States Tax Rich at Their Peril

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Politicians in New York and other states hoped to bring in more money by raising taxes on the rich -- but so far, that plan isn't working.
     
The state of New York says it's receiving about 20 percent less than it hoped from higher income taxes and other fees on the wealthy.

Some states such as New York, New Jersey and California are only temporarily raising their highest tax rates. They are worried that wealthy people will simply leave their states.
    
Tom Golisano, who owns The Buffalo Sabres, changed his official address to Florida. He was paying $13,000 a day in state income taxes.
     
Others have also left, and more people are considering leaving. 

"People aren't wedded to a geographic place as they once were. It's a different world," said New York Lt. Gov. Richard Ravitch.
    
One analyst says governments can't tax the rich too much, because, "they employ people." 

"You can say, 'The millionaire is evil,' but they don't just put their money in a coffee can," said Christopher Summers, president of the nonpartisan Maryland Public Policy Institute. "They employ people ... That fact is, you need rich people to keep working hard so they will invest."

*Originally published September 28, 2009

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