Sticky Situation
November 22, 2017 9:26 AM Subscribe
Very interesting piece. Thanks for posting. I especially liked the concluding paragraph:
posted by Jonathan Livengood at 9:47 AM on November 22, 2017 [33 favorites]
Unfortunately money enjoys substantially more freedom of mobility than people do, now.
posted by mhoye at 9:49 AM on November 22, 2017 [4 favorites]
posted by mhoye at 9:49 AM on November 22, 2017 [4 favorites]
data always contradicts common republican talking points
posted by entropicamericana at 9:57 AM on November 22, 2017 [84 favorites]
posted by entropicamericana at 9:57 AM on November 22, 2017 [84 favorites]
Isn’t the point of the Panama Papers that the money of the rich has already fled? Fine, kick their asses out then. They’re not contributing to our economy as it is, just ruining it.
posted by Autumnheart at 10:05 AM on November 22, 2017 [5 favorites]
posted by Autumnheart at 10:05 AM on November 22, 2017 [5 favorites]
Great article, although I'm not sure about this bit:
After making it on to the Forbes billionaire list, elites are actually more likely to die than to move to a different country.
I suspect that we're all more likely to die than to do, well, pretty much anything else. :-)
posted by clawsoon at 10:13 AM on November 22, 2017 [9 favorites]
After making it on to the Forbes billionaire list, elites are actually more likely to die than to move to a different country.
I suspect that we're all more likely to die than to do, well, pretty much anything else. :-)
posted by clawsoon at 10:13 AM on November 22, 2017 [9 favorites]
This is based off of the author's academic research. Abstract here:
A growing number of U.S. states have adopted “millionaire taxes” on top income-earners. This increases the progressivity of state tax systems, but it raises concerns about tax flight: elites migrating from high-tax to low-tax states, draining state revenues, and undermining redistributive social policies. Are top income-earners “transitory millionaires” searching for lower-tax places to live? Or are they “embedded elites” who are reluctant to migrate away from places where they have been highly successful? This question is central to understanding the social consequences of progressive taxation. We draw on administrative tax returns for all million-dollar income-earners in the United States over 13 years, tracking the states from which millionaires file their taxes. Our dataset contains 45 million tax records and provides census-scale panel data on top income-earners. We advance two core analyses: (1) state-to-state migration of millionaires over the long-term, and (2) a sharply-focused discontinuity analysis of millionaire population along state borders. We find that millionaire tax flight is occurring, but only at the margins of statistical and socioeconomic significance.
posted by MisantropicPainforest at 10:16 AM on November 22, 2017 [5 favorites]
A growing number of U.S. states have adopted “millionaire taxes” on top income-earners. This increases the progressivity of state tax systems, but it raises concerns about tax flight: elites migrating from high-tax to low-tax states, draining state revenues, and undermining redistributive social policies. Are top income-earners “transitory millionaires” searching for lower-tax places to live? Or are they “embedded elites” who are reluctant to migrate away from places where they have been highly successful? This question is central to understanding the social consequences of progressive taxation. We draw on administrative tax returns for all million-dollar income-earners in the United States over 13 years, tracking the states from which millionaires file their taxes. Our dataset contains 45 million tax records and provides census-scale panel data on top income-earners. We advance two core analyses: (1) state-to-state migration of millionaires over the long-term, and (2) a sharply-focused discontinuity analysis of millionaire population along state borders. We find that millionaire tax flight is occurring, but only at the margins of statistical and socioeconomic significance.
posted by MisantropicPainforest at 10:16 AM on November 22, 2017 [5 favorites]
Of course it does - like climate change or trickle-down economics, we've never been fighting against facts and data.
The current political environment is a mob town movie through and through - policy has allowed immense wealth and power to accumulate in a small number of persons and corporations. Those persons and corporations (the mob) realize that you can get what you want just by threatening things - they can allude to bad consequences that are on the horizon for you, and mention how a payment or payments will prevent those things from occurring.
Unfortunately, in our version of this mob movie we don't have a hero who is willing to stand up to the mob - the people who are supposed to police them are in fact mobsters themselves, and a huge swath of the rest think the best answer is to give the mob what it wants so it will go away. So the mob gets stronger and asks for more until the movie ends. Fin.
posted by notorious medium at 10:18 AM on November 22, 2017 [4 favorites]
The current political environment is a mob town movie through and through - policy has allowed immense wealth and power to accumulate in a small number of persons and corporations. Those persons and corporations (the mob) realize that you can get what you want just by threatening things - they can allude to bad consequences that are on the horizon for you, and mention how a payment or payments will prevent those things from occurring.
Unfortunately, in our version of this mob movie we don't have a hero who is willing to stand up to the mob - the people who are supposed to police them are in fact mobsters themselves, and a huge swath of the rest think the best answer is to give the mob what it wants so it will go away. So the mob gets stronger and asks for more until the movie ends. Fin.
posted by notorious medium at 10:18 AM on November 22, 2017 [4 favorites]
I mean, if you approach the issue with emotional logic, it's much more likely that they won't move even if they get taxed more. Think about the stress that comes with moving to a different state, starting social lives over, finding the right new home, the right new neighborhood, etc. The rich aren't immune to these, unless they got rich by being super anti-social, which isn't common. A few percentages in raised income taxes probably won't outweigh that stress, especially if you already do well enough.
posted by numaner at 10:24 AM on November 22, 2017 [4 favorites]
posted by numaner at 10:24 AM on November 22, 2017 [4 favorites]
Great research and article. A related piece describes how the UK's tax shelter laws work.
posted by anthill at 10:58 AM on November 22, 2017
posted by anthill at 10:58 AM on November 22, 2017
being super anti-social, which isn't commo
Not meaning to nitpick, but this is not what antisocial means. You want "unsociable." Big important difference as anti-social people don't avoid social contact, they use social norms to manipulate people, and so, often love being sociable. Huge, important difference.
posted by saulgoodman at 11:14 AM on November 22, 2017 [3 favorites]
Not meaning to nitpick, but this is not what antisocial means. You want "unsociable." Big important difference as anti-social people don't avoid social contact, they use social norms to manipulate people, and so, often love being sociable. Huge, important difference.
posted by saulgoodman at 11:14 AM on November 22, 2017 [3 favorites]
I analysed tax return data from every million-dollar income-earner in the United States.
Is this data easily available? I assume it is anonymized.
posted by MtDewd at 11:15 AM on November 22, 2017
Is this data easily available? I assume it is anonymized.
posted by MtDewd at 11:15 AM on November 22, 2017
Data contradicts common talking point that high taxes cause the rich to flee.
Or having a Republican in the White House causes celebrities to flee to Canada. Promises, promises...
posted by Alexandra Kitty at 11:57 AM on November 22, 2017
Or having a Republican in the White House causes celebrities to flee to Canada. Promises, promises...
posted by Alexandra Kitty at 11:57 AM on November 22, 2017
I was a little skeptical, as this is in the left-leaning Guardian, so I went to see what the reliable Tax Policy Center says, and found this blog post which ... cites the same research. OK, then!
posted by Mr.Know-it-some at 12:35 PM on November 22, 2017 [1 favorite]
posted by Mr.Know-it-some at 12:35 PM on November 22, 2017 [1 favorite]
They might not flee, but this column from a few days ago notes that Ontario's projected tax revenue is $2B lower than was projected in the spring, and suggests that new marginal tax rates on incomes over $200K may be driving "what is known euphemistically as 'tax planning.'".
Of course, anything on taxes published by the National Post is suspect, doubly so when the C.D. Howe institute is cited for evidence. But might be interesting material for this discussion.
posted by sevenyearlurk at 12:50 PM on November 22, 2017
Of course, anything on taxes published by the National Post is suspect, doubly so when the C.D. Howe institute is cited for evidence. But might be interesting material for this discussion.
posted by sevenyearlurk at 12:50 PM on November 22, 2017
I actually know a guy who moved to Nevada to avoid income tax on a large gain unrelated to his home state. Aside from that, his income is still all taxed in his former home state since he earns it there.
I've always been a bit conflicted on it. In one sense it doesn't matter because over time the growth of much of that pot of money will still be taxed by his former state as is all the money he spends there and the feds of course still get the entirety of their cut. (More, actually)
But still, it seems shady. Nevertheless, I have a hard time saying I wouldn't make the same decision. After all, the tax savings more than paid for the house he built out there and the land he put it on. Somehow, thinking of it in those terms makes it even worse. (And makes me feel worse for not being able to say with certainty I wouldn't make the same choice)
posted by wierdo at 1:34 PM on November 22, 2017 [2 favorites]
I've always been a bit conflicted on it. In one sense it doesn't matter because over time the growth of much of that pot of money will still be taxed by his former state as is all the money he spends there and the feds of course still get the entirety of their cut. (More, actually)
But still, it seems shady. Nevertheless, I have a hard time saying I wouldn't make the same decision. After all, the tax savings more than paid for the house he built out there and the land he put it on. Somehow, thinking of it in those terms makes it even worse. (And makes me feel worse for not being able to say with certainty I wouldn't make the same choice)
posted by wierdo at 1:34 PM on November 22, 2017 [2 favorites]
Isn’t the point of the Panama Papers that the money of the rich has already fled?
No. US tax is based on citizenship and we have anti-abuse rules aplenty to stop base erosion. Which is why, re US taxpayers, the leaks have been such a dud.
posted by jpe at 1:35 PM on November 22, 2017 [1 favorite]
No. US tax is based on citizenship and we have anti-abuse rules aplenty to stop base erosion. Which is why, re US taxpayers, the leaks have been such a dud.
posted by jpe at 1:35 PM on November 22, 2017 [1 favorite]
Lol, as if it's hard to have your offshore business lend you money for the parts of your lifestyle they can't justify paying for directly. It helps, but is by no means necessary in the sense that few are prosecuted for their laxness in repayment, if you have US-source income with which to pay back (or at least be credibly in the process of repayment) the loans, of course.
posted by wierdo at 1:44 PM on November 22, 2017
posted by wierdo at 1:44 PM on November 22, 2017
I suspect there are a number of wealthy people who go looking for the state least likely to take away whatever their particular type of wealth is - but if they own businesses, they need to keep a presence in the state where their workers are; if they want a vacation home on the beach, it really doesn't matter how good Idaho's property taxes are; if they want to live within driving distance of their parents or even a major airport, again, "tax breaks" may not be their most compelling search-for-residence feature. And no amount of untaxed wealth will protect you from a tornado or hurricane.
The ones who can ignore all other factors and "flee" for whatever state will tax them least are a small enough group to not have any notable influence on national economics.
posted by ErisLordFreedom at 2:38 PM on November 22, 2017 [2 favorites]
The ones who can ignore all other factors and "flee" for whatever state will tax them least are a small enough group to not have any notable influence on national economics.
posted by ErisLordFreedom at 2:38 PM on November 22, 2017 [2 favorites]
A surprising number of wealthy people I've met in Los Angeles -- to be honest, the ones I'm not a particular fan of for other reasons -- have expensive cars registered in other states to avoid paying California's higher registration fees and insurance rates. Well, perhaps that isn't surprising.
When I think about it on occasion, I wonder if they cling to as much wealth as possible because they don't want to give up the money they have, or if they're wealthy because they cling to as much wealth as possible. I mean, on some level, it would be nice to think that they're wealthy now in part because they were poor once and scrimped every last penny buying groceries from the about-to-expire rack and cooking their own meals.
But then, when I was poor, that's what I did, and now that I'm comfortable I pay my taxes without much concern, donate money on a regular basis, and though I do keep an eye on big-ticket waste, I don't sweat the small stuff. I don't feel a compulsion to cling to every last penny. I don't know if I should consider that a personal failing or a sign of good character. Perhaps both.
posted by davejay at 3:09 PM on November 22, 2017 [11 favorites]
When I think about it on occasion, I wonder if they cling to as much wealth as possible because they don't want to give up the money they have, or if they're wealthy because they cling to as much wealth as possible. I mean, on some level, it would be nice to think that they're wealthy now in part because they were poor once and scrimped every last penny buying groceries from the about-to-expire rack and cooking their own meals.
But then, when I was poor, that's what I did, and now that I'm comfortable I pay my taxes without much concern, donate money on a regular basis, and though I do keep an eye on big-ticket waste, I don't sweat the small stuff. I don't feel a compulsion to cling to every last penny. I don't know if I should consider that a personal failing or a sign of good character. Perhaps both.
posted by davejay at 3:09 PM on November 22, 2017 [11 favorites]
Attention rich people: Pay more taxes, go somewhere else, or be eaten.
Honestly, the majority of us don't give a rat's ass about you.
posted by macbot3000 at 9:09 PM on November 22, 2017 [4 favorites]
Honestly, the majority of us don't give a rat's ass about you.
posted by macbot3000 at 9:09 PM on November 22, 2017 [4 favorites]
I feel like this thread coild merge seamlessly with the water witching one
posted by es_de_bah at 10:24 PM on November 22, 2017
posted by es_de_bah at 10:24 PM on November 22, 2017
If you raise taxes and spend them making the place nice, by having great schools and cultural attractions and responsive government services, people won't want to leave when they get some wealth.
Conversely, if you cut taxes and make the place shitty, by impoverishing schools, and cancelling events and curtailing services, even the people who love the place will eventually conclude they should leave if they have the means.
posted by bystander at 11:57 PM on November 22, 2017 [6 favorites]
Conversely, if you cut taxes and make the place shitty, by impoverishing schools, and cancelling events and curtailing services, even the people who love the place will eventually conclude they should leave if they have the means.
posted by bystander at 11:57 PM on November 22, 2017 [6 favorites]
The rich can flee all they want, they don't pay tax and they have a disproportionate effect on tax policy.
posted by Homemade Interossiter at 3:06 AM on November 23, 2017 [1 favorite]
posted by Homemade Interossiter at 3:06 AM on November 23, 2017 [1 favorite]
"The rich can flee all they want, they don't pay tax and they have a disproportionate effect on tax policy."
I'll ask the question: What do you consider to be "rich", Homemade?
Here's a real world example where high taxes have caused a horrible imbalance here in the Great Cleveland area: There are two inner-ring suburbs called Cleveland Heights and Shaker Heights that are both very progressive, at one time very wealthy. Cleveland Heights, in particular, has bled population since the 1970s.
The result is that we have a community of very wealthy homeowners, who are relatively price inelastic to tax increases, and of rapidly increasing renters who are at the opposite end of the economic spectrum. The great middle has vanished. Ask anyone of those people who left and they will tell you the same thing: property and local income taxes that are out of control. If you're at the top of the income scale, an additional $1,000 - $2,000 every few years isn't a problem. If you're at the lower end, you're generally getting subsidized, so even if the landlord raises rent to cover the new taxes you've got a helping hand. The folks in the middle? No such luck. $200,000 home will run you close to $10,000 annually in property taxes, plus another 2.25% of your income, plus another percentage to the locale in which you work, plus another 4ish% for state. We haven't started on Federal taxes yet.
My point is not to decry taxes entirely, it's to state that people at the top of the bracket don't worry about incremental changes in taxes, but that extra whack to the middle forces a lot of people to move with their feet. And in Cleveland Heights, that has happened in droves.
If incomes are rising, high taxation isn't a problem. If they're stagnant, or the population is shrinking, it's a huge burden on the middle class because they're the ones who shoulder the burden and are forced to move. The rich don't flee.
posted by tgrundke at 7:15 AM on November 23, 2017 [1 favorite]
I'll ask the question: What do you consider to be "rich", Homemade?
Here's a real world example where high taxes have caused a horrible imbalance here in the Great Cleveland area: There are two inner-ring suburbs called Cleveland Heights and Shaker Heights that are both very progressive, at one time very wealthy. Cleveland Heights, in particular, has bled population since the 1970s.
The result is that we have a community of very wealthy homeowners, who are relatively price inelastic to tax increases, and of rapidly increasing renters who are at the opposite end of the economic spectrum. The great middle has vanished. Ask anyone of those people who left and they will tell you the same thing: property and local income taxes that are out of control. If you're at the top of the income scale, an additional $1,000 - $2,000 every few years isn't a problem. If you're at the lower end, you're generally getting subsidized, so even if the landlord raises rent to cover the new taxes you've got a helping hand. The folks in the middle? No such luck. $200,000 home will run you close to $10,000 annually in property taxes, plus another 2.25% of your income, plus another percentage to the locale in which you work, plus another 4ish% for state. We haven't started on Federal taxes yet.
My point is not to decry taxes entirely, it's to state that people at the top of the bracket don't worry about incremental changes in taxes, but that extra whack to the middle forces a lot of people to move with their feet. And in Cleveland Heights, that has happened in droves.
If incomes are rising, high taxation isn't a problem. If they're stagnant, or the population is shrinking, it's a huge burden on the middle class because they're the ones who shoulder the burden and are forced to move. The rich don't flee.
posted by tgrundke at 7:15 AM on November 23, 2017 [1 favorite]
Depends on what you mean by rich. It's the mildly wealthy who pay the most in raw terms in this country. The very poor pay more as a percentage of income, but it is categorically false that rich people in general pay no (or even little) tax. That's one reason why the supply side argument is seductive to many innumerate people.
The numbers they (at least the folks who aren't using blatant tax evasion to offshore all of their money) pay look gigantic compared to what most of us pay in absolute terms. Problem is that once you get very far into the 1%(ish), the income starts going up way faster than the taxes. Gigantic tax bill comes from incomprehensibly large fortune, but since people have difficulty internalizing how large a billion or ten billion of something really is they look at a tax bill in the 7 or 8 figures and are shocked.
Problem is, it isn't the tax bill they should be shocked by, it's how much there is to be taxed. Even paying what seems like a vast amount to me is still a tiny percentage of the whole, hence our chronic lack of revenue.
The funny thing is that the temporarily embarrassed millionaires aren't even wrong in the sense that if they were to get lucky and make a lot of money, chances are they'd only make it to what I call mildly rich. These folks are largely being taxed unfairly. Not because they are paying too much, but because the people who make even more pay much less.
That said, the only people I've known with that kind of money who complain about their tax bills are the Ayn Rand acolytes, who are almost universally shitty people in other ways. The others were saying in 2002 and every time since that they don't need another damn tax cut, they need the government to maintain the damn roads and bridges and such, since it is that infrastructure that enables them to make the money they do.
The ultra rich, in general, there are exceptions, are the ones that don't give a shit. They've got enough money to live a fine life and still make plenty of money even in a failed state. The rank and file Republicans are either bought off or too provincial to see the wider effects of their economic policies. Either way, it's the relatively few with their radical ideology that are the worst. Them and the giant corporations bribing their way into oligopolies.
All this is one reason why we don't have much trouble getting neoliberals and even moderate leftists elected. The pragmatic donor class made their money under policies ranging from what we had under LBJ all the way through Clinton with no problem, so they give zero shits if we go back there. Once you get too far left of the liberal consensus in the latter half of the century, they start getting nervous.
(I'm only speaking in terms of tax and economic policy here, FWIW)
posted by wierdo at 7:35 AM on November 23, 2017 [2 favorites]
The numbers they (at least the folks who aren't using blatant tax evasion to offshore all of their money) pay look gigantic compared to what most of us pay in absolute terms. Problem is that once you get very far into the 1%(ish), the income starts going up way faster than the taxes. Gigantic tax bill comes from incomprehensibly large fortune, but since people have difficulty internalizing how large a billion or ten billion of something really is they look at a tax bill in the 7 or 8 figures and are shocked.
Problem is, it isn't the tax bill they should be shocked by, it's how much there is to be taxed. Even paying what seems like a vast amount to me is still a tiny percentage of the whole, hence our chronic lack of revenue.
The funny thing is that the temporarily embarrassed millionaires aren't even wrong in the sense that if they were to get lucky and make a lot of money, chances are they'd only make it to what I call mildly rich. These folks are largely being taxed unfairly. Not because they are paying too much, but because the people who make even more pay much less.
That said, the only people I've known with that kind of money who complain about their tax bills are the Ayn Rand acolytes, who are almost universally shitty people in other ways. The others were saying in 2002 and every time since that they don't need another damn tax cut, they need the government to maintain the damn roads and bridges and such, since it is that infrastructure that enables them to make the money they do.
The ultra rich, in general, there are exceptions, are the ones that don't give a shit. They've got enough money to live a fine life and still make plenty of money even in a failed state. The rank and file Republicans are either bought off or too provincial to see the wider effects of their economic policies. Either way, it's the relatively few with their radical ideology that are the worst. Them and the giant corporations bribing their way into oligopolies.
All this is one reason why we don't have much trouble getting neoliberals and even moderate leftists elected. The pragmatic donor class made their money under policies ranging from what we had under LBJ all the way through Clinton with no problem, so they give zero shits if we go back there. Once you get too far left of the liberal consensus in the latter half of the century, they start getting nervous.
(I'm only speaking in terms of tax and economic policy here, FWIW)
posted by wierdo at 7:35 AM on November 23, 2017 [2 favorites]
Is it wrong that I saw this and immediately started trying to remember which episode of ST:TNG was being referenced?
posted by HannoverFist at 10:03 AM on November 23, 2017 [1 favorite]
posted by HannoverFist at 10:03 AM on November 23, 2017 [1 favorite]
Had the link correctly stated "Data contradict common talking point" you wouldn't have been confused. /grammar-pedant
posted by Johnny Wallflower at 11:35 PM on November 23, 2017 [1 favorite]
posted by Johnny Wallflower at 11:35 PM on November 23, 2017 [1 favorite]
"The ultra rich, in general, there are exceptions, are the ones that don't give a shit. They've got enough money to live a fine life and still make plenty of money even in a failed state. The rank and file Republicans are either bought off or too provincial to see the wider effects of their economic policies. Either way, it's the relatively few with their radical ideology that are the worst."
Swings both ways, amigo. Look at the wealthiest six members of congress - they're Democrats, not Republicans, save one. The Republicans aren't even fiscal conservatives any longer, so they're useless in that regard, as far as I'm concerned.
In the case of Cleveland Heights that I gave above, the wealthy elite are overwhelmingly Democrat and they are the ones setting and voting for the policy that then affects the middle and lower classes who cannot afford to pay. You think Diane Feinstein has an issue if she has to pay $1,000 more, or even $10,000 more annually? Of course not. But that California family making $50,000 pear year sure is going to feel a $500 or $1000 swing in their income, especially if it's stagnant.
Conservatives, writ large, don't have a problem paying for common infrastructure and needs. Speaking for myself only, I have an issue with the way the money is spent and the general lack of accountability that occurs when dollars are handed out. That goes for corporate as well as personal welfare. Whether you believe in government or private management/control, there will be graft and fraud - as such, my belief is that you can only control this by limiting the dollars and placing the burden on individuals, not groups and not governments.
People make decisions based on their personal needs and I can tell you without a doubt that in the greater Cleveland area, the move out of the inner ring suburbs to the surrounding counties of Lake, Medina, Geauga and Lorain is driven primarily by excessive taxes. In fact, I'd go so far as to say that if you ask anyone who has moved out of the inner ring to these outlying communities, 100% of them would say that taxes was a major, if not sole factor in this decision.
posted by tgrundke at 9:06 AM on November 24, 2017 [1 favorite]
Swings both ways, amigo. Look at the wealthiest six members of congress - they're Democrats, not Republicans, save one. The Republicans aren't even fiscal conservatives any longer, so they're useless in that regard, as far as I'm concerned.
In the case of Cleveland Heights that I gave above, the wealthy elite are overwhelmingly Democrat and they are the ones setting and voting for the policy that then affects the middle and lower classes who cannot afford to pay. You think Diane Feinstein has an issue if she has to pay $1,000 more, or even $10,000 more annually? Of course not. But that California family making $50,000 pear year sure is going to feel a $500 or $1000 swing in their income, especially if it's stagnant.
Conservatives, writ large, don't have a problem paying for common infrastructure and needs. Speaking for myself only, I have an issue with the way the money is spent and the general lack of accountability that occurs when dollars are handed out. That goes for corporate as well as personal welfare. Whether you believe in government or private management/control, there will be graft and fraud - as such, my belief is that you can only control this by limiting the dollars and placing the burden on individuals, not groups and not governments.
People make decisions based on their personal needs and I can tell you without a doubt that in the greater Cleveland area, the move out of the inner ring suburbs to the surrounding counties of Lake, Medina, Geauga and Lorain is driven primarily by excessive taxes. In fact, I'd go so far as to say that if you ask anyone who has moved out of the inner ring to these outlying communities, 100% of them would say that taxes was a major, if not sole factor in this decision.
posted by tgrundke at 9:06 AM on November 24, 2017 [1 favorite]
I might disagree with you on a number of points, tgrundke, but you do make a really interesting point about local moves driven by local tax differences, which wouldn't be captured by this study. Flight to low-tax suburbs does seem like A Thing which happens, and it would be useful to see that quantified. One imagines people calculating what move they could make which would lower their taxes (and other costs) while still keeping them connected to their local community/profession/business. A local move would mean a smaller tax savings than they could get by moving to Florida or the Cayman Islands, but it would also mean a smaller loss of community and income.
posted by clawsoon at 10:30 AM on November 24, 2017 [2 favorites]
posted by clawsoon at 10:30 AM on November 24, 2017 [2 favorites]
clawsoon -
Thanks.
Tax havens or shelters like the Caymans are for the super wealthy.
The most common tax avoidance is to stay local and move out of the high tax areas like happens around Cleveland. I double checked today and a $250,000 home in Cleveland Heights will run you approximately $10,000 annually in property taxes. Local taxes are 2.25% of income. The same $250,000 home 20 minutes away in the next county over will be $5700 in property taxes with no income tax and with a far superior school district to boot.
Taxes are the primary reasons communities like Willoughby, Chesterland, Russell, Avon, Medina, Twinsburg and Hudson are growing while communities like Cleveland Heights, Shaker Heights, Lakewood, South Euclid, Lyndhurst and Richmond Heights are losing population hand over fist.
Cuyahoga County has lost 300,000 people since 1980: from nearly 1.5 million to 1.2 million in 2016. Surrounding Geauga has gained 20,000 people during that same period, Medina has gained 64,000 people, Lake has gained 17,000 and Lorain has gained 31,000.
These are not net new migrants into the Great State of Ohio.
The Florida haven, however, is a very popular one for Northeast Ohioans and many Atlantic and New England members as well. Many of my childhood friends' parents have retired in recent years and setup shop in Florida to qualify for residency and avoid Ohio income taxes. They have apartments and condos back here for the summer months, but the move to Florida in retirement is driven just as much by tax policy as it is by being sick and tired of the battleship grey skies and snow from October - March.
So my point is this: tax policy disproportionately affects the actions of the middle class and these people move in far greater numbers than do the wealthy. The people fleeing Cuyahoga County of course include some very high income earners, but on a number basis the majority of those leaving are solidly middle class whose taxes are eating them alive.
posted by tgrundke at 10:50 AM on November 25, 2017
Thanks.
Tax havens or shelters like the Caymans are for the super wealthy.
The most common tax avoidance is to stay local and move out of the high tax areas like happens around Cleveland. I double checked today and a $250,000 home in Cleveland Heights will run you approximately $10,000 annually in property taxes. Local taxes are 2.25% of income. The same $250,000 home 20 minutes away in the next county over will be $5700 in property taxes with no income tax and with a far superior school district to boot.
Taxes are the primary reasons communities like Willoughby, Chesterland, Russell, Avon, Medina, Twinsburg and Hudson are growing while communities like Cleveland Heights, Shaker Heights, Lakewood, South Euclid, Lyndhurst and Richmond Heights are losing population hand over fist.
Cuyahoga County has lost 300,000 people since 1980: from nearly 1.5 million to 1.2 million in 2016. Surrounding Geauga has gained 20,000 people during that same period, Medina has gained 64,000 people, Lake has gained 17,000 and Lorain has gained 31,000.
These are not net new migrants into the Great State of Ohio.
The Florida haven, however, is a very popular one for Northeast Ohioans and many Atlantic and New England members as well. Many of my childhood friends' parents have retired in recent years and setup shop in Florida to qualify for residency and avoid Ohio income taxes. They have apartments and condos back here for the summer months, but the move to Florida in retirement is driven just as much by tax policy as it is by being sick and tired of the battleship grey skies and snow from October - March.
So my point is this: tax policy disproportionately affects the actions of the middle class and these people move in far greater numbers than do the wealthy. The people fleeing Cuyahoga County of course include some very high income earners, but on a number basis the majority of those leaving are solidly middle class whose taxes are eating them alive.
posted by tgrundke at 10:50 AM on November 25, 2017
I would probably disagree with you (and much of the American middle class), tgrundke, about "being eaten alive" vs. "paying my fair share", but I'd agree that the perception of being eaten alive is driving actions.
It does seem as though there's a correlation between how good a job people think a government bureaucracy is doing and how much they're willing to pay in taxes. To extend that all the way out to a half-baked theory: I've sometimes wondered if the perception of government work determines both the ability of people who are drawn to it and the taxes that people are willing to pay for it. In America, government is seen by a majority of the population as being mostly for losers. Talented people avoid government work and taxpayers vote for lower taxes. In Sweden or France, it's the opposite. It's not universal on either side of the pond, and since tax policy is driven by majority rule it can shift. But it does seem that America is caught in a catch-22 where people won't agree to more taxes until they think the government is doing a much better job, and the government won't be able to do a much better job until perceptions change and it can attract the talent and taxes needed.
(You'll notice that I'm not convinced by the idea that government success is doomed by its being a monopoly. Free market incentives by themselves don't magically make things work better. But that's a whole 'nother discussion.)
posted by clawsoon at 12:08 PM on November 25, 2017
It does seem as though there's a correlation between how good a job people think a government bureaucracy is doing and how much they're willing to pay in taxes. To extend that all the way out to a half-baked theory: I've sometimes wondered if the perception of government work determines both the ability of people who are drawn to it and the taxes that people are willing to pay for it. In America, government is seen by a majority of the population as being mostly for losers. Talented people avoid government work and taxpayers vote for lower taxes. In Sweden or France, it's the opposite. It's not universal on either side of the pond, and since tax policy is driven by majority rule it can shift. But it does seem that America is caught in a catch-22 where people won't agree to more taxes until they think the government is doing a much better job, and the government won't be able to do a much better job until perceptions change and it can attract the talent and taxes needed.
(You'll notice that I'm not convinced by the idea that government success is doomed by its being a monopoly. Free market incentives by themselves don't magically make things work better. But that's a whole 'nother discussion.)
posted by clawsoon at 12:08 PM on November 25, 2017
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