10-27-2009 by dan
First, a link to an article that is used as a conservative’s example of high tax rates driving away the very tax base they are relying on:
http://www.nypost.com/p/news/local/tax_refugees_staging_escape_from_qb4pItQ71UXIc0i6cd3UpK
I have a slightly different read on that, though. Notice that the peak of exodus happened in 2005, around the peak of the housing bubble. I think it is entirely possible that this “exodus” was more a function of financially literate folks “realizing” their real estate gains by selling the house and moving to a cheaper neighborhood. You could probably read that as dodging taxes, but I think that the more primal motivator here is realizing the massive gain in home equity.
Second, a link to an article on the NYT about Hank Greenberg starting up AIG2:
http://www.nytimes.com/2009/10/27/business/27aig.html
This seems really douchey on the surface. He’s clearly plundering a company that is down for the count, possibly even from his own failures as a CEO (it is possible that when he left AIG initially there was no contingency plan in existence, and most of the operational knowledge was in his head). The worst part is that it isn’t AIG that will lose business to AIG2, it’s the taxpayers that bailed the crap company out.
On the other hand, this seems to be a very strong argument against propping up “too big to fail companies” like AIG. This is definitely an unintended consequence of bailouts and executive pay caps. I like to think that the tax payers would have had a better chance at getting repaid if the government had just nationalized AIG, broken it up, and been done with it.
