Laffer Curve Alive and Well

The Wall Street Journal reports that Maryland's state income tax surcharge on millionaires hasn't quite worked out they way lawmakers had hoped it would. The 30% 2008 tax increase on those making over $1m was supposed to bring in an additional $106m of tax revenue per year.

"Well, the state comptroller's office now has the final tax return data for 2008, the first year that the higher tax rates applied. The number of millionaire tax returns fell sharply to 5,529 from 7,898 in 2007, a 30% tumble. The taxes paid by rich filers fell by 22%, and instead of their payments increasing by $106 million, they fell by some $257 million."

This development highlights the fact that capital is mobile, and people won't allow themselves to be sitting ducks for tax-hungry politicians, eager to steal from taxpayers to ensure they get elected.

Congress and other states would be wise to pay attention.