(Via Texans for Sarah Palin) But it’s tax hikes for the wealthy (540 billion over 10 years), so that’s all right, right? At least, it’s tax hikes for the wealthy today. And what gets redefined as ‘wealthy’…

Key House Democrats decided Friday to raise taxes on the wealthy to help pay for health care legislation, capping an up-and-down week for President Barack Obama’s top domestic priority.

[snip]

Democrats on the tax-writing Ways and Means Committee agreed to a new surtax that would start with households making $350,000 a year and begin in 2011, said the committee’s chairman, Rep. Charles Rangel, D-N.Y.

…well, that’s up to Charlie Rangel.

Have a nice morning!

Moe Lane

Crossposted to Moe Lane.

The Wall Street Journal looks at the severe falloff in tax revenues from millionaires in Maryland after the state socked them with a new, higher tax rate for the purpose of closing a budget gap, a move hailed at the time by supposedly big-thinking liberals. Somehow, Maryland liberals were surprised that this didn’t work out:

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.

The easy partisan divide on this issue is over how much of the decline in revenues is attributable to millionaires leaving the state or voluntarily reducing their taxable income (by working less or hiding money in tax shelters) as opposed to the effects of the recession, which the WSJ notes as an obvious contributing factor. But that’s only one problem with sharply progressive tax rates; the Journal notes a structural problem that is at least equally serious in times of recession, as New York and California in particular are discovering to their grief. Specifically, the surplus annual income and investment returns of the wealthy tend to be much more volatile year-to-year than the great mass of incomes earned by average citizens.

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To sum up the New York Times article: New York Democrats in the Assembly have come to an agreement with New York Democrats in the Senate and the New York Democrat in the Governor’s office to raise state taxes on all incomes above $300,000/year. This is felt to be the best way to handle the looming 3.2 billion deficit in taxes from the previous projected budget - as opposed to, say, spending 3.2 billion less next year. Meanwhile, Democratic Assembly Speaker Sheldon Silver went to some trouble to make certain that this tax plan did not include tax offsets for homeowners; the suggestion that this is for partisan political purposes is, of course, scurrilous. So, no doubt, is the observation that this tax bump is going to be squarely hitting small businesses at the same time that some of them are going to get hit on their federal tax burden as well.

And, of course, it is completely unfair to point out that New York’s economy is critically dependent on the collection of talent, capital, and organization that was already in poor financial health even before this new development.  I am given to understand that the inhabitants of Wall Street tend Democratic in both contributions and elections. It’ll be interesting to see how many times they can be kicked before there’s a general reassessment of that policy.  Presumably it won’t happen right way, if only because it takes time for people to admit to themselves that they actually do have class interests, and they’re not voting them; but patience is a virtue.

As for the rest of New York, I ask what I asked the Washingtonians earlier: how’s one-party rule working out for you guys?

Moe Lane

Crossposted to Moe Lane.