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Tax the rich

Sam Pizzigati
Thursday, Feb 29, 2024

Home sweet home. For Jeff Bezos, one of our planet’s three richest human beings, the state of Washington neatly fit that description for nearly 30 years. But then this past November Bezos suddenly announced he was moving to Miami.

Why the move? In an Instagram posting, Bezos explained that he wanted to be closer to his dear parents in Florida and the Cape Canaveral operations of his corporate aerospace hobby.

Left unmentioned: His once-beloved state of Washington, a state notorious for going easy on its richest residents at tax time, has put in place a new 7 percent tax on long-term capital gains in excess of $250,000. By relocating to Florida, a state with no state income tax or levy on capital gains, Bezos stands to save what Time describes as “hundreds of millions of dollars in taxes.”

Actually, make that billions of dollars in tax savings.

Just before Washington’s new tax went into effect in 2022, Florida journalist Jennifer Torres notes, Bezos “sold about $15.7 billion worth of Amazon stock – sidestepping approximately $1.1 billion in taxes from stock sales that would have been due under the new capital gains tax.”

Last week, with the new tax fully in effect, the newly Miami-based Bezos finished unloading – over the course of just nine trading days – another 50 million Amazon shares, saving, notes CNBC’s Robert Frank, at least another $610 million.

Those savings will be multiplying rapidly in the years ahead now that Bezos has resumed his annual Amazon stock-trading pattern. Beginning in 1998, Frank notes, Bezos “sold billions of dollars worth of shares almost every year for more than two decades.”

But the Bezos move to Miami doesn’t just save the Amazon executive chairman big bucks in taxes. His exit out of Seattle gives our nation’s most avid apologists for grand fortune what they see as more “evidence” that any moves to raise taxes on our richest will always backfire.

Jurisdictions that tax the rich, the standard conservative mantra goes, will always wind up watching their richest flee to jurisdictions that sensibly refuse to “soak the rich.” The over $600 million that Bezos has just saved in taxes on his most recent stock trades, Heritage Foundation “distinguished fellow” Stephen Moore exulted on social media last week, “further confirms the impact of taxes on relocation decisions!”

But right-wing harrumphing about the foolishness of raising taxes on the rich, note analysts who actually bother to study tax data, rests on a relative handful of high-profile anecdotes – like the Bezos windfall – that profoundly distort the actual tax-the-rich story.

So points out sociologist Cristobal Young in his 2017 book, The Myth of Millionaire Tax Flight: How Place Still Matters for the Rich. The view that the “freedom of movement” our richest enjoy will always undercut any move to raise more tax revenue from the rich, Young notes, “has become increasingly prominent in public debates over taxes, especially at the state level.” But that view, he posits, in no way reflects the “actual evidence.”

“Migration overwhelmingly occurs when people are establishing their careers,” the Cornell University-based Young notes. “People almost never move when they are at the advanced career stage.”

The prime reason our awesomely affluent stay put? The wealthiest among us have oodles of “business and social contacts that make them prominent, well-connected insiders where they live.”

The numbers back up Young’s case. His research draws on data “from the tax returns of every million-dollar income earner in every US state over thirteen years,” some 45 million tax records in all.

Excerpted: ‘Do High Taxes on the Rich Make Any Sense?’. Courtesy: Counterpunch.org