Does a Tax like the Washington Millionaires Tax Drive Business out of a State?

Opponents of taxes on the rich have been warning for years that taxes aimed at the rich, and at wealthy businesses, have a negative effect and have many moving their businesses to a more tax friendly state.

The Washington millionaires tax and California’s (probably going to be on the November ballot) one-time 5% tax on the state’s 200 to 215 billionaires are showing that to be true. The Association of Washington Business (AWB) did a survey of Washington’s business owners and found 55% considering moving their businesses elsewhere.

That’s up from an earlier survey finding 44% thinking along those lines.

Last year when the state’s millionaires tax was being considered by the Washington Legislature, AWB President Kris Johnson advised legislators not to go that direction.

“We are already seeing evidence of employers moving operations or moving their personal residence to other states, and we expect to see more in the coming years as plans that are being made right now are put into motion,” Johnson said.

• 60% of employers say they’re looking in other states for real estate
• 28% are actively looking for locations
• 18% have a relocation plan in place
• 6% have already moved part of their business to another state
• 18% of employers already own a home or condo outside of Washington
• 44% are consulting with their tax consultants or CPAs about options

Here is the exclamation point of the survey:

• 72% say the state’s tax burden is a top business challenge
• That’s up from 64% last quarter

“We hope that policymakers will regard this as the emergency that it is and respond by developing a pro-growth agenda aimed at keeping businesses from leaving the state,” Johnson said. “And creating the conditions for businesses to start, grow and thrive right here in Washington.”

For support of the tax, Washington’s House Majority Leader Joe Fitzgibbon — a prime supporter of the millionaires tax — cited the migratory trend survey, the U-Haul Growth Index. He said when it comes to moving from state-to-state, Washington is the 6th most popular one to move to in the union.

That’s up one number from the year before.

That’s people. But are businesses moving here? In a Wall Street Journal op-ed piece, former Starbucks CEO Howard Schultz says no and he ripped into woke and socialist Seattle, Washington Mayor Katie Wilson for driving business out of her city. Schultz said her policies are speeding up the decline of the city.

As Washington’s largest city, it also impacts the state as a whole.

Schultz said Seattle spawned Starbucks, Amazon and Microsoft, and dozens of other income and job producing companies. Now the mayor’s attack-business policies are driving them away.

“These companies imported global talent at scale for decades, anchoring an interconnected system of suppliers and startups,” Schultz wrote in his editorial. “As those businesses reduce their local role, Seattle has no clear answer to the question of what will provide the next set of jobs and revenue growth. Wilson has chosen to cast business as a foil rather than a partner. Her socialist rhetoric vilifies employers, even while she continues to rely on them for revenue. She has encouraged residents who disagree with her policies to leave.”

He also ripped the progressives in Washington’s Legislature saying they’re making a big mistake by emphasizing taxation as a solution to the state’s income problems.

“The theory appears to be that prosperity can be mandated through redistribution rather than generated through growth,’ he wrote. “Washington has a broken tax system.”

Starbucks former CEO also noted that Washington will not see a fast decline. Cities and states decline gradually. Policies like those enacted by Wilson and the Washington Legislature will eventually ruin Washington’s economy.

“They drift when public safety, fiscal stability and economic vitality deteriorate together,” he told the Wall Street Journal readers. “Downtown vacancies reduce foot traffic. Declining foot traffic weakens small businesses. Employment falls. Revenue shrinks. Services erode. Confidence — something that’s hard to build and easy to lose — begins to evaporate.”

His bottom line.

“Across the country, other states are competing for capital and talent by simplifying regulation, reforming tax systems and investing in workforce development,” he said. “But the current government needs to learn that future entrepreneurs won’t be attracted by ineffective public systems, especially when joined with policy and political rhetoric that demonize businesses.”

By the way, Starbucks just announced its laying off 61 employees.

Others like entrepreneur Jesse Proudman — who founded three companies over three decades in Washington — are also planning a hasty exits. One of his firms is Venice.ai. It is a privacy-focused, platform-based artificial intelligence system.

‘We’re out looking for an alternative,” he wrote. “So, we were looking in Nevada. We’re looking in Texas and Austin. We’re looking at Nashville and Florida. And these are climates where the business community is vibrant. They’re climates where the government is encouraging entrepreneurship, where they’re welcoming people, and they’re not villainizing those who have built something.”

By the way, both Schultz and Proudman poked fun of Mayor Wilson who had her parents — at least up until Wilson got the job as mayor — paying much of the of her $2,200 a month child care and $2,200 per month rent on her and her husband’s apartment.

Source link: The Olympian — https://bit.ly/4v49pZx

Source link: The Daily Mail — https://bit.ly/435AwqQ

Source link: Daily Mail — https://bit.ly/4tAud9R