Millionaire's Tax Is Popular In New Jersey, Where It Has Worked Before
Greg Sargent highlights a new Quinnipiac poll that finds nearly two-thirds of New Jersey residents support a "Millionaire's Tax" to balance the state budget. It's worth noting that, though federal taxes on the rich have gone down in recent decades due to, among other things, huge cuts in the capital gains tax and reduced marginal tax rates, New Jersey actually has some experience with raising taxes on the rich.
In 2004, New Jersey raised taxes on people making more than $500,000 a year. Despite the common claim from conservative proponents of lower taxes for the rich that such tax increases are counterproductive because they cause the wealthy to move or work less in order to avoid the increase, a 2011 study concluded that this did not happen:
The study found that the overall population of millionaires increased during the tax period. Some millionaires moved out, of course. But they were more than offset by the creation of new millionaires.
The study dug deeper to figure out whether the millionaires who were moving out did so because of the tax. As a control group, they used New Jersey residents who earned $200,000 to $500,000 — in other words, high-earners who weren't subject to the tax. They found that the rate of out-migration among millionaires was in line with and rate of out-migration of submillionaires. The tax rate, they concluded, had no measurable impact.
"This suggests that the policy effect is close to zero," the study says.
Sargent argues, quite reasonably, that strong support for a new millionaire's tax in New Jersey is likely related to the success the Occupy Wall Street movement has had in drawing public attention to inequality and tax fairness. It might also have something to do with the state's recent experience using a millionaire's tax to balance the budget without the dire consequences so often predicted.