Voters in blue states who went solidly for President Obama’s re-election are ironically those who will suffer the most from the tax-the-rich policy promoted by Obama.
“With their enthusiastic backing of President Obama and the Democratic Party on Election Day, the bluest parts of America may have embraced a program utterly at odds with their economic self-interest,” observes Joel Kotkin, executive editor of NewGeography.com.
“The almost uniform support of blue states’ congressional representatives for the administration’s campaign for tax ‘fairness’ represents a kind of bizarre economic suicide pact.”
Raising taxes on the so-called rich — defined as households making over $250,000 a year — will have the strongest impact on blue states that depend largely on the earnings of high-income professionals including doctors and lawyers, entrepreneurs, and technical workers, he points out. The states and metropolitan areas that have the highest concentration of these people are overwhelmingly in the bluest states.
But the higher taxes will have far less effect on the truly wealthy Obama purports to target, who derive most of their income from capital gains and have access to offshore tax dodges.
The 10 states with the largest percentage of “rich” households under the Obama policy include New York, California, New Jersey, Connecticut, Maryland, Massachusetts, plus Washington, D.C. All of them are true-blue bastions, yet they would benefit the most from an extension of all the Bush-era tax cuts.
Moves to curb mortgage-interest deductions for affluent households would also fall most heavily on blue states, where home prices are highest and residents carry the largest mortgages on average, according to Kotkin, who also is a presidential fellow in urban futures at Chapman University and author of the book “The Next Hundred Million: America in 2050.”
Singling out “rich” taxpayers could also reduce their discretionary spending, which drives employment for lower-income workers.
Kotkin’s NewGeography article — which originally appeared in Forbes magazine — also notes that being “rich” means different things in different places. A couple with two children and a $150,000 annual income in a city in red state Texas is far “richer” in terms of housing and personal consumption than a couple earning $300,000 in blue New York City or Los Angeles.
Kotkin adds: “Perhaps the greatest irony in all this is that the Republicans, largely detested in the deep-blue bastions, are the ones most likely to fall on their swords to maintain lower rates for the mass affluent class in the bluest states and metros.”