by Max Brantley
I'm throwing it out early.
Tax deadbeat Ed Garner praised Mike Masterson's column today as proving his point of the need for his proposed capital gains tax cut for the wealthy. It did not. It only illustrated the economic ignorance of the people pushing this soak the poor scheme. The story was that an Arkansas guy got rich when his bank was bought by an out-of-state company. He moved to a state with no capital gains tax to avoid the marginal 3 percent tax lick (4.6 state capital gains tax rate minus the value of the federal income tax deduction) he'd have had to pay on his millions. Did he invest that capital in a new business in another state? Did the purchase of a company built here create any added value (probably fewer branches and bank officers, if the empty Bank of America tower downtown with a trust department in St. Louis is any guide)? There's a long list of Arkansas millionaires who fled to tax-free states to cash in on sale of Arkansas companies and who then moved back to lives of luxury on those millions in lower-cost Arkansas. The tax fugitives created no economic development here nor there, except, as I've said before, for their platoons of yard men, house servants, butlers, etc.
Buying stock in Arkansas — or starting a company in Arkansas — is not a guarantee of an increase in the value of the capital invested, as the Garners and Mastersons seem to believe. Thus, a future 3 percent marginal increase in that hoped-for profit isn't much of a lure for capital investment. What draws capital investment are educated workers, raw materials, proximity to market and a welcoming climate (tax policy, since few corporations pay much anyway, is of only marginal importance). What makes a good climate? Good schools; handsome, livable cities; sound infrastructure; cultural offerings, and a responsive government (hard to maintain when it's cash starved). Those who think we'll prosper by making the rich richer at the expense of everything and everyone else need some schooling. You could look no farther than the business success story of Rep. Ed Garner, who's dodged required state tax payments any number of times. What did it do for him?