Taxing the Rich: Part 2

This is a follow up to my original post that asked the question whether it really is a good idea to tax the rich more heavily. There are many people who have the idea that the rich will just grin and bear it and won’t alter their behavior if we as a society decide to tax them more. They, after all, have the ability to pay and will just continue to work hard no matter how much the rest of society decides to tax them. I had several interesting conversations this past weekend that would say otherwise.

While visiting some friends this weekend I had conversations with several people looking for jobs after they graduate from Harvard Business School. Most HBS grads can be fairly certain of receiving job offers in the six-figure range and of course this salary has the potential to grow very rapidly in the succeeding years. These graduates, and others from various MBA programs, are the drivers of the economy. Many will start business that will create billions of dollars and provide jobs for thousands of workers. At the very least, their salaries will provide much needed spending and tax revenues wherever they decide to live.

On more than one occasion a student told me they were looking at job opportunities on the West Coast. Mainly California and Seattle. Many of those students said that they were leaning toward Seattle for the simple reason that taxes were lower and that their prospective job offers from the companies in California did not reflect the added cost of living. After you factor in California’s Income Tax, High Sales Tax, and High Property tax you have to earn a lot more than you would in a state like Washington that has no Income Tax.

So those who argue that raising taxes will have no noticeable impact on the rich need to think hard about what they believe is right. My stance on this issue isn't because I'm greedy for myself. If these students and others like them decide to move to a different state they take their income, and all their tax dollars with them. In the end, you are just hurting the poor you are desperately trying to help.