(Wall Street Journal) -- In a Wall Street Journal op-ed, Arthur Laffer and Stephen Moore, co-authors of "Rich States, Poor States," write that "with states facing nearly $100 billion in combined budget deficits this year, we're seeing more governors than ever proposing" to "soak the rich." According to the opinion piece, lawmakers in several want to raise income tax rates on the top 1% or 2% or 5% of their citizens. The governor of Illinois "wants a 50% increase in the income tax rate on the wealthy because this is the 'fair' way to close his state's gaping deficit." The problems, the authors note, is that soaking the rich "never works because people, investment capital and businesses are mobile: They can leave tax-unfriendly states and move to tax-friendly states."
The op-ed notes that "research from Richard Vedder of Ohio University ... found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas."
Over these same years, "the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts," the authors write. The authors state that, "We believe there are three unintended consequences from states raising tax rates on the rich. First, some rich residents sell their homes and leave the state; second, those who stay in the state report less taxable income on their tax returns; and third, some rich people choose not to locate in a high-tax state." Read more at <http://online.wsj.com/article/SB124260067214828295.html>
