When Will Politicians Ever Learn?
Essex & Associates:: www.essexinc.biz January 10, 2011
Greetings!
Oregon raised its income tax on the richest 2% of its residents last year to fix its budget hole, but now the state treasury admits it collected nearly one-third less revenue than the bean counters projected.
In 2009 the state legislature raised the tax rate to 10.8% on joint-filer income of between $250,000 and $500,000, and to 11% on income above $500,000.
Only New York City's rate is higher. Oregon's liberal voters ratified the tax increase on individuals and another on businesses in January of this year, no doubt feeling good about their "shared sacrifice."
Congratulations. Instead of $180 million collected last year from the new tax, the state received $130 million. …
One reason revenues are so low is that about one-quarter of the rich tax filers seem to have gone missing. The state expected 38,000 Oregonians to pay the higher tax, but only 28,000 did.
Funny how that always happens.
These numbers are in line with a Cascade Policy Institute study, based on interstate migration patterns, predicting that the tax surcharge would lead to 80,000 fewer wealthy tax filers in Oregon over the next decade.
All of this is an instant replay of what happened in Maryland in 2008 when the legislature in Annapolis instituted a millionaire tax.
There roughly one-third of the state's millionaire households vanished from the tax rolls after rates went up.
If Salem, Oregon politicians want to find where the millionaires went, they might start the search in Texas, the state that leads the nation in job creation-and has a top income and capital gains tax rate that is 11 percentage points lower than Oregon's.
Unfortunately, politicians are slow learners. It is imperative that you have your own tax reduction strategies that do not rely on the whims of the legislature.
Use an experienced tax advisor to engage tax saving strategies on your behalf, then it does not matter as much if the politicians slowly or never learn.
Wishing you many happy returns,
Wayne
Wayne T. Essex Ph.D.
Essex & Associates
Tax, Accounting, HR, Payroll
7501 Paragon Road
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