Tag Archives: millionaires’ tax

This Is How The Story Always Goes

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On Friday, Zero Hedge posted an article about a recent statement by Representative Ro Khanna (D-CA).

The article reports:

Rep. Ro Khanna (D-CA) – fresh off endorsing California’s November ballot measure to seize 5% of billionaire wealth – published a Substack essay Wednesday titled, no really, “Why I Support a Billionaire Wealth Tax.”

He makes it roughly a dozen paragraphs before explaining that it isn’t one.

“The tax should not stop at billionaires, it must reach centimillionaires,” Khanna writes, before spelling out exactly what that means: every fortune of $50 million and up, hit with a 2% federal levy on wealth above that line – every year, forever, on top of everything else you already pay. The vehicle is Elizabeth Warren’s Ultra-Millionaire Tax Act, which Khanna notes he has cosponsored every single year it’s been introduced.

And before anyone reaches for the estate planner: Khanna wants the levy to pierce irrevocable trusts, with the tax billed to the grantor who set them up – because parking a fortune in a trust, in his telling, shouldn’t take it off the government’s books.

Former Microsoft executive Steven Sinofsky summed up the reveal in eight words: “Just like that, no longer a billionaires tax.”

The article provides some insight into the recent history of wealth taxes:

The measure headed to California voters in November is a one-time 5% tax on the state’s roughly 250 billionaires. Newsom, opposing it, countered on June 26 with a national “billionaires’ tax” – which, in its original form, applied to anyone worth $100 million or more, language that was quietly scrubbed after multiple outlets quoted it as we reported. Six days later, Khanna planted the flag at $50 million.

None of this is exactly new, of course. The Warren bill has carried the $50 million line since she rolled it out in 2019, and Biden’s 2022 “Billionaire Minimum Income Tax” kicked in at $100 million households. The branding always says billionaire, but the fine print ios a slippery slope.

Then there’s inflation… The bill’s $50 million threshold is a flat statutory number that hasn’t moved since 2019 – meaning inflation has already quietly cut the real threshold by more than a fifth. The creep shows up in the sponsors’ own math: when the bill debuted, backers said it touched the top 0.05% of American households; the 2026 reintroduction, per the same Saez-Zucman analysis the sponsors tout, now reaches 260,000 households – the top 0.15%. Same words, triple the coverage, five years. Asset inflation does the broadening automatically. Congress just has to sit still.

When the Income Tax began in 1913, it was only supposed to apply to the top 1 or 2 percent of the wealthiest Americans. We see how that worked out.

Proof The Laffer Curve Works

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On Wednesday, CBN News reported that France was ending its super tax on millionaires.

The article reports:

Socialist President Francois Hollande proposed a tax of up to 75 percent on people earning above 1 million euros a year, equal to about $1.2 million a year in the United States. 

One critic of the super-tax said it makes France “Cuba without the sun.”

Many wealthy French citizens fled the country to avoid paying the super tax, including actor Gerard Depardieu, who became a Russian citizen. 

Because millionaires left the country or found tax shelters, the excessive tax did not generate nearly the amount of money that politicians predicted it would.

What is at play here is the Laffer Curve.

On April 15, 2012, Forbes Magazine posted a graph of the Laffer Curve:

Contrary to what you may have heard, people are not stupid. If it becomes obvious that the harder they work the more will be taken from them, they will not work as hard. There is a point where excessive taxation does not reap positive rewards. Congress  needs to remember this. It didn’t work in France, and it won’t work in America.

Voting With Your Feet

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Quarter of Massachusetts

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Last week the Daily Caller posted an article about the impact of tax policy on where people choose to live. A recent study released by the Center on Budget and Policy Priorities (CBPP), which leans left, concluded that weather has more on an impact of where people choose to live than tax policy. The article at the Daily Caller lists a few inconvenient facts that dispute that conclusion.

The article cites the fact that Hawaii and California have lost significant amounts of population over the last 20 years–3.6 million more people have moved out of California than have moved in, and 130,000 more people have moved out of Hawaii than have moved in. During that same time period, Florida gained 2.3 million net residents.

The article also reports:

If weather matters more than taxes, then why is Alaska performing so well compared to California and Hawaii? Alaska may have the worst climate in the country and California and Hawaii arguably have the best, but Alaska has out-performed both states on nearly every measure, according to Rich States, Poor States: ALEC-Laffer Economic Competitiveness Index, a report from the American Legislative Exchange Council.

There are also some interesting statistics on what happened in Maryland after the state passed a millionaires’ tax in 2008–there was a 33 percent decline in tax returns from millionaire households. The article also reports that Maryland lost $1 billion of its net tax base in 2008 because of out-migration.

The article concludes:

State elected officials obviously have little control over their states’ 10-day forecasts, but they do control their states’ tax climates. We know tax policy is not the only reason people are motivated to live, invest or grow a business in a state, but it plays a significant role. State lawmakers should keep this in mind as they shape public policy.

I will admit that when my husband retires, we will probably relocate. The tax policy of a state will be taken into consideration at that time. Tax policies in Massachusetts (and the cost of living in the state) make it a less than ideal place to retire. The climate doesn’t help either! 

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