How money walks - Lucas County and Ohio both lose billions

We all know that people will flee high-tax areas and relocate to low-tax areas, a fact that too many politicians ignore. But the same applies to counties and cities and now we know how much.

"How Money Walks," by Travis Brown, takes a look at data from the Internal Revenue Service and then examines how wealth and people move between states. His website maps the data with numbers. The correlation is clear, he says: the key to accumulating wealth in your state is to have a pro-growth tax policy that does not tax personal income.

Nationally, Ohio fairs poorly.

The state lost $18.39 billion in annual Adjusted Gross Income from 1992-2010.

To be fair, we did gain income from some states:

• $323.51 million New York
• $218.36 million West Virginia
• $205.12 million New Jersey
• $112.16 million Pennsylvania
• $15.20 million Connecticut

But here is who we lost to - and how much:

• $6.46 billion Florida
• $1.51 billion North Carolina
• $1.18 billion South Carolina
• $1.16 billion Texas
• $1.09 billion Arizona

In Lucas County, as in all the other large metropolitan areas, the story is the same:

Lucas County lost $1.82 billion in AGI. Here is where we lost to - and gained from:

Gained Wealth From:

• $8.27 million Allen County, OH
• $5.95 million Erie County, OH
• $5.25 million Lorain County, OH
• $5.08 million Seneca County, OH
• $4.86 million Trumbull County, OH

Lost Wealth To:

• $219.39 million Wood County, OH
• $204.14 million Monroe County, MI
• $100.26 million Franklin County, OH
• $60.18 million Fulton County, OH
• $42.49 million Lee County, FL

In both the state and county data, you can see that we're losing far, far more than we're gaining.

There are lessons here, especially in light of Toledo's income tax - but is anyone paying attention?

Filling in on WSPD

I probably won't do much posting today or tomorrow as I research various topics for filling in for Brian Wilson on WSPD tomorrow from 3-6 p.m. I hope you'll tune in on AM 1370 or online and be part of the conversation.

In the meantime, here are a couple of items for your to read on your own:

Denmark's new fat tax

First Lady Michelle Obama's trip to Target was staged - perhaps because of the criticism she received for wearing $42,000 worth of diamonds on her wrist - and rather than be skeptical of the timing and the action, the liberal media swooned! No bias there.

And, in case you missed it, BET's Robert Johnson tells Pres. Obama to stop attacking the wealthy.

"Well, I think the president has to recalibrate his message. You don't get people to like you by attacking them or demeaning their success. You know, I grew up in a family of 10 kids, first one to go to college, and I've earned my success. I've earned my right to fly private if I choose to do so.

"And by attacking me it is not going to convince me that I should take a bigger hit because I happen to be wealthy. You know, it is the old -- I think Ted and Fred and I we both sort of take the old Ethel Merman approach to life. I've tried poor and I tried rich and I like rich better. It doesn't mean that I am a bad guy."

A new tax on stock trades being pushed by unions

The Hill has the story about the AFL-CIO and some Democrats pushing for a new tax on every stock transaction.

It would *only* be about a tenth of a percent, so, they claim, most small and medium-sized investors wouldn't really notice it. (Beware when someone says a tax is *only* ...) It would, however, significantly cut into the profits of large firms like Goldman Sachs, the article points out.

“It would have two benefits, raise a lot of revenue and discourage speculative financial activity,” said Thea Lee, policy director at the AFL-CIO.

“The big disadvantage of most taxes is that they discourage some really productive activity,” she said. “This would discourage numerous financial transactions. People flip their assets several times in an hour or a day. They make money but does it really add to the productive base of the United States?”

I cannot believe this! At a time when the economy is in decline (still), this would discourage people from buying stocks. It they don't buy stocks, they don't become investors. If there are no investors, there are no investments. Without investments, there are no capital expenditures or expansions. If businesses don't grow, they fail.

Do 'they' not understand basic economics? Obviously not.

And now the AFL-CIO gets to determine what actions "add to the productive base" of our nation? Incredible! Unsustainable union demands are what contributed to the decline of the automotive industry and the layoffs of thousands - how's that for contributing to the productive base????

The AFL-CIO and some allied Democrats would like to cut down on the overall level of trading, or at least give the U.S. government a piece of the action, which would likely tamp down trading.

There's the point - they want more money for the government, which obviously means more spending on union priorities. Take money away from the citizens in order to spend it on pork projects or in meeting the demands of the union. Of course!

But that's not the only thing. According to the article, liberals are mad at Goldman Sachs:

Democrats and labor officials would also like to take a bite out of Goldman’s profits. Liberals are angry the company, which immersed itself in the frenzy of speculation leading to last year’s financial collapse, is now making huge profits after accepting (and repaying) $10 billion in government aid. Goldman employees are on track to earn an average of more than $700,000 this year.

Now we're getting to the heart of the matter. The company accepted and repaid government aid. As a result, the government can't tell them what to do anymore, since it no longer has the hammer of the bailout to hold over their heads. And now, the employees are going to - wait for it - earn money!!!!

We can't possible have people making huge amounts of money - they must suffer! But how to make them suffer for the sin of earning a lot of money? Tax them in such a way as to discourage their ability to earn.

And this is what is passing for government policy? Whatever happened to government protecting our rights and our liberties and our private property? Whatever happened to being happy that others can make a good living and earn money? How did we get to the point of such class envy that we use government to steal from those who "have" to give to others with the end goal of buying votes and ensuring re-election so the process can continue?

How did we get to the point that we demonize wealth instead of celebrate the accomplishments of the individuals who attain it - and thus are able to fund so many charitable, artistic and philanthropic acts?

AFL-CIO president John Sweeney said, following the election of Barack Obama as president:

"We have taken the first crucial steps to build a better future for our children and grandchildren. And what we've seen – the stunning voter participation and the common call for change – is an indication of the history we can continue to make together.
...
The election is just step one in delivering the change we need."

The article further states that one of the priorities for the unions is "regulating Wall Street."

So that's what they're trying to do. But in trying to get even with a company they don't like, and raise money to fund their goals of socialized health care, they are supporting a bill that will tax everyone - and will be especially hard on the average investor like many of their union members.

Most individuals have their pensions invested in retirement accounts and mutual funds that make such investments. As individuals age they make changes in their accounts and this bill will tax them every time. But don't worry, it's *only*...

The bigger problem with this idea is that the tax will discourage the overall market. If people are taxed based upon how many times they buy or sell a stock, it will reduce the number transactions, which will have a global impact. If you have the option of purchasing a stock in America or in Japan, but America charges you a tax for each purchase, would you be more likely to invest in the Nikkei, instead? People invest to make money so why would they willingly forgo a portion of their hoped-for profits simply because some union thinks they're more 'entitled' to the earnings than they are?

This needs to be stopped. Not just because it's bad for the nation and bad for Americans (it is!), but because unions (and other special interest groups) should not be able to have the laws written to benefit their own narrow interests (like the bailout of their union health care and mismanaged pensions), especially at the expense of the American tax payer.

Why do we demonize wealth?

In response to a blog post and a similar article in the Toledo Free Press about levy fatigue, a friend sent me an email that nicely joined together several factors impacting Toledo.

For background, she refers to several items in the news:

*The Blade published an article lamenting the loss of area executives.

*There was the announcement of low interest loans to encourage those who can't afford to purchase art to do so (see articles here and here).

*COSI is asking for another levy for operational funds - after their request last year failed.

She wrote:

"If we have truly lost the upper middle to upper levels of wealth in this area we are probably finished. These are the people who underwrite art and music and culture to which the less affluent get access usually at no cost. They are the ones who need a place to network to generate the deals that make a city/region work both literally and figuratively.

Without this layer of people we are reduced to asking poor people to go into debt to support art. We have to get excited about the numbers of people in poverty because there is money to hand out rather than jobs. We put the burden of keeping non-profits operational on the backs of low wage earners through levies rather than the fundraising efforts of people who do not have to worry about the price of gas.

I think the loss of labor jobs is regrettable but the previously unnoticed loss of management jobs is far worse because the ripples are farther reaching. When will Toledo/Lucas County get over its hypocritical view of wealth and the wealthy who really are the answer to many of our area's problems?"

And I think that she's raised a very valid point - that we discourage or penalize those who attain wealth. We tax them, we take from them to give to others, we call their companies 'evil corporations,' we criticize them when they spend their own money on themselves, we blame them for excessiveness - especially when it appears that they contribute to 'global warming' ... But you'd be hard pressed to find anyone who'd say they don't want more money than they have right now.

It used to be that the American Dream was to rely upon oneself to achieve whatever goal one set. We used to admire those who achieved wealth by working hard, creating something new or even playing the stock market well.

But today, class envy has become the norm. The normal response to someone who has wealth is to say they got it at someone else's expense. Many politicians and opinion-makers promote the idea of a limited pie - that if someone has wealth, it's because some else doesn't. They look for more ways to 'tax the wealthy' to provide benefits for the 'poor.' And they promise such programs in exchange for votes, relying upon income from those they claim shouldn't have wealth in the first place.

Locally, we subsidize the creation of market rate housing...but many who'd be able to afford such housing are not the ones buying memberships to country clubs, becoming patrons of the arts or sponsoring major initiatives of non-profits. Can you imagine the outcry if local leaders said they were going to subsidize the creation of luxury housing - perhaps in the planned Marina District - in order to attract those with enough disposable income to generously contribute to the economic revitalization of the downtown area?

We say we want a knowledge-based economy, but we demonize those who would lead such an economy. We say we want good jobs, but make it nearly impossible, cost-wise, for job-providers to locate here. And heaven forbid if such job-providers happen to be non-union... We say we want to encourage success, but then tax and criticize those who succeed.

We can't have it both ways - and I'm reminded of the "10 Cannots" by Rev. William J. H. Boetcker, 1916:

* You cannot strengthen the weak by weakening the strong.
* You cannot help small men by tearing down big men.
* You cannot help the poor by destroying the rich.
* You cannot lift the wage earner by pulling down the wage payer.
* You cannot keep out of trouble by spending more than your income.
* You cannot further the brotherhood of man by inciting class hatreds.
* You cannot establish security on borrowed money.
* You cannot bring about prosperity by discouraging thrift.
* You cannot build character and courage by taking away a man's initiative and independence.
* You cannot help men permanently by doing for them what they could and should do for themselves.

Would Toledo be better if we had more "wealthy" people? Would our community and economy benefit by such a population? You decide.