To date, the Supreme Court has had no problem with any of these laws. So what is to stop, say, California from imposing exit taxes on the steady stream of citizens heading off for Texas, Arizona, and Nevada? More than 200,000 people flee the Golden State every year, taking their money with them while leaving behind their share of the state's $617 billion in state debt, which comes to about $16,000 per resident. That's $3.2 billion a year in tax evasion!
If presenting every deserter with a $16,000 bill proves too unpopular, why not follow Uncle Sam's lead and make a grab for unrealized capital gains taxes? California taxes capital gains at the same rate as ordinary income - voters there recently passed a referendum to increase the top rate to 13 percent - so a tax like that would bite the richest nice and hard. That'll make those Silicon Valley millionaires think twice before escaping to a low-tax state before cashing in their shares! And who has any sympathy for them? After all, they didn't build that.
Thursday, December 20, 2012
When Will Death Spiral States Impose Taxes On Fleeing Citizens?
I picked this up from Rush's website. The main problem with this is once the exit tax is imposed NO ONE who has any money will want to move there and anyone who is starting to make money will just pack up and leave.