http://taxprof.typepad.com/taxprof_blog/2009/10/court-upholds-.html
I’d say this is a good call by the court even if I think the law itself to be foolish for California (talk about incenting people to leave).
some of their arguments are suspect, but I can't really see them ruling anything else. It is not unconstitutional since it was amended to allow income tax. It is stupid, it is unfair, it is harmful to society and it encourages them to leave. But it is not unconstitutional.
A $10,000.00 minimum... sounds like a moving truck is a lot cheaper, especially when you consider the other taxes paid. Those that can will leave and California will lose the larger percentage these people kick in. Would they be happier if the population of California were migrant farm workers? Perhaps, but even they need roads, schools, and infrastructure. It will be interesting to see what effect this does have down the road.
talk about incenting people to leave
Actually, I think this might work. There are a lot of silly liberal millionaires in California for whom no other state is quite crazy enough.
For them the status value of California might be worth more than a few ten thousand bucks a year.
(Personally, if I lived in California, I would leave.)
Seems like Cali is on a role looking for wayys to make people leave. throw in the whole "banning big screen TVs because they waste too much energy" is just as bad if not worse than this.
This is not precisely a tax on millionaires, it's a tax on people that earn in excess of $1 million per year. While it is reasonable to assume that anyone making $1 million per year is a millionaire, not all millionaires make a minimum of $1 million per year.
So while it's perfectly reasonable for someone making in excess of $1 million per year to want to move out of California that presumes that their job which pays them such a high wage is easily transportable and that is not always the case.
In general, jobs pay in relationship to the general cost of living of the area that they are in. You can't assume that a job that pays $1 million in pretty much the highest cost of living area in the country will also pay that same $1 million in Detroit or some other rust belt city or rural area of the country.
If it did then *everyone* that lives on either coast would move to the center of the country. The reason they don't is because the high paying jobs aren't there and if they were there then the cost of living, particularly real estate, would be bid up so as to make that a high cost of living area as well.
So sure, anyone in CA that makes $1 million plus a year that can make that same amount in a low cost area of the country and who also doesn't happen to be tied to a $10 million home is perfectly free to move anywhere they want. However if that $1 million job pays only 1% less in another area of the country then they are better off staying where they are.
You think people with an income of one million a year depend on the location much?
I don't know anything about that range of income. I'm not sure the usual idea of "this job pays 100,000/year in NY but only 60,000/year in East-Nowhere, Some-Carolina" formula applies here.
Thinking of California, I figure those people are either owners of companies, who will keep the income from their company in California even if they lived in Idaho, and Hollywood people, who depend on the location but simply won't have that same income on a regular basis. They stay for their project and move away when it is done (or they stay when it is done). I doubt production companies will move out of California because of this.
Companies are located where they are for a number of reasons. Accesibility to customers, accessibility to raw materials, availability of a workforce with particular skills and so on. Companies are not located where they are as an act of charity by the upper management. Just like no employee is hired as an act of charity. If an employee doesn't contribute more to the bottom line than they cost they'd be out on thier ass so fast their head would spin. Perhaps the company was simply founded there and developed there. Whatever, the companies are there now and to move would require substanstial costs.
Basically CA has said we think the advantages of being in CA outweigh a 1% tax on earnings in *excess* of $1 million. My reading of this is that someone making only $1 million would pay $0 due to this tax and someone would have to make $2 million to actually have to pay a relatively miniscule $10K.
If CA is right then not many people will be going anywhere, if they're wrong then more will leave. But if CA is like any other state that I know of they tax income *earned* in CA regardless of where the income earner lives, so TV and Movie people and company owners would not benefit in the least by moving out of state unless the company moves out as well which is a possibility but far more difficult and costly then simply living "off-site" with periodic commutes.
If the number of "silly liberals" found cheating on their taxes during cabinet selections/or in congress are any indicator, they like to hold onto their money just as much (and more i.e. to the point of tax evasion) as anyone else.
If Michigan did that to me I would consider moving.
Yes, but Michigan is not a liberal mecca and you are not a liberal.
And so you should. Vote with your feet... it's still a free country at the moment. Those that stay and pony up, my hats off to you as well, and your VP thinks you're a patriot to boot. Win win.
But realistically let's say Michigan did pass an additional 1% tax on earnings above $1 million per year. How much would that really cost you versus the cost of relocating Stardock to some other state or even country? I suspect in the best case you'd be spending millions to save thousands. It's your right in either case, but moving in this situation seems to be a pyrrhic victory.
I agree in part, but when the total tax picture comes into play, it might be the straw that broke the camels back.
You make a point but you ignore a simple fact. Its the principle of things. Imagine that the Gov't would come up with a tax that some would consider working in another state to avoid paying it yet most would see it's not really much and chose to stay and pay it. But you have to ask yourself, with all the taxes the Govt already has why another? Because they can? It's not about how much money you spend moving vs how much you pay in this 1% tax. It's the principle. I would be convinced to move, even if it cost me more, if I believed the tax would go against what I believe in.
You are looking at this from a mathematical point of view, we see it from an abusive point of view. The Gov't continues to come up with ways to take more money from people, using the excuse that they have enough to spare, and ignoring the fact that the economy is not getting better and those that have more don't have as much as they had before and taking more from them leaves them with even less and we all know that in order to make money you have to spend money. but how do you spend money you don't have and make money when people don't have jobs?
Charles when you look at it that way you have to consider both. It is mathematical. You're taxed on your money twice, once when you earn or save it and again when you spend it (with some small exceptions). Not saying it that can't be abusive, I believe it is, but it's always going to boil down to the numbers. Since conditions are more likely to make every poor rather than rich, and numbers of the earners lean more to the lower side, that's where the votes go. The mentality, with encouragement of vote seeking politicians, is it's better to eat roasted goose today than wait for the golden eggs tomorrow.
If it costs $5 million to take a loss on your newly built house, sell or rent out your office building in a down market, move your company and those employees willing to relocate and uproot your family from their home and friends to move to another state in order to save $5K per year out of a $1.5 million salary then those are *awful* expensive principles, particularly since you'd have no gaurantees that the state you moved to wouldn't do the same thing to you next year.
Someone making that kind of money could conceivably afford to take that kind of loss and if it pissed them off sufficiently then perhaps they would do it but it would seem to me a case of cutting off your nose to spite your face although it most certainly is someone's right to do such a thing.
[edit] What it really does discourage are companies that were thinking of moving *into* the state. That's where the big difference will be. In the case of Michigan it probably doesn't matter since people have been leaving the state in huge numbers ever since the 70's (I left shortly after the riots in 1968 having grown up in Detroit), but I would think that would be California's primary concern. [/edit]
I guess the bottom line is do you feel that a graduated tax is intrisically unfair? Certainly we have had a graduated federal tax for a long time with historical marginal tax rates as high as 70%. For 2009 the highest marginal rate is 35% but then there's also the issue of AMT which has affected me for the last few years and hopefully will continue to affect me.
I say hopefully because if I'm affected by AMT then that means I will have been able to maintain what I consider to be a relatively high salary which I consider to be a good thing. That's not to say that I would complain if AMT were eliminated but I'm not overly complaining about it to begin with. After all if I pay more taxes it only means that I made more money.
Same with state tax. I see no intrinsic evilness in a graduated state tax. I know most here disagree with that premise and so I won't argue the point. You are all welcome to your opinion but you must realize that you're not in the majority.
Think of how smokers feel.
They enjoy life because they have the legal right to do harm to other people without their consent?
It's because smokers are an easy minority to dislike and therefore are the constant target of tax increases. Similarly the rich are an easy minority to dislike and therefore are the constant target of tax increases.
It's because smokers are an easy minority to dislike and therefore are the constant target of tax increases.
They are also an easy minority to not be a minority (they can just stop smoking) and an excellent minority to tax (because they are not doing anything useful and if we tax it and they stop, we are not losing anything).
Similarly the rich are an easy minority to dislike and therefore are the constant target of tax increases.
Yes, but the rich are a useful minority. If they decided not to be rich, we'd all be poorer because the wealth they created and own would simply not exist and they wouldn't share it with anybody either.
Smokers: produce smoke, pay some taxes
Rich boys: produce a lot of wealth, pay a lot of taxes
The rich boys pay more taxes than smokers and even if neither group did, there would be no advantage for society to convince rich people to be poor instead.
(Contrary to popular myth rich people are not rich because other people are poor and, conversly, smokers do not stink because other people smell nice. Making rich people poor would not increase anybody else's wealth and making smokers quit does not make other people smell worse or more unhealthy.)
Although there are those that could argue a similarity here as well.
I have yet to see a law that actually allows a rich person to harm me as severely as a typical smoker thinks he is entitled to.
I have no real interest in being dragged down a superfluous discussion defending smokers’ rights or the lack thereof.
Plus who in the world ever "decided not to be rich"? Very few willingly make this choice, the last person I recall trying was Ricky Williams but he is a definite nut case and it didn't work out all that well for him. The NFL sued him for his signing bonus and "forced" him screaming and kicking back into the realm of the wealthy. Like I said, a nut case, but still a great running back.
I am all for smokers' rights, as long as they have the same rights as non-smokers.
Ah yes. It always gets down to voodoo, trickle down economics. That was disproved by the *first* Bush depression of 1990-91 and reinforced by Bush 2 in 2001 and the Bush 3 depression that we're still currently in.
You are making this much too complicated.
If I build a chair, I will be richer than before (because now I have a chair). Somebody else, although they also have the wood, will not have a chair, because they didn't make one.
If we as a society decided that we should all be equally rich, neither of us would have a chair (unless you force me to make two chairs). Nobody would benefit from that (and the second option is a form of slavery).
Plus who in the world ever "decided not to be rich"?
It's usually decided for people.
If you hold Bush responsible for this recession shouldn't you, by by use of time, hold Clinton responsible for 2001? Your partisan knickers are showing.
You don't understand how this works.
The recession that followed Clinton's eight years in office and coincided with Bush's first year in office was Bush's responsibility.
And the recession that followed Bush's eight years in office and coincides with Obama's first year in office was Bush's responsibility.
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