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Income Tax Quashed, Ballmer To Cash In Billions
theodp writes "Washington's proposed state income tax not only prompted Microsoft CEO Steve Ballmer to spend $425,000 of his own money to help crush the measure at the polls, it also inspired Microsoft to launch a FUD campaign aimed at torpedoing the initiative. 'As an employer, we're concerned that I-1098 will make it harder to attract talent and create additional jobs in Washington state,' explained Microsoft general counsel Brad Smith. 'We strongly support public education, but we're concerned by key details in I-1098. This initiative would give Washington one of the top five highest state income tax rates in the country. I-1098 would apply this tax rate to all income, including capital gains and dividends, and would not permit any deductions for charitable contributions.' Nice to see a company take a principled stand, backed by a CEO who's not afraid to put his money where his company's mouth is, right? Well, maybe not. Just three days after the measure went down in flames, Ballmer said in a statement that he plans to sell up to 75 million of his Microsoft shares by the end of the year to 'gain financial diversification and to assist in tax planning.' Based on Friday's closing price of $26.85, the 75M shares would be valued at approximately $2 billion. All of which might make a cynic question what was really important to Microsoft — public education, or a $2B state income tax-free payday for its CEO?"
I live in Wisconsin too, and my house is worth more than double that and my property tax is $6500 a year. My state income tax doesn't come anywhere near my federal income tax. Even the example property tax bill on the Wisconsin Department of Revenue FAQ site shows a $367,000 home/property paying $5741. http://www.revenue.wi.gov/faqs/index-pt.html State sales tax is 5%, and some counties tack on another .5%. Highest counties in the state tack on .6% for a maximum sales tax of 5.6%.
http://www.revenue.wi.gov/faqs/pcs/taxrates.html#txrate2
So yeah, I'm guessing you are exaggerating a wee bit.
Correct me if I'm wrong but doesn't California have a state income tax as well as the highest sales tax and yet it still manages to a magnet for high tech companies. Even Microsoft has offices in Silicon Valley which, to me seems a bit unnecessary especially if high taxes are so detrimental to businesses.
There are a bunch of arguments for why the rich should pay more (not just dollar wise but percentage wise).
Off the top of my head:
1. They can afford to. It costs $X to run the government and lowering the burden on the poor by increasing that on the rich is considered a reasonable thing to do by many people (not you obviously).
2. They use more government resources and hence it's fair they pay more. The military provides more benefit to the rich - they lose more if the Russians invade and confiscate all the property. The legal system provides greater protection (in terms of the value protected) for their property.
3. The marginal propensity to consume falls as income rises. If you think the economy is demand driven then taking more money from the rich and less from the poor will be better for the economy.
4. Income exhibits diminishing marginal returns in terms of utility (a person earning $100,000/year gets less utility from an extra $1000 than a person earning $25,000/year does). Hence taxing the rich at higher rates than the poor will result in higher total utility than a flat percentage system.