All Tax Policy Leads To Complaints

This story, admittedly apocryphal, makes an interesting point. We are envious of each other, and that sometimes produces chaotic policy. The link is here.

There is a real-world flaw in the story, but while crucial in the real world, it has no effect on the meaning of what you can read. The flaw – the cost of governing never falls, so there is never a tax reduction similar to the one in the story.

The story is this:

I wonder two things:

  1. Have the leaders in high tax states like New York, New Jersey, and California taken to counting the dollars lost when people move to a lower tax state like Texas, Tennessee, or Florida? I know of one who moved from New York to Florida and saved income tax of $5,000,000  per year.
  2. Politicians seem to have lost track of the fact that incentives and disincentives guide behaviour. In the short run, wedge issues can work, but in the long run, they won’t.

The people need to become smarter because politicians do not need to do so. The current system works for them as it is. As long as they have the wealth versus poverty wedge, they can do things that benefit themselves alone. Political advantage versus good governance is a trap for the rest of us.

I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning. I have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Business Development Bank.

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