by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Nina Easton‘s latest Fortune column (not yet posted online) features the headline “Millionaire taxes hurt the masses, from Newark to Paris.”
When New Jersey Governor Chris Christie heard British Prime Minister David Cameron invite France’s wealthy to decamp to England to escape a proposed 75% tax rate, he felt something akin to deja vu. Every day top executives of Johnson & Johnson, Merck, and other companies commute from their homes in Pennsylvania to offices in Christie’s state, saving roughly two-thirds on their state income tax bill — and costing New Jersey’s treasury $50 million, by one estimate.
Astute U.S. governors have long understood that capital is fickle, and millionaires are mobile. High top tax rates are the equivalent of a DO NOT ENTER sign for many of the wealthy and would-be wealthy — those entrepreneurs building companies and bringing jobs. “That’s irrefutable,” Christie tells Fortune, “and common sense.” In twice vetoing his own legislature’s millionaire surtax plans, Christie cited a Boston College study showing that New Jersey lost $70 billion in wealth between 2004 and 2008 under a similar tax. …
… But taxes on millionaires will always be cheap and easy politics, predictably drawing strong support in opinion polls. “Taxes you don’t pay are always popular,” says Christie, “but the story doesn’t stop there. There are never enough rich people to tax. After they tax these folks, they’re coming after you.”