The millionaire migration myth
The Hearst Connecticut Media editorial board recently published an editorial parroting refuted Republican talking points of a supposed ‘millionaire migration’ if the legislature dares demand Connecticut’s highest earners pay their fair share. Republicans have resorted to sound bites because they fall short on alternate solutions, or an actual budget, of which they have failed to propose for three consecutive years.
Instead, Republicans hope to convince us of this boogeyman tale of all the state’s tax revenue catching the next private jet to Florida. But here are the facts: reports indicate millionaires do not often relocate.
According to a 2016 study conducted by the American Sociological Review, “millionaires are not very mobile and actually have lower migration rates than the general population. This is in part because family responsibilities and business ownership are higher among top income-earners, which embeds individuals in their local regions.”
The report continued: “Yet, because migration flows represent a very small share of top income-earners, the observed patterns of migration have little impact on the millionaire population tax base even over 13 years.”
What’s more, in 2017 the Internal Revenue Service confirmed data reported out by the state Department of Revenue Service that lower income residents migrate from Connecticut at rates higher than high-income residents. Data clearly shows millionaires are not fleeing the state at alarming rates due to tax policy, and in fact millionaires continue to proliferate in Connecticut despite tax policy changes.
Internal Revenue Service filings show the number of Connecticut millionaires has grown over the years, even after the creation of five new and higher tax brackets on top income earners over the past 18 years.
It is also important to note that when former Gov. Dannel Malloy took office and instituted higher income taxes on millionaires, the number of their filings grew, from 7,450 in 2008 to nearly 11,000 in 2012 – a 45% increase in Connecticut millionaires in just four years, all paying a higher income tax rate.
Regarding the former governor, Malloy’s words were presented in improper context by this editorial board. When he stated, “If you blithely throw around the idea you’re going to propose a 19.5 percent tax on an industry that is responsible for a disproportionate share of our state personal income tax revenue, then don’t be surprised when people start to explore other opportunities.”
He was not presenting a general warning against taxing the rich, he was speaking specifically about a proposal to add a surcharge on income derived solely from hedge funds. The quote was not related to salary, value of stock options, or gains from the stock market.
The Hearst Connecticut Media Editorial states, ” Connecticut’s top earners do have a lot of money. And hiking their taxes could temporarily bring the state even more riches than it’s been reaping in federal aid and Wall Street windfalls this year.”
The clever usage of the word “temporarily” is an inaccurate representation of what requiring the highest earners to pay a bit more would do long-term for the state: establishing stable, reliable revenue streams for years to come that will help fund the programs and services that Connecticut residents need and deserve.
What is “temporary” are the relief funds from the federal government. Those funds should not become a means of continuing to evade our collective responsibility to pay our fair share of taxes. In fact, the result of crafting revenue and spending policy on the foundation of the millionaire migration myth continues to place the tax burden on middle- and lower-income Connecticut residents. These taxes and fees would be greatly reduced, and the likelihood of tax breaks would be in order, if this responsibility were equitably distributed.
Although it may be difficult for some to resist the temptation to fear the boogeyman, the millionaire migration myth is just an excuse to not raise taxes on top earners. Connecticut’s middle class and poor do not have the financial capacity to continue to foot the bill, nor do they have any interest in placating to the refuted, inaccurate fears of those aligning themselves with the wrong side of this debate.
Jennifer Pope of Hamden is a Democratic State Central Committeewoman from the 11th Senate District.
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