TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, August 26, 2011

State-by-State Growth of High-Income ($200k/Year) Taxpayers

Tax Foundation, Growth of High-Income Taxpayers:

These data show percentage growth of taxpayers earning over $200,000, minus the percentage growth of all taxpayers, over the decade-long period from 1999 to 2009. The $200,000 threshold is in nominal dollars, so all states will have had considerable growth, but the differences between the states demonstrate that certain states have had much stronger increases in wealthy taxpayers than others.


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Keeping the threshold in nominal dollars makes this result worthless. The income distribution in real dollars for each state might have stayed the same or even moved opposite the incorrectly inferred direction.

For example, imagine a state in which everyone earned $199k in 1999 and $201k in 2009. Their income increased much less than inflation. Now imagine all the other states had the same normal distribution of income, with incomes keeping up with inflation. The one state that lost ground relative to the other states would be characterized as getting rich faster, when the opposite was actually the case. An accurate study must control for the starting distribution or it must account for inflation. Otherwise, it's garbage in, garbage out.

Posted by: AMTbuff | Aug 26, 2011 1:04:19 PM

AMTbuff: This is all the IRS gives. They set the threshold at $200,000 and keep it there every year.

Posted by: AZ | Aug 26, 2011 8:41:56 PM

AMTbuff may have a point. I thought the point of the graph, based on the only statistics that seem to be available, is to demonstrate growth. It may be that AMTbuff is correct about one or two states but the overall effect demonstrates a movement of high income people.

It would be interesting to know what accounted for Alaska's 122% increase.

Posted by: Bob Guzzardi | Aug 27, 2011 6:43:33 AM

Florida's lack of an income tax doesn't seem to have enticed too many seniors to vote with their feet. Likewise, Maryland's and Viginia's income taxes don't seem to have caused an exodus. This is why ATMbuff doesn't like the data.

Posted by: Publius Novus | Aug 29, 2011 7:35:28 AM