Is Taxing The “Rich” The Answer?

May 18th, 2009 categories: Rants & Riffs

The Hawaii State Legislature raised the top income tax rate in Hawaii to 12% last week. News reports say that the increase gives Hawaii the highest state income tax rate in the Nation. The Governor vetoed the bill and our elected officials over-road her denial. This begs the question, is raising taxes on the wealthy going to improve our local economy? Today’s Wall Street Journal on-line had an excellent article that may hold the answer.

“Here’s the problem for states that want to pry more money out of the wallets of rich people. It never works because people, investment capital and businesses are mobile: They can leave tax-unfriendly states and move to tax-friendly states.”
CLICK HER TO READ THE WSJ ARTICLE

I know what your thinking, what does this have to do with Honolulu real estate? I think it could have a direct effect, at some point upper income individuals could say, “I love Hawaii, but it is not worth putting up with the tax burden!” At which point they pick a Sun Belt state that has a more favorable tax structure. They then take all of their marbles and expertise to benefit another state and guess what, Hawaii loses out! Real estate could be hurt by this movement as there could be fewer resident buyers for upper end homes.

Upper income individuals are generally the engines that drive job creation, private enterprise and prosperity. We can’t do anything about this tax increase until the next legislative session or maybe the next election, but it is time to “throw the bums out!”

This entry was posted on Monday, May 18th, 2009 at 9:45 am and is filed under Rants & Riffs. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.