Feed the Kids, Tax the Rich

Massachusetts has passed a new tax designed to provide all public school students with free breakfasts and lunches, regardless of their need. It’s a 4% income tax that is projected to generate $1 billion a year. Staying with the current political liberal zeitgeist, it won’t be a burden to 99.9% of the electorate because it will be levied solely on taxpayers making $1 million or more per year.

Will it work? On paper, it certainly seems like it will since it affects such a tiny part of the taxpaying population (0.1%). But what if it drives some of the state’s super-wealthy (and their companies and a portion of the employees of those companies) away from Massachusetts and down to a much less expensive state like income-tax-free Florida, taking with them the tens of billions of dollars they have been putting into the economy of Massachusetts.

Generally speaking, the wealthiest 1% of the taxpayers in the US contribute about 60% of the federal and state tax revenues. For Massachusetts, that means about $36 billion of the state’s +/- $60 billion yearly budget. How smart would the new tax seem then? Think about it. You don’t need a lot of taxpayers to leave before this great idea results in a drastic net loss.

I’ve got my guess. What’s yours? Read this.