The ATM is a wonderful device. It allows someone short on cash to quickly and efficiently replenish their wallet, allowing them to spend more money as they see fit. Yet it is not magic; what you spend is your own, and it will come to an end sooner or later.
Yet some House members seem to view wealthy individuals as ATMs – nothing more than an easy means to fatten the wallet of state government.
HB 758 “An Act to Raise the Income Tax Rate Paid on Highly Compensated Taxpayers” sponsored by Luebke (D- Durham), Hall (D- Durham), Harrison (D- Guilford), and McGuirt (D- Anson, Union) would attempt to dip into these human ATMs by creating a new, higher “millionaire” income tax rate for persons who make a sizeable income.
The wealthy are often targeted for such government money-grabbing ploys. Politicians can’t resist exploiting baseless class envy to score cheap political points. Combine this with the unrealistic expectations of boosting revenue to the state, and “soak the rich” plans are like catnip to left-wing politicians.
High-income earners should not be subject to higher tax rates intended to bolster tax revenue, however, because they themselves are economic stimulators. It is they who begin businesses in the state, and they who provide jobs for North Carolinians. To reduce their income is to tempt them to save money by reducing workforces, taking less business risks, or taking more drastic steps.
It is incredibly naïve to expect to further penalize productive behavior without any reaction from the targets of such punishment. Such “soak the rich” schemes have already unfolded in other states with clear results.
Three years ago Maryland enacted its own millionaire tax, expecting a windfall of new revenue. Much to their surprise, tax returns netted far lower than expected. Why? Because millionaires have the option of moving to a more tax friendly state, taking their money and businesses with them. California, New Jersey, and New York all experienced similar losses in valuable citizens and tax revenues after enacting such taxes.
Research has shown that this can occur at an alarming rate, changing tax revenues drastically and reducing available state funds before any correction can be made. The end result is these high, punitive taxes chase the most productive entrepreneurs out of the state, and state government is left with less revenue than they were expecting.
North Carolina can ill afford this increase in taxes, primarily because it is wrong for a government to view its citizens as a cash cow, and secondly because there is no guarantee that the rich will remain to pay. In a period in which North Carolina is working so hard to bolster local businesses, increase job creation, and preserve as much revenue as possible, it would be unwise to goad wealthy taxpayers to drastic measures.
For turning citizens into ATM machines, and for risking businesses and jobs in North Carolina, HB 758 is this week’s Bad Bill of the Week.