Wednesday, August 4

When people are taxed, they flee

Burt Folsom writing on what people do when taxed:

First, [Minnesota] Governor Dayton wants a “snowbird tax” on those citizens, mostly retirees, who summer in Minnesota but exit during the winter. If snowbirds spend at least sixty days in Minnesota a year, Dayton wants to tax their income from stocks, bonds, capital gains, and dividends. He says it is “one of the unfairnesses that somebody can spend six months and one day out of the state and pay no state personal income taxes and come back here and take advantage of all the state has to offer for five months and 29 days. So, yes, there’s a snowbird tax,” the governor insists.

Second, Governor Dayton wants to hike the state’s income tax from 7.85 to 9.85% on all income over $150,000 for singles and $250,000 for joint filers. That would give Minnesota the sixth highest state income tax in the nation. …

People respond to incentives, and if Governor Dayton tries to fleece the state’s snowbirds, they will fly south permanently–and the state will actually lose, not gain, revenue. That has already happened with tax hikes in New York, California, and Maryland.