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Comment by dpb001 | Hacker News Reader

The union of states arrangement has the side effect of putting the states in competition with each other for things like new/expanding businesses and residents. It's relatively easy to relocate (or even remain in a state while legally "residing" elsewhere). So there are diminishing returns to raising the tax rates significantly on the upper brackets at the state level. I'm not a believer in the trickle down theory but beyond a certain marginal rate many people would just move to a state with a lower rate.

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That’s never been proven. The blue states re the most objectively desirable states to live in with maybe the exception of Idaho and Wyoming and Florida. Blue states have more leverage than they apply.

I’m a blue state resident and will not argue the point about overall quality of life. But a quick look at net inflow/outflow rankings by state show there’s already a migration in the red state direction. There are many factors involved, but the cost of living is certainly one. Taxes are a large component of the cost of living. Increasing them on a segment of the population that has the resources to move elsewhere can only result in some additional migration. Whether that results in a net loss of tax revenue remains to be seen.

this somehow excludes such human concept as sense of belonging. might be in usa it has atrophied already but sense of home is really important in some places. place where you spend most of your life, where you have you real social network, neighbors and childhood friends. sometimes its lower tax is not worth loosing it all. its not everything about money (for some)

ps im talking about real persons here, not corporations

You're talking about people who aren't ultra wealthy there. Once the tax bill gets high enough relative to elsewhere it doesn't make sense not to jump through the hoops to change your place of residence.

Once you are ultra-wealthy you don't need to worry about taxes unless you are so greedy as to make earning infinite money your only goal in life even if it hurts you in every other way. And it is silly to set general policy based around how irrational and neurotic individuals will act.

I'm uncertain if I should have included "ultra" there. Point is that the father up the tax bracket you are in this scenario the more of the bill you foot and the larger your monetary incentive to relocate.

But at the same time the more money you make the less paying a bit extra to live where your friends and family are is really that big of a concern. Otherwise why are wealthy people living in and around big expensive cities when they can move to any number of other states and pay a fraction of the cost for housing and services. Many people are sitting on a decades worth of pay or more because they don't want to sell their property and move somewhere cheaper.

I expect that cost of living as a percentage of income goes down even as absolute prices go up in most cases. Whereas the taxes we're talking about here go up.

Your logic amounts to assuming you can significantly raise the price relative to other states on the basis that they already pay a bit more which I don't think follows. The degree is off but also the relative difference isn't there. Living in an expensive house in a big city is going to cost extra no matter where you do it but the taxes we're taking about will only exist in some of those cities.

Meanwhile the higher up the income ladder you go typically the fewer constraints there are tying you to a particular physical location. On the extreme end, if you make it high enough it can get to the point where you can literally relocate to a different country without much issue and it may be worthwhile for you to do so.

I don't buy it, we don't really see it on a smaller scale now despite the same incentives being in place on a smaller scale, in fact it is rare enough to warrant fearmongering news stories when it does happen and PR statements. Nobodies moving out of high tax countries to go live in Somalia without taxes. And if they do leave, then who is to say they can even maintain the same business relationship to the US? They either pay the taxes because the US taxes citizens even outside the US, or if they abandon their citizenship to avoid it then they become subject to the same costs and fines and restrictions as any other foreign persons and businesses.

I really don't really see much of any chance for downsides to 99.9% of the population, but plenty of upsides. If the only thing maintaining the US economy is a a small percentage of rich people sitting on stacks of capital, the US economy is already doomed and the people on top are just trying to be the last ones down into the water.

We do see it though. But usually they hide the income overseas because that's more straightforward or cheaper or whatever. However there are several small island countries that are known for hosting ultra wealthy expats on very favorable terms. This isn't some hypothetical.

In the business world how many companies are just coincidentally booking all their revenue in Ireland?

I'm really not clear what point you're trying to argue here. Someone upthread suggested that a sense of community would prevent the disproportionately wealthy from relocating to nearby states to avoid higher taxes. I call bullshit, dependent on the size of the relative tax gap. They don't even have to sell their house, just purchase a second one and reside there more of the year.

Wealthy people move between countries and change citizenship to avoid overtaxation. Moving between states isn't as big a move.

Countries fight back with exit-taxes, controlling asset movement, and taxing (now) foreign owned assets. The US in particular makes it very difficult to take your theoretical winnings from the table.

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