Tags: arthur laffer | stephen moore | cristobal young | tax | exodus

Laffer-Moore 800K Tax Exodus Prediction Called 'Nonsense'

Laffer-Moore 800K Tax Exodus Prediction Called 'Nonsense'
(Dimitris Kolyris/Dreamstime.com)

By    |   Friday, 27 April 2018 11:38 AM

The predicted Laffer-Moore 800,000-person tax exodus from New York and California is being called "pure nonsense" by a Stanford University economist and sociologist,  following the conservative economists’ bold forecast in the Wall Street Journal.

Arthur Laffer and Stephen Moore, in a WSJ op-ed article this week headlined "So Long California, Sayonara New York," predicted all those people will flee the two states over the next three years because of the new tax bill passed by Congress and signed by President Donald Trump.

Stanford’s Cristobal Young, though, called the forecast "pure nonsense," CNBC reported. Young said California and New York – and New Jersey – have been high-tax states for decades and they still have the highest per capita concentration of rich people in the country.

"There is no correlation between the top tax state tax rate and the number (or rate) of millionaires in a state," Young told CNBC.

He said the people most affected by tax rates are the "late-career working rich" and they are less likely to move because they are "embedded in place for a host of social and economic reasons."

Young's own study done with Charles Varner of Stanford University, and Ithai Lurie and Richard Prisinzano of the U.S. Department of Treasury, examined 13 years of income data for all Americans earning $1 million or more, CNBC said.

They found that only 2.4 percent of million-dollar earners move every year, a rate lower than the 2.9 percent move rate for the broader population, per CNBC. They discovered that only 0.04 percent of millionaire earners move for tax reasons.

"For years blue states have exported a third or more of their tax burden to residents of other states," Laffer and Moore said in the WSJ opinion piece. "In places like California, where the top income-tax rate exceeds 13 percent, that tax could be deducted on a federal return. Now that deduction for state and local taxes will be capped at $10,000 per family.”

"Consider what this means if you're a high-income earner in Silicon Valley or Hollywood. The top tax rate that you actually pay just jumped from about 8.5 percent to 13 percent. Similar figures hold if you live in Manhattan, once New York City's income tax is factored in. If you earn $10 million or more, your taxes might increase a whopping 50 percent."

Laffer and Moore said conservative states will benefit the most from the predicted exodus, like Arizona, Nevada, Tennessee, Texas, and Utah.

"Since 2007, Texas and Florida (with no income tax) have gained 1.4 million and 850,000 residents, respectively, from other states," Laffer and Moore pointed out in the Wall Street Journal. "California and New York have jointly lost more than 2.2 million residents.

"Our analysis of IRS data on tax returns shows that in the past three years alone, Texas and Florida have gained a net $50 billion in income and purchasing power from other states, while California and New York have surrendered a net $23 billion."

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The predicted Laffer-Moore 800,000-person tax exodus from New York and California is being called "pure nonsense" by a Stanford University economist and sociologist,  following the conservative economists’ bold forecast in the Wall Street Journal.
arthur laffer, stephen moore, cristobal young, tax, exodus
497
2018-38-27
Friday, 27 April 2018 11:38 AM
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