Story By: BOB SPENCER Political Columnist
Can any rational person explain the taxing policies of Democrat controlled states? California, New York, Illinois and Minnesota are examples of Democrat controlled states that are doubling down on their high tax policies and in the process are hurting their economies.
The latest IRS data shows that four states listed above have some of the highest tax rates for income taxes. These high taxes hit high income earners much harder than high earners in the rest of the states. These high tax rates have had severe negative economic consequences for these states. For decades, taxpayers in high tax states had no option but to stay and pay. In the modern world with the ability to work remotely, high earners can move to another state and continue to run businesses in high tax states.
This has occurred more often over the past few years. The IRS has documented this tax flight in reaction to the high tax states. The data shows what most people knew, many high income earners in California, New York, Illinois and Minnesota are leaving these states and relocating to states that have much lower tax rates. Between 2022 and 2023, California lost $11.9 billion in income that could have been taxed. New York lost $9.9 billion while Illinois lost $6 billion and Minnesota lost $1.5 billion.
For my Democrat friends, this is not just a one time loss for these states. Had these high income earners stayed in these states, the states would have had the ability to tax them every year on their income. I have spoken with many executives who have lived in these high tax states and they are surprised that the Democrats in control of these states have not been willing to lower their tax rates to keep these high earners from leaving. These Democrats are like a store owner who puts in place a policy that causes his best customers to leave and shop in other stores. Most store owners would change the policy in order to retain their best customers. Not today’s Democrats. These fiscally challenged Democrats are unable to understand the most basic principles of economics. They are like the captain of a ship who, when told of icebergs ahead, responds by increasing the ship’s speed. Equally devastating to these Democrat controlled states is the fact that their welfare benefits are much higher than the states with lower tax rates. The economic impact of these policies is that in these high tax states, the makers (taxpayers with high income levels) are leaving and the takers (residents who receive state welfare and often pay no taxes) are staying. This is causing these states to realize huge deficits that show no sign of abating. An intelligent politician would attempt to determine what could be done to cause the high income earners to stay.
Sadly for Californians, New Yorkers, Illinoisans and Minnesotans, the Democrats in control have little understanding of economic fundamentals and as a result the residents will suffer for decades.
