Thursday, March 01, 2018

Tax the rich, ride the rollercoaster

Last year, the Atlantic had an article about the fiscal problems in Connecticut which included this tidbit:
In the last decade, Connecticut’s millionaires have accounted for as much as 30 percent of the state’s income-tax revenue. This is a problem, because the investment income of financiers is volatile. When hedge funds’ earnings falter, as they have in the last few years, Connecticut feels the pain. Indeed, the state’s income-tax revenue ... tracks capital gains ... so closely that Connecticut’s tax coffers are essentially a barometer of the health of financial markets.
The results (which can be seen in the embedded graph) are an extremely volatile revenue stream for the state.  Connecticut has to hope that the "rich get richer" because that's where the tax revenues are.

So if 30% of your state revenue is paid by millionaires, what do you get when your state has half of all taxes paid for by the top 1%?  You get the worst "quality of life" in the United States:
If the stock market shifts from gains to losses, Standard & Poor’s said, the budget could be negatively impacted in a major way because about half of the state’s revenue comes from the wealthiest 1% in California.
They're really hoping that the next Avengers movie can pay the bills in Sacramento.

1 comment:

Anonymous said...

Another measurement:

All those taker states aren't helping the maker states' bottom line.