Wealth Taxes Don’t Work – Just Look at the States

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Unleash Prosperity Hotline
Issue #724
03/06/2023
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1) Wealth Taxes Don’t Work – Just Look At The States
CTUP co-founders Arthur Laffer and Steve Moore are back in the Wall Street Journal today demonstrating the folly of the progressive left’s strategy to tax Americans on their wealth. Seven blue states – California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, and New York - are considering Bernie Sanders-style soak-the-rich wealth taxes this year. These proposals include higher taxes on capital gains, annual taxes on lifetime savings, and income tax surcharges on millionaires and billionaires.

These seven also happen to be the highest tax states with California and New York charging a top tax rate of some 13% - compared to zero in nine states including Florida and Texas.

The table below shows the results of these high taxes. Rich people leave – and they don’t come back. They take their riches, their businesses, and their employees with them. More than five million Americans on net have left the high-tax states in favor of lower-tax jurisdictions.

High Tax States Being Bled To Death
Population Loss 2012-22 Personal Income Loss 2011-21
California 1.6 million $50 billion
Connecticut 73,000 $14 billion
Illinois 1.1 million $47 billion
Maryland 145,000 $14 billion
Massachusetts 84,000 $13 billion
New Jersey 304,000 $26 billion
New York 2.1 million $79 billion
Total 5.4 billion $250 billion
Source: Census Bureau for population and IRS for lost income from movers.
The bottom line: if these blue states keep socking it to the rich, they will soon find they don’t have rich people left to pay the bills.

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2) No, America Doesn’t Need An Industrial Policy
Liberals love the idea of government-directed investment because they love big government and hate free markets.

What’s the Republicans’ excuse for backing this looney idea typically associated with corporate welfare schemes? Many Republicans want a New Industrial Policy that would hand out corporate welfare grants to “strategic industries” - such as microchips and steel mills. The way to beat China’s centrally-planned economy is evidently to have more central planning here.

Where have we heard this cockeyed idea before? In the early 1980s, we were told that we must shower our manufacturers and automakers with taxpayer dollars or else the Japanese would eat our lunch. But then the Reagan tax cuts kicked in and we had the ferocious economic comeback of America - and nobody talked of industrial policy again, until now.

Thank God we rejected corporate welfare in the 1980s. We stuck with free markets in guiding investment capital while Japan chose government-directed investment. The chart below shows the U.S. stock market vs Japan’s. The Japanese stock market has been basically flat for four decades and our market is up about 20-fold.

Let the free market and private capital markets direct the market for investment capital - and stop double taxing investment and America will flourish.

U.S. Versus Japan Stock Market Semi-Logged Scale
Source: Laffer Associates
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3) What Happens When The Last Business In Portland Leaves The City?
Speaking of the demise of blue states and cities, this headline on the impact of the crime spree in big cities speaks for itself:

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The closures come only three months after Walmart CEO Doug McMillon warned that retail shoplifting is surging. He predicted "prices will be higher and/or stores will close" if local prosecutors don’t change their priorities.

Nor is it just Walmart. Rains PDX, a clothing store in Portland, shut down last November after a string of break-ins made it impossible to stay open.

A printed note from the owner posted on the window of the shuttered store read: "Small businesses (and large) cannot sustain doing business, in our city’s current state. We have no protection, or recourse, against criminal behavior that goes unpunished. Do not be fooled into thinking that insurance companies cover losses. We have sustained 15 break-ins … we have not received any financial reimbursement since the 3rd."


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4) The Biden Legacy: A Scandal A Day
Our friends at FreedomWorks have done the legwork to compile all of the Biden administration scandals in one handy place.

It's a long and growing list.

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5) Chart Of The Day – Nearly $400 Billion Globally Spent On Masks With Almost No Health Improvement
As we showed last week, we now have scientific evidence that masks have had only a tiny, if any, impact in stopping the spread of Covid.

We were struck by this graphic submitted by a HOTLINE reader.

If the estimates from Statista Consumer Marketing Research are accurate, from 2020 to 2022 the world bought 928 billion masks at a cost of $389 billion. With a world population of 8 billion, that's 116 masks for every man, woman, and child on Planet Earth — most of them made of plastic and mandated by the same left-wingers who ban straws and plastic shopping bags.

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6) Who Elected WHO?
This parody by Russell Brand of the World Health Organization’s Orwellian surveillance schemes is funny and scary at the same time.

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