Here's the problem for states that want to pry more money out of the wallets of rich people. It never works because people, investment capital and businesses are mobile: They can leave tax-unfriendly states and move to tax-friendly states.All this economic science and reality is wholly lost on the clowns in the Minnesota legislature who can only see as far as the next constituency they intend to purchase. Once they expand government to a new demographic and make them dependent on the largess, they NEVER retreat.
The tax differential between low-tax and high-tax states is widening, meaning that a relocation from high-tax California or Ohio, to no-income tax Texas or Tennessee, is all the more financially profitable both in terms of lower tax bills and more job opportunities.
Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts.
I was once happy to have Norm Coleman as mayor of St. Paul for the same reason I cherish Pawlenty; if the built-in, institutional, political "progressives" who litter the political scene in Saint Paul specifically and in Minnesota in general are not held in check, the size and price of government will eventually consume revenue and resources to the point that it will be unsustainable.