January 29, 2013

Capital has legs part 2

As I was saying the other day, capital flight is a reality. Technology only accelerates that reality:

Taxpayers Go Where Taxes Are Low: "Contiguous with the Empire State, Connecticut still is smarting over the relocation of hedge-fund manager Edward Lampert. With an estimated net worth of $3 billion, according to Forbes, Lampert was considered the fifth-wealthiest man in the Nutmeg State. In August 2011, Connecticut increased taxes by $875 million, retroactively to that January. It cut the maximum property-tax credit from $500 to $300 and lifted its top state income-tax rate from 6.5 percent to 6.7 percent. Then, on June 1, 2012, Lampert moved his company, ESL Investments, to Florida. Lampert also took with him the $10.6 billion that ESL reportedly controlled at that time.

“We are all aware that the changes to the tax structure in Connecticut last year have given many people pause as to whether this is the best place to do business and reside,” Greenwich first selectman Peter Tesei told the Hartford Courant. “I am concerned about the departure of Mr. Lampert and his firm, and would ask the state of Connecticut to take another look at its policies.”"

That is just one guy. Not a small one either. He's denying them of tens of millions in tax dollars. How long will this go on? How long can it continue?

The piece also mentions Rush Limbaugh fleeing New York for Florida. That's another thing that would have been impossible a few years ago. He would have needed the huge antennas in New York to reach his audience. Now all the stations are networked and the feed can come from anywhere. Rush could have moved literally anywhere on the planet and continued.

Unfortunately, Connecticut and New York seem to be the types that have to learn the hard way. As technology makes these moves easier the blue state model will collapse under its own weight. Slowly at first, and then very quickly.

Posted by Duffy at January 29, 2013 03:44 PM | TrackBack

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