John Galt Rents a U-Haul

Rich New Yorkers tire of overtaxation.

Throughout history, there have been many occasions where unwise government policies caused the most productive and intelligent citizens to flee a nation, and this loss to talent led directly to national decline.  From medieval Spain, where the Inquisition's banishment of Jews caused all the bankers and financiers to spread across Europe and Turkey to their benefit and Spain's decline, to Hitler's thoughtful provision to the United States of all Germany's greatest Jewish scientists who gave us the atom bomb, foolish rulers have repeatedly shot themselves in the foot by irrational hatred of a particular sort of people.

We are seeing the same thing in America today: not hatred against Jews, thankfully, and not a desire to murder anybody - but an irrational hatred and jealousy all the same.  The modern target of popular pogroms?  The rich.

For decades now, the Democratic Party has loudly proclaimed the virtues of "soaking the rich" - though they usually express the sentiment as "making the rich pay their fair share."  George W. Bush's tax cuts for all sent the left into a collective catatonic fit; despite being "for all," the tax cuts heavily benefited the wealthy since they have more income to be taxed.  The worm turns, and with Democrats in charge across the board, America's upper class is being measured for the chopper.

However, a necessary aspect of becoming and staying rich is a certain attitude of self-preservation.  Just as King Ferdinand and Hitler drove out their most productive citizens to their eventual sorrow, New York City provides us a sterling example of why over-taxing is a bad, bad idea.  The New York Post reports:

New Yorkers are fleeing the state and city in alarming numbers -- and costing a fortune in lost tax dollars, a new study shows.  More than 1.5 million state residents left for other parts of the United States from 2000 to 2008, according to the report from the Empire Center for New York State Policy. It was the biggest out-of-state migration in the country.

The vast majority of the migrants, 1.1 million, were former residents of New York City -- meaning that one out of seven city taxpayers moved out...

The average Manhattan taxpayer who left the state earned $93,264 a year.  The average newcomer to Manhattan earned only $72,726.  That's a difference of $20,538, the highest for any county in the state. [emphasis added]

If your rich people move out to escape confiscatory taxes, which in New York City can total well over half of income, they effectively get an instant, massive raise.  Billionaire Tom Golisano re-registered as a Florida resident and instantly saved himself $5 million; Rush Limbaugh has famously announced that he's doing the same.

At the same time, New York City's welfare benefits are known the breadth and depth of the continent as being lavish.  The city may be losing population, but not as fast as you might think.  What it's losing is the wealthy and productive citizens who pay the bills; they're being replaced by people moving in to collect welfare.  Mayor Michael Bloomberg explained the problem:

One percent of the households that file in this city pay something like 50% of the taxes.  In the city, that's something like 40,000 people.  If a handful left, any raise would make it revenue neutral.  The question is what's fair.  If 1% are paying 50% of the taxes, you want to make it even more?

A city of millions - and a few tens of thousands provide half of the tax revenue!  How much more can you squeeze out of them before they run?

Ayn Rand's legendary novel Atlas Shrugged tells of an America where the productive people led by John Galt get fed up, simply refuse to produce anymore, and the nation collapses.  As long as federalism prevails and there are other more lightly-taxed states to move to, we won't see that at the national level, but New York City is flirting with a one-state Randian collapse.

Will the rest of us learn the lesson and write to our elected representatives before Obama spreads the same devastating policies nationwide?

Petrarch is a contributing editor for Scragged.  Read other Scragged.com articles by Petrarch or other articles on Economics.
Reader Comments
1% of the ppl paying 50% of the $$ seems to be a national average- no wonder they attempt to hide reportable income: refusing to submit to a form of coercion is a virtue, akin to fighting slavery and totalitarianism.
Come to Colorado~!
We could use some good brains ~!
October 29, 2009 11:47 AM
The only infallible, unstoppable, guaranteed way to get a truly new Congress is :
NEVER REELECT ANY INCUMBENT! AND DO IT EVERY ELECTION!

Voters must IMPOSE term limits by NEVER REELECTING INCUMBENTS , AND DO IT EVERY ELECTION! Don't let anyone serve more than one term. Some of the reasons to do this:

. It gives us a one-term, term limited Congress without using amendments
. It would be supported by 70% of the country who want term limits for Congress
. It is completely non-partisan
. If repeated, it ends career politicians dominating Congress
. It opens the way to a "citizen Congress"
. It ends the seniority system that keeps freshmen powerless
. It doesn't cost you any money. But you MUST vote! Just don't vote for an incumbent
. It is the only guaranteed, infallible, unstoppable way to "Throw ALL the Bums Out"
. It takes effect immediately the day after Election Day
. If it doesn't work, do it again and again! It will work eventually, I promise.

NEVER REELECT ANYONE IN CONGRESS. AND DO IT EVERY ELECTION!

nelson lee walker of tenurecorrupts.com


October 29, 2009 3:30 PM
The Economist says it's happening to London:

http://www.economist.com/opinion/displaystory.cfm?story_id=15127107

BRITISH AIRWAYS lost £292m ($465m) in the six months to the end of September and its pension fund has a £3.7 billion deficit. Its cabin crew responded by voting to strike over the Christmas period, alienating the millions of customers that pay their wages and fund those pensions. Similarly, London now risks losing its reputation as a hub of international finance, driving away mobile capital and taxpayers at a time when the government's deficit is above 10% of GDP. There will be no immediate exodus. But the impression that tax policy is now designed to maximise the number of Labour votes rather than the state's revenue should worry Britons as well as financiers.

No single tax change has been decisive, though the levy on bank bonuses, announced on December 9th, has brought the issue into focus. This newspaper has argued that it is fair for the taxpayer to claw back the huge subsidy that all banks have enjoyed: the cheap money and guarantees were provided to help banks continue lending and build up their capital, rather than distributing the money to staff. A globally co-ordinated approach to this could have worked. But Gordon Brown's rushed attempt to punish the rich seems ever more cackhanded.

One bank has offered to transfer any of its staff to another country.
December 24, 2009 6:27 PM
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