Yesterday, Rep. Hagan introduced HB 284, a bill that would increase the marginal income tax rate applicable to income in excess of $200,000 to its pre-2005 rate.
So, is this a good idea? After all, the Governor's budget is in complete disarray and he has yet to propose how he's going to fund the shortfall.
Well, let me give you two real-life and current examples of why Hagan's idea could not be more stupid.
1) I give you Democrat and soon-to-be ex-Governor David Paterson of New York speaking yesterday on his state's tax revenue problem:
"You heard the mantra, 'Tax the rich, tax the rich,' " Gov. David Paterson said Wednesday at a gathering of newspaper editors at an Associated Press event in Syracuse. "We've done that. We've probably lost jobs and driven people out of the state."2) From this past May, here is the Wall Street Journal on Maryland.
Maryland couldn't balance its budget last year, so the state tried to close the shortfall by fleecing the wealthy. Politicians in Annapolis created a millionaire tax bracket, raising the top marginal income-tax rate to 6.25%. And because cities such as Baltimore and Bethesda also impose income taxes, the state-local tax rate can go as high as 9.45%. Governor Martin O'Malley, a dedicated class warrior, declared that these richest 0.3% of filers were "willing and able to pay their fair share." The Baltimore Sun predicted the rich would "grin and bear it."
One year later, nobody's grinning. One-third of the millionaires have disappeared from Maryland tax rolls. In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April. This year there were 2,000, which the state comptroller's office concedes is a "substantial decline." On those missing returns, the government collects 6.25% of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year -- even at higher rates.
Two case studies just in the past few months that prove taxing the wealthy, if you even want to consider $200k as wealthy, is a dumb idea.
But when has that ever stopped Ohio Democrats?