Inflation is having an effect on everything, even policy analysis.
Back in 2013, I wrote that Phil Mickelson was “California’s One-Man Laffer Curve” because he wanted to escape the Golden State to save about $1.2 million per year in taxes.
But now, when a goose that lays golden eggs wants to escape, the numbers are much bigger.
How much bigger?
According to this story by CNBC, Jeff Bezos saved more than $600 million by moving from Seattle to Miami. That’s the steroid-fueled version of a one-man Laffer Curve.
Here are some excerpts from the report, which was authored by Robert Frank.
Jeff Bezos’ $2 billion stock sale last week came with an added perk: no state taxes. Last year, Bezos announced on Instagram that he was leaving Seattle after nearly 30 years to move to Miami. He said the move was to be closer to his parents and his rocket launches at Blue Origin. The timing also suggested another reason: taxes.
In 2022 Washington state imposed a new, 7% capital gains tax on sales of stocks or bonds of more than $250,000. Washington state doesn’t have a personal income tax, so the new levy marked the first time Bezos would face state taxes on his stock sales. …In 2022, when the tax took effect, Bezos stopped selling. He didn’t sell any Amazon stock in 2022 or 2023…
After his move to Miami, Bezos made up for lost time. Last week, a filing with the SEC revealed that Bezos launched a pre-scheduled stock-selling plan to unload 50 million shares before Jan. 31, 2025. At today’s price, that would total more than $8.7 billion. Florida has no state income tax or a tax on capital gains. So on the $2 billion sale last week, he saved $140 million that he would have paid to Washington state.
On the entire sale of 50 million shares over the next year, he will save at least $610 million. …he’s more than paid for his 417-foot yacht, Koru, with just his Florida tax savings.
I have two reactions to this report, one analytical and one visceral.
- My analytical reaction is that this story is good news because it keeps money in the private sector where it will be used more productively and also because it sends a powerful signal to the proponents of a state suicide pact that it is foolish to overtax people who can easily move.
- My visceral reaction is to cheer that the greedy politicians in the state of Washington wound up with an exploding cigar rather then several hundred million dollars that they could use to buy votes. For what it’s worth, I expect more rich people follow in Bezos’ footsteps.
P.S. I wonder about the revenue implications of the state capital gains tax in Washington. Notwithstanding Bezos moving out, I’m sure there will be some revenue collected from this misguided levy. But that doesn’t mean the tax will be a net plus for politicians. You also need to consider that the exodus of successful taxpayers will lead to less revenue from sales taxes, property taxes, and other levies.
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