Blue States Are Chasing Away Their Tax Bases: A Surge in Taxes on High Earners Is Leading to a Mass Exodus
One obvious reason why the 7% capital gains tax didn’t solve Washington’s budget problem is because state policymakers remain profligate in their spending habits—Washington’s biennial budget has effectively doubled over the past decade.
Another reason why the tax didn’t solve their budget woes is because the additional tax burden encouraged high-earning Washingtonians to leave the state and take their incomes with them.
The chart below shows the net migration of earners making more than $200,000 between 2015 and 2022.[1]Over 2,300 high earners left the state on net in 2021, the year the 7% tax was enacted, and almost 6,400 more left in 2022 when the tax came into effect.
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As it turns out, “tax the rich” is a great slogan until “the rich” move somewhere else.
“The problem with socialism is you run out of other people’s money” — Margaret Thatcher
