One of the country pleasures people in these parts enjoy is waiting for emails from the "Gruenater" himself, Glenn Gruenhagen. One never knows what pearls of wisdom will turn up with a mere click of the mouse; with these treasures, we poor country folk never covet Newt's line of credit at Tiffany's.
Today, this sparkly geode of misinformation related to Dayton's proposed tax increase on the top two percent of earners turned up in my inbox:
Maryland and Oregon each passed tax increases on top earners only to end up collecting far less revenue than anticipated. Both states lost approximately one-third of their high-income filers, who relocated to tax-friendly states like Florida. They didn’t necessarily move their entire business out of state, but relocated themselves enough days a year to meet tax-filing requirements.
Since Mr. Google is a close personal friend, I thought I'd check that out, starting with Oregon. The claim about the state's population of high income earners flight as the cause of revenue decline is a standard grade conservative GOP gem.
But there are a few wee problems with the claim, at least for Oregon. The editors of the Register-Guard in Eugene, Oregon, noticed this back in April, in Those migrant millionaires; The rich aren’t fleeing Oregon tax increases:
After voters approved the measure, the critics claimed their prophecies were being fulfilled. The Legislative Revenue Office reported in August that Measure 66 would yield an estimated $300 million, rather than the projected $472 million. Those seeking evidence of tax flight, however, faced a problem: Measure 66 was retroactive to 2009, and much of the shortfall was based on revenues from that year. To leave the state and avoid higher tax rates, a high-income taxpayer would have had to see Measure 66 coming more than a year ahead of time.
The decline in tax collections from upper-income people occurred mainly because they, like everyone else, had been affected by the Great Recession. Some who had incomes above the Measure 66 threshold fell below it. Others saw steep declines in their income from dividends and capital gains, nearly all of which goes to people in the top tax brackets. The revenue projections for Measure 66, based on income information from 2008, were bound to be far from the mark.
Information from Phoenix Marketing International, a company that provides research services to industry, further undermines the notion that Measure 66 has chased people out of Oregon. Phoenix ranked states by their percentages of households with $1 million or more in investable or liquid assets, excluding sponsored retirement plans and real estate. The rankings, from 2006 though 2010, are remarkably stable. Oregon has ranked No. 25 since 2008, having climbed a couple of positions from the years before.
. . .Most states have seen significant declines in their percentages of households with $1 million or more in assets — including Oregon, where the percentage fell to 4.12 percent in 2009 from 4.88 percent in 2007, which helps explain the Measure 66 shortfall.
High-income people are undoubtedly sensitive to taxes. But few can or will move simply because of a change in marginal rates. Most are tied to their communities by their work, their families and their social networks. Indeed, the rich are likely to be among any state’s least mobile populations — they’ve done pretty well where they are.
So yes, revenue declined from projections, but no, one-third of rich Oregonians didn't flee into the wilds of Seattle.
Over at Blue Oregon, Oregon Center for Public Policy executive director Chuck Sheketoff makes the same point while debunking the Maryland tax refugee urban legend in Facts (and Logic) Go Missing Again in a Wall Street Journal Editorial (Updated with Addendum:
There they go again. Seven months ago I posted a comment about the The Unsubstantiated Tale of the Fleeing Maryland Millionaires by The Wall Street Journal and distributed by the Oregon Senate Republicans.
Well, now comes the Oregon House Republicans republishing (through email only; not on legislative website) yet another Wall Street Journal piece claiming that recent data presented by the Legislative Revenue Office (PDF) at a joint meeting of the House and Senate revenue committees (audio link) shows that 10,000 wealthy Oregonians have fled the state.
The claim is just baseless.
First, although Measure 66 applied to 2009 income, voters didn’t approve them until January 2010. For The Wall Street Journal’s claim to be true, 10,000 wealthy Oregonians would have had to master time travel and leave the state retroactively to avoid the 2009 tax.
Second, the total number of tax returns filed in 2009 is greater — not less — than what the state had predicted in May of 2009. That doesn’t suggest out migration.
The explanation for why in 2009 there were actually 10,000 fewer tax returns subject to the new rates than had been projected in mid-2009 is obvious: the Great Recession was worse than the state economists had thought in mid-2009. The recession caused income for all income groups to fall further than they anticipated. Those at the top and subject to the new tax rates — those who derive a greater portion of their income from capital gains — saw a particularly sharp decline. . . .
That fewer taxpayers than expected in mid-2009 ended up actually being subject to the new tax rates reflects the fact that the Great Recession pushed many people below the new tax brackets' thresholds. There’s no data to suggest that the taxpayers formerly in the new brackets are not likely still in Oregon and paying taxes. . . .
So other than the Wall Street Journal, where is the sage of Glencoe's ghostwriters get this stuff? My pretend internet research assistant Mr. Google found it at The Heartland Institute and other like think tanks, which try to hock this cubic zirconia across the country wherever a revenue shortage develops. A diligent collector might even find a motherlode of shared language or something like that somewhere deep in the bushes.
Related posts in the Glenn Gone Wild series
With Glenn gone wild, "Voters in Minnesota should demand their votes back," says WDN
Gruenhagen gone wild, redux: ladies, help men control themselves
Seeing dead people in the Public Safety committee: Gruenhagen berates Alfred Kinsey
Glenn gone wild: Gruenhagen gets public health crisis that leaves Bachmann stammering
Gentle readers:
Let us examine Dagnydagny's comment for what it is: a misdirect in which a mocking tone masquerades as substance.
First, the appeal to authority --with a chaser of a preemptive mind reading as to what my thoughts are about Laffer and Moore, a mild form of well poisoning. Strike one and two.
Second, the WSJ article cited is from 2009, before the tax measures that supposedly created tax refugees in Maryland and Oregon. This is a misdirect away from the more substantive evidence that demonstrates that the actual claim Gruenhagen made--about two specific states--is not correct. Strike three.
Finally, the economists by degree, and lackeys by association, writing in the Op-ed section of the Wall Street Journal, cite studies from the likes of Richard Vedder.
For background on him, see:
http://www.sourcewatch.org/index.php?title=Richard_Vedder
But I'm sure this line of refutation will be advanced at True North or some other organ of the right--perhaps even by this same commenter, maybe even writing under his or her own name, but without a smidgen more of a claim to sound logic or evidence that is germaine to what Gruenhagen actually claimed.
--Bluestem Prairie
The comment:
Art Laffer and Steve Moore are, I'm sure, not your favorite economists, but nevertheless they are really entitled to that label. So I don't think we can call what the WSJ has published mere wishful thinking or unsubstantiated thoughts:
http://online.wsj.com/article/SB124260067214828295.html
Whether it's 1/3 of high earners, or some other percentage, I think the research itself shows that States facing budget problems can't necessarily solve them through raising the top bracket rate. People do, indeed, vote with their feet, at least at the margin, and MN can't afford to lose any more revenue, even at the margin.
Posted by: Dagny | May 27, 2011 at 12:12 PM
It's no use trying to reason with her, BSP: Dagny's a Randroid who takes her nom de internet from the railroad magnate who John Galt rapes into his sex slave in Atlas Shrugged: http://www.washingtoncitypaper.com/blogs/sexist/2009/09/30/books-you-dont-want-your-lover-to-love/
Posted by: Phoenix Woman | May 28, 2011 at 07:42 PM