Thursday, August 22, 2013

How nice red areas turn tino Detroit style dumps #4

Politicians have no clue as to what the 80/20 Principle is

See, in the world of business, roughly 80% of your business will come from 20% of your customers.

The same is true of government tax receipts. But instead of sending a thank you note to the people picking up the tab, lefties like to persecute these people; deride them as if they are somehow part of the problem instead of part of the solution and finally, tax them some more.

And you know what most of these people end up doing? They don't protest. They don't get angry. They just leave and take their tax dollars with them.

Just look at our future United States of Detroit.............

Blue states like California and Illinois are  struggling meeting obligations for their own public pension funds, so they certainly don’t need this latest bit of news—their tax bases are shrinking drastically. A new study on state-by-state income migration from the Tax Foundation (h/t WSJ), found that New York, California, and Illinois—the largest blue states in the country—led the country in income flight during the last decade. New York was hit particularly hard, losing $46 billion dollars of taxable income to people leaving the state over the past ten years. And these states were not alone: blue stalwarts like Maryland, New Jersey, and Massachusetts were not far behind.
Red and purple destinations like Florida, Texas, Arizona and North Carolina led the pack of states benefiting from this migration, each gaining over $10 billion in taxable income due to new migrants from other states. Although the red/blue divide breaks down somewhat towards the middle of the group—red states like Louisiana saw some minor losses while blue states like Vermont enjoyed modest gains—the overall pattern is hard to miss.
One of the trends driving blue boosters to despair is that the most extensive government programs require taxes hikes which tend to cause businesses to flee, eventually taking residents and their tax dollars with them. This erosion of the tax base forces states to hike taxes further to keep the system running which only accelerates the process. The pension crises in states like California and Illinois suggest that this cycle may be reaching some sort of natural climax. Reversing the trend will require some gut-wrenching changes to business-as-usual.

Need some more evidence? How about on a national level..............

Earlier this month it was reported that the number of Americans renouncing their citizenship increased sixfold in the second quarter compared to last year. According to The Wall Street Journal, more Americans renounced their citizenship in the first two quarters of 2013 than the whole of 2012 combined. The increase comes ahead of a July 2014 deadline (which has been moved back six months) imposed by an absurd piece of legislation called the Foreign Account Tax Compliance Act (FATCA), which compels foreign financial institutions to disclose the holdings of their American customers to American authorities as part of the U.S. government's latest attempt to crack down on Americans who avoid taxes by keeping assets abroad.  

Of course, American authorities can’t legally force a foreign entity to do anything. However, they can threaten to impose a 30 percent withholding tax on income from American sources on a foreign financial institution if those institutions don’t comply with the U.S. Treasury Department’s demands, thereby turning foreign businesses into an IRS enforcement tool. The recent news of the huge increase in the number of Americans renouncing their citizenship is only the latest reminder of not only the arrogance of the IRS but also of the fact that American tax laws place an unreasonable burden on American who live abroad.

One of the most notable instances of an American renouncing his citizenship is Eduardo Saverin, the Brazilian-born co-founder of Facebook, who has lived in Singapore since 2009. Ahead of Facebook’s IPO Saverin renounced his American citizenship, although Saverin denied that his decision was based on economic incentives. Saverin’s decision upset some legislators on Capitol Hill, and prompted Sen. Chuck Schumer (D-N.Y.) and some of his colleagues to sponsor a bill, which died in committee, called the Ex-PATRIOT Act, which would have punished Americans who chose to make the rational decision to take legal means to move assets and wealth abroad in an attempt to hand over less money to the government. One of the most objectionable parts of Schumer’s Ex-PATRIOT Act is its title. While perhaps a clever backronym, the implication that you must be somehow unpatriotic for living abroad or for choosing to take legal means to lower your tax bill is disrespectful and symptomatic of a worrying attitude towards the relationship between citizens and their government.  
So if you are the state of New York, just keep yapping about how you don't want Rush Limbaugh as a resident and poof! he'll be a Florida resident in the blink of an eye.

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