Facts Go Missing: The Unsubstantiated Tale of the Fleeing Maryland Millionaires

Chuck Sheketoff

Talk about building a case on rumor and supposition.

A couple of days ago the Oregon Senate Republican Office sent out a news release reprinting a Wall Street Journal story, “Millionaires Go Missing.” The story said that following Maryland’s enactment of a higher tax bracket on high-income residents, “[o]ne-third of the millionaires have disappeared from Maryland tax rolls.”

The Journal conceded, “[N]o doubt the majority of that loss in millionaire filings results from the recession.” And yet, as if in a gotcha! moment, it adds, “But no one disputes that some rich filers did leave.”

Well, duh. People come and go. No one will also dispute that poor and middle-income Marylanders also left the state, and that people of all income levels moved into the state.

Undeterred by the absence of any hard facts, the Journal concludes that it’s futile for a state to raise taxes on the wealthy because they will flee. That’s probably why the Oregon Senate Republican Office sent out a press release reprinting the Journal story.

Instead of circulating stories founded on supposition, the Senate Republican Office would do better to distribute the analysis by the Institute on Taxation and Economic Policy (ITEP),Where Have All of Maryland’s Millionaires Gone? Nowhere – They’re Probably Just Not Millionaires Anymore. (PDF).

ITEP examined the preliminary tax return data released by the Maryland comptroller — who acknowledged that not all the data is in yet, particularly for high-income earners — and found that the data fail to support the Wall Street Journal’s claim:

[A]s a result of legislation enacted in 2007 and in 2008, income tax rates for affluent Marylanders were higher this past year, not just for residents with taxable incomes over $1 million, but for individuals with taxable incomes above $150,000 and for families with incomes over $200,000. Consequently, if it is the case that wealthier taxpayers respond to changes in income tax liability by changing their state of residence, one would expect to see that response not just for taxpayers with incomes above $1 million, but, to some degree, among all affected taxpayers. The Comptroller’s preliminary data suggest that this is not the case.

With the exception of “millionaires”, the number of returns in the affected ranges of taxable income appears to have grown between 2007 and 2008. Given recent economic events – and, in particular, the widely-anticipated decline in income from capital gains, which are received almost exclusively by the very wealthiest residents of each state – a far more likely explanation for the alleged disappearance of Maryland’s millionaires is that, for 2008 at least, they are no longer millionaires. Instead, their incomes may now fall in lower ranges of the distribution, thus potentially accounting for some portion of the increase in the number of returns in those ranges.

In other words, analysis of the preliminary data from Maryland fails to support the assertion that a tax increase on the wealthy will cause them to flee.

Oregon data suggests the same. Last year, the Oregon Center for Public Policy crunched the numbers and found no basis for the oft-repeated claim that Oregon’s income tax on capital gains is causing wealthy Oregonians to relocate to Clark County, Washington — a state without an income tax — to avoid taxes. As state Representative Jules Bailey aptly questioned a couple of weeks ago when the revenue forecast was released, if wealthy people live in Oregon with its current 9 percent top bracket rather than move to Washington, which has no income tax, why would paying 11 or even 12 percent matter?

Look also at data from other states that recently imposed higher rates on the wealthiest, such as New Jersey and California.

A September 2008 Princeton University study (PDF) concluded, “the ‘half-millionaire tax,’ at least in New Jersey, appears to be an effective and efficient revenue-generation mechanism, having little impact on migration patterns among half-millionaire households.” The study said that the cost associated with the few who left the state ($37 million a year) was merely “a small opportunity cost of a tax policy that generated more than $1 billion” in 2006. Moreover, the study found that household income grew rapidly among wealthy New Jerseyans despite the tax. From 2002 to 2006, the number of New Jersey households with incomes of $500,000 or more increased 70 percent.

Similarly, an analysis by the California Budget Project found that after California enacted a 1 percentage point increase in the tax on income over $1 million the number of taxpayers with incomes over $1 million increased — by 37.8 percent from 2004 to 2006.

Yes, some wealthy Oregonians move to Washington, but wealthy people also move into Oregon and many more stay here. Anecdotal stories from people who know wealthy people who move do not make data. And when you look at the data, you see that tax rates don’t matter.

Few issues are more consequential right now than whether the Oregon legislature will vote for a modest — two or three cents per dollar — tax increase on wealthy Oregonians to avoid deeper budget cuts that will inflict greater pain on low- and middle-income Oregonians.

Facts matter, and that debate on raising taxes on the wealthy ought to be guided by solid evidence, not rumor and supposition.

Ocpp_final_1 Chuck Sheketoff is the executive director of the Oregon Center for Public Policy.   You can sign up to receive email notification of OCPP materials at www.ocpp.org

  • (Show?)

    I cannot provide any statistics, but I know several individuals that moved across the river when they were anticipating large capital gains events, like selling a business. Some then moved back to Oregon a few years later.

    In the case of the new tax rate for Oregon there is no one event. I also assume that if the source of income is in Oregon then their taxes apply regardless of where one lives. The only persons that can escape that are people who can take their business with them and then only if most of their business was conducted outside of Oregon. This is not always doable. Very few family owned business today are producers of products or services that are primarily sold outside of Oregon. We can all name some, but that doesn't mean that they constitute a big list statewide.

  • Ned (unverified)

    Comrad Sheketov, No one person should be able to amass a Million dollars in wealth. These excess monies should be returned to the State, returned to the people for the greater good.

    Peace on earth (except bush/chenney who should be eternally burn in Hell and be tortured water boarding ok).

  • Jim S. (unverified)


    How lame. Not even a single argument, just name calling and red-baiting? It's as if all I were to do in this email is call you Ned McCarthy.

    I don't see Chuck arguing against anyone accumulating a million dollars. The argument is that there's no evidence raising their taxes a bit will cause them to flee. Do you have any evidence to the contrary?

  • Jim S. (unverified)

    P.S., Ned

    I'm with you on the bush/cheney bit.

  • Richard (unverified)

    Instead of following every dumb idea that led to California's demise why don't we just annex into California?

  • Ralph (unverified)

    Jim S., It's obvious you don't know the former legal aid attorney. Chuckie was out for anyone who had any money back then and still is.

    I wonder if he still has holes in his shoes and that old pathetic brown brief bag he used to tote around. He was such an angry fellow.

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    Alright. That's enough namecalling. Let's get back to discussing the issues.

  • steve (unverified)

    Two dumb California ideas that should NOT be imported: 1) Electing a numbskull Republican governor, and 2) having a 2/3 requirement to pass tax measures in the legislature.

  • David McDonald (unverified)

    If you think our terrified Legislature is going to raise taxes on the wealthiest Oregonians, you haven't been paying attention to the 2009 session.

  • BOHICA (unverified)

    Eat the rich.

  • Richard (unverified)

    That's perfect steve. California's problems are caused by a Republican Governor and an inability to easily raise taxes?

    That's the attitude than condemns us to follow California into fiscal demise.

    Our foolish numbskull governor and legislature are identical to the California politicians which built their demise.

  • Earthwalker (unverified)

    It seems to me that the overall causation of flight from a state due to taxation is the lack of oversight by the Feds in regulating interstate commerce.

    We hear, all the time about individual states drawing away business and wealth by offering tax breaks, deregulation, etc. It seems to me that this is in direct contradiction to the spirit of Article 1, section 10 of the Constitution. Texas steals away capital by providing incredibly low Capital gains taxes on the wealthy. Conneticut takes the banking industry by deregulating. This is not fair competition.

    If this is the reality that we are dealt, however, then what we need to do is concentrate on Quality of life issues in Oregon, so our lifestyle will the envy of the wealthy. I also believe we need to view services provided by non-Oregonian corporations and their headquarters as susceptible to customs duties that will quell the drain from our commerce. We also need to view Vancouver citizens as direct competitors. No more Mr. Nice Guy, we start enforcing taxcode on those who would try to suck away our taxes and quality of life like parasites.

  • altross (unverified)

    ome more facts...

    New Jersey's state income tax rates are lower than Oregon's. Even with the 'half-millionaire' tax, the tax rate on income over $500K is 8.97%. Tax rates on incomes less than $500K are 6.37% or lower.

    As for the California data, 2004 to 2006 is a very small time window during big years for capital gains. It's difficult for people (especially established people with high incomes) to just pack up and move overnight. It will be more interesting (and relevant) to see what the long-term effects of the tax rate increase (coupled with California's myriad other problems) will be. As other people have noted here, the early returns gleaned from looking at California's state budget problems today aren't so good.

    ...'two or three cents per dollar' on a $1,000,000 is $20,000 to $30,000 a year - minimum... $20K to $30K a year may seem 'modest' to Chuck - but it's enough to get a 'millionaire' thinking.

    It's a relatively easy move from Portland across the river to Washington with little or no long-term impact to people's day-to-day lives. The same cannot be said about moving from Los Angeles, San Diego, or San Francisco to a no state income tax state like Nevada.

    Facts matter, but only properly so when presented/understood in their entire context.

    As for Oregon tax rates... well, best get all you can now because I won't be retiring here.

  • Julie Jenkins (unverified)

    Well, I've never been a "soak the rich" type (maybe eat them), but if it were true that they would leave the state, let's go with the Brits' 50p bracket!

    Ned, aka, Wunderblunder, are you capable of making a straight statement? Five months, more than 50 posts, and not one declarative statement without some puerile attempt at sarcasm. You can tell the Hannity cut and pasters. The combination of 12 year old, male sarcasm and ignorance of the facts is most telling. Go choke on a burger at Carl's Jr. with your pack. At least Richard makes a straight, declarative statement, though knee-jerk and vacuous.

  • Assegai Up Jacksey (unverified)

    And BO writers still care more about every stupid thing the right says, when there are issues on the table that, were an opposition party in power, would be the subject of intense lobbying.

    How about the nationals all around the world, that will disappear as you read this, a victim of extraordinary rendition, approved and ordered by the Obama administration? Without pictures is really doesn't exist, does it? Which is it? Did you elect someone that isn't responsive to the #1 issue of the election, or have you changed to support the current US policy? Why was it evil when Bush did it? It's MORE evil now, because you know better. They're dumb enough to believe some of their own spin.

    Yeah, the missing greed mongers are a pretty dumb story. Did you ever imagine that you would end up writing pieces to distract from brutal human rights abuses? Do the politics as usual, continue to send your kids to Iraq...the Republicrat fusion is nearly complete.

    No matter. The damage Dems have done to their karma in the last 6 months is something I don't think they will ever recover from. "What credit is it to a man to gain the whole world, yet lose his own soul?" Given what's on the table, if this is what inspires you to write, then you are truly lost.

    It's time to take the word "progressive" out of the blog statement and rename it "Blue Hacks". Six months on, it is obvious that this is no longer "talking around the water cooler". It's trying to have a conversation around the water cooler, and a HR rep keeps showing up to make sure the only things discussed are how the competition is dumb and to make sure that internal problems are never addressed. You want to ridicule stupid thinking and failed logic? You can start with Pelosi, Reid, Kulongoski and Adams. You can affect them. Real progressive remember that "if you're not a part of the solution, then you're a part of the problem". Do you honestly think this is part of the solution? How many "guffawing at the right" posts has Carla churned out? Is that really supposed to help, or is it just fun? Look at what your tax dollars are being spent on and you'll see there is nothing fun about political parties and their behavior. Political junkies are no different than any other kind. Well, except having the cheek to tell us that society benefits. Right. Society benefits from crackheads too, I suppose.

  • mp97303 (unverified)


    I would be curious to see what kind of analysis your company could come up with in re the various lists of cities that groups publish. In the last week, US News listed it best states for biz and Washington = #1. Another group named its 10 most economically resilient cites and PDX sure wasn't there. I wonder what these states/cities do differently than we do. Do these lists have an academic merit or are they just fluff. Have you ever explored this?

  • (Show?)

    Altross your math is off. Taxes have marginal rates. A millionaire paying a marginal rate of 11% over 500K would be $10,000 for a millionaire. The first $500k is taxed at the lower rate. And you're confusing people with $1mil in assets, with $1mil in annual income I assure you, someone pulling in a million dollars in state taxable income will not be excessively burdened by a 1% additional assessment.

  • Mike (unverified)

    As I recall CA problem is that voters approve all these initiatives that force the state to enact programs but then they won't pay for them.

    Also prop 13 passed in 1978 shifted the burden of program funding & taxation from local govts to the state; kind of like measure 5 did here.

    Also vothers take away flexibility in budgeting replacing it w/mindless rules; for example a recent law (approved by initiative) states 40% of state funding has to go to K-12. What if 35% is enough depending on the size of the state budget and the needs of K-12? Also the 40% minimum risks becoming a max-legislators can say "ok 40% is going to education that's done."

    Oh and the fact that 27 assemblymen or 14 state senators (1/3 of a legislature's membership +1) can tie up any tax bill due to the 2/3 rule doesn't help.

    The state was also much harder hit by the real-estate bust; the catalyst for the recession and with 30,000,000 + people (more than Canada) it is much harder to govern than say, Idaho.

  • dartagnan (unverified)

    "And you're confusing people with $1mil in assets, with $1mil in annual income"

    Right-wingers are so out of touch they still think somebody with a million dollars is rich.

  • Patrick Story (unverified)


    Never for a minute did I believe the right-wing claim that Maryland millionaires were leaving the state. As a long-time resident of the Washington, D.C. area, I know that Maryland is a millionaire's paradise, with its Chesapeake Bay perfect for yachting, and its horse farms perfect for breeding thoroughbreds.

    Even our millionaire former Senator Gordon Smith maintains an estate there.

    And being right next door to D.C., Maryland is perfect for millionaires and billionaires keeping an eye on their lobbyists busy fighting fair taxation.

    But thanks for providing the numbers--

  • Greg D. (unverified)

    You do not need to look to Maryland to see examples of tax refugees. Check out the folks that populate the million dollar (starting price) homes along the Evergreen Highway, Riverside Drive and Columbia River in Vancouver. We recently attended a fancy cocktail party at a house along the Columbia in the 'Couv and were surprised to meet so many highly paid executive types who work at the "tennis-shoe company" in Beaverton but who live in Vancouver. I suspect they don't live in Vancouver to enjoy the proximity to the Burlington Northern Railroad tracks or the restaurant scene (Olive Garden) but instead they live in Washington to avoid paying Oregon income tax on their investment income (wages are taxed if you earn them in Oregon regardless of where you live). Other folks who own some of the largest businesses in Oregon enjoy their status as official Washington residents, even if they continue to maintain their second homes in the West Hills (wink wink).

    Raising tax rates to maintain critical public services is a good thing, but don't fool yourselves. At some level, and depending on individual circumstances, people will flee to avoid the higher tax rates.

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    That's the attitude than condemns us to follow California into fiscal demise.

    Seems to me that our budget problem is much worse than California's. They've got a $20 billion budget gap to fill - while ours is $3.8 billion.

    But they're roughly ten times our size in population. So, on a per-capita basis, we've got almost twice the budget gap.

    Seems like it's California that's following us into fiscal demise.

  • Not a Little Farmer (unverified)

    Assegai up Jacksey - thanks for that post, well said.

  • (Show?)

    The one common denominator between Oregon and California is that the legislatures in both states are hamstrung by anti-democratic, power-to-the-minority provisions that require more than a simple majority to take certain actions.

  • (Show?)

    "Seems to me that our budget problem is much worse than California's. They've got a $20 billion budget gap to fill - while ours is $3.8 billion.

    But they're roughly ten times our size in population. So, on a per-capita basis, we've got almost twice the budget gap."

    I don't know that per-capita is an effective way to judge. Per-capita in the labor force maybe, or probably better yet, debt as a percentage of state GDP. You need to consider the ability of the respective state to dig itself out in some way. It may come out the same way--Oregon's in worse doo-doo--but I wouldn't accept that prima facie, necessariily.

  • livermore (unverified)

    why is it when folks can't agree with facts they create new "facts" showing something different.

    tell a lie often and long enough and eventually folks believe it to be true.

    i'm just glad i'm not going to be paying higher taxes and that rich folks will since they're all greedy and selfish anyway.

    i wouldn't worry cause we have the most votes.

  • livermore (unverified)

    but i forgot to add, we have to kept getting more benefits to people, paid by rich people, to make sure we keep our majority votes.

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