April; this year there were 2,000, which the state comptroller's office concedes is a "substantial decline."
- On those missing returns, the government collects 6.25 percent of nothing.
- Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year -- even at higher rates.
No doubt the majority of that loss in millionaire filings results from the recession. However, this is one reason that depending on the rich to finance government is so ill-advised: progressive tax rates create mountains of cash during good times that vanish during recessions, says the Journal.
Yet, the Maryland state revenue office says it's way too early to tell how many millionaires moved out of the state when the tax rates rose. But no one disputes that some rich filers did leave.
All of this means that the burden of paying for bloated government in Annapolis will fall on the middle class, says the Journal.
Source: Editorial, "Millionaires Go Missing," Wall Street Journal, May 26, 2009.
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