If We Tax the Rich, They’ll Leave D.C.

Blah, blah, blah. This came across the Twitterz:

Yes, if wealthy people see their marginal income tax rate increase by a few percentage points, Sheridan-Kalorama, Foxhall, and Dupont Circle will become boarded-up wastelands where nobody lives anymore.

If you read that sentence aloud, you’ll realize how absurd that proposition is.

One of the few upsides–perhaps the only upside–of not having enough urban housing (at least, that’s what Madam Market Signal seems to be telling us)–is that there won’t be a shortage of people, even well-heeled people, who want to live in cities.

What might happen is housing and rental prices (and perhaps business rents too) would decline in real terms. This is a good thing! Yes, the property tax base might decrease, but people also would be spending less of their incomes on housing. And frankly, I don’t think that’s going to happen–wealthy people will move in regardless.

People left D.C. in the 1970s and 1980s not because of higher taxes, but because of concerns over schools and crime. Dealing with those problems costs money.

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4 Responses to If We Tax the Rich, They’ll Leave D.C.

  1. adameran says:

    I’m not sure you linked to it, but “How Public Housing was Destined to Fail” is certainly worth a look.

    Also: realestate4ransom.com

    In any case, asset price appreciation (the perception of wealth) certainly has priority now, rather than genuine productivity (actual wealth). Alfred North Whitehead calls this the “fallacy of misplaced concreteness.” It’s like going to a restaurant and devouring the paper menu rather than the food. The Bible calls this “idolatry,” so its a longstanding human issue.

  2. kaleberg says:

    After 9/11, Mayor Bloomberg raised taxes in NYC and pointed out just that, the rich aren’t going to leave the city over a tax increase. He sure didn’t.

  3. People left DC in the 1950’s and 1960’s, gentrification started in the 1970’s.

  4. Pingback: OH NOES! A Tiny Tax Hike on People Who Earn $1 Million Annually | Mike the Mad Biologist

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