Tax Shackles

     I strained to come up with a clever neologism for what I’m about to address, but I failed. “Taxicles?” No, sounds too much like “popsicles.” “Shtaxles?” No, that’s too ethnic; someone would probably suggest that it be served with wiener schnitzel. Anyway, the subject is one of some gravity, so the above title will just have to do.

     If you have twenty minutes, the following video is worth your time and attention:

     Five populous states are trying to fetter their residents – give them a tax disincentive to move out. Those “exit tax” provisions won’t retard all emigration, of course, but they will cause a significant fractions of Californians, New Yorkers, et cetera to cast about for ways of averting the planned amputations of their net worth. There might be some dodges. There’s also the possibility that the federal courts will strike those exit taxes as unConstitutional on the ex post facto provision of Article I, Section 10. But for the moment, it’s a trend in motion, and likely to spread.

     It sets up an interesting tension. You want to move your income away from California’s high-income tax? Well, then the Golden State will get you on the way out. If you insist on not paying the exit tax, then California gets to keep taxing you for years more… possibly including your net worth, which the Giermeisters in Sacramento have already fixed their sights on. But which of those decisions would be favored by the California legislature? The exit tax would yield large prompt revenue, but the income tax and (contemplated) net-worth taxes would yield more over a protracted interval. And once a resident has fled, he’s gone for good.

     The voracity of governments always grows over time. That’s been demonstrated so many times that it no longer requires substantiation. However, I will remind my Gentle Readers of the debates over the proposed Sixteenth Amendment:

     When the Sixteenth Amendment was being debated on the floor of the Senate, one of its opponents rose to ask the body what it could say to reassure the American public that this tax would not rise to seize some unconscionable fraction of their earnings -- perhaps as much as ten percent! A pro-income-tax senator rose and replied that the country need never fear such a development: "The people would never allow it!"

     The American Revolution was a tax revolt, as much as an assertion of independence and the right to self-governance. Americans have been subjected to a mind-boggling array of tax measures since then, most of them falling at the state and federal levels. (If you live in an incorporated municipality, keep a hand on your wallet.) There appears to be no event free of taxation… not even death. And now, the greediest of America’s state governments, aware that their tax policies are causing their states to lose their most taxable residents to lower-tax states, are determined to chain us down so they can mulct us in perpetuity.

     Food for thought – if it’s not fuel for an actual revolution.