At a Seattle University forum last month, Mayor Katie Wilson delivered what may go down as the most economically illiterate applause line of the year. Asked about millionaires fleeing Washington over the state’s new 9.9% income tax on earnings above $1 million, the self-described socialist waved her hand and said, to cheers from the crowd, “I think the claims that millionaires are going to leave our state are, like, super overblown. And if — the ones that leave, like, bye.”
Bye. The line drew 4 million views on social media within days. Even Democrats rebuked her: Former state Sen. Reuven Carlyle wrote that Wilson’s enthusiasm for “destructive anti-business rhetoric is harmful to jobs, taxes and quality of life.” Members of her own party said so publicly.
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Wilson’s quip was not an outlier. It was the soundtrack to a much larger game playing out in blue state capitals from Sacramento to Albany to Springfield. Politicians raise taxes on the productive, and the productive respond by relocating with their capital.
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The people left standing — teachers, nurses, small-business owners, working families — get stuck with higher property taxes, crumbling services, and the bill for all the empty chairs. I have witnessed this in California for the past 36 years. When I arrived, the mood was upbeat, the economy was thriving, and the traffic was merely bad rather than catastrophic. Single-party rule and progressive taxation changed most of that. The music is still playing, but the chairs are disappearing fast.
California’s proposed 5% one-time wealth tax targeting billionaires illustrates the dynamic in advance. Proponents promised $100 billion over five years. By the January residency cutoff, at least six billionaires, including Larry Page, Sergey Brin, and Peter Thiel, had departed, taking an estimated $536 billion in wealth with them. Hoover Institution researchers now project the measure will net closer to $40 billion, and the net present value is negative once foregone income-tax revenue is counted. The Atlases shrugged.
IRS data show New York shed 74,482 net tax filers in 2022-23 and $111 billion in cumulative net adjusted gross income over the past decade. Gov. Kathy Hochul (D-NY) tried a different approach in March, calling remaining millionaires “patriotic” while asking them to recruit wealthy taxpayers back from Palm Beach, Florida. She conceded that Wall Street is moving to Texas “because of the tax rate,” then declined to cut rates. Illinois shed 55,609 net residents and $6 billion in AGI in 2023 alone, leading the nation in the rate of income loss. A state millionaire surtax this spring failed to reach the ballot. The income losses continue either way.
Progressives wave this away as “overblown” or argue that the rich can simply “afford it.” Both arguments collapse under dynamic scoring. When a state drives away the people who create jobs, pay the highest income taxes, and fund the services everyone uses, it does not soak the rich — it soaks the middle class and the poor who are dependent on the tax base that just left. Capital follows the path of least resistance. Governments that forget this learn it the hard way, one departing Learjet at a time. In Washington, the lesson arrived early: Fisher Investments moved to Texas, Starbucks announced a $100 million expansion into Nashville, Tennessee, and Microsoft president Brad Smith warned he was “more worried about the business climate in Washington than at any point over the last 30 years.” Wilson waved “bye.”
The fix is not complicated. Lower rates on work and investment grow the base rather than shrink it. Spending discipline comes before rate hikes. And voters in these states need to hold politicians accountable, starting with those who wave goodbye to the tax base and rebrand it as progressive governance.
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Blue-state leaders have spent years yelling at the scoreboard of wealth while ignoring the fundamentals of economic reality. The music in this game of musical chairs is winding down. When it stops, the question will not be who left. It will be who is left holding the bag.
And it will not be the folks who already said “bye.”
Jay Rogers is a financial professional with more than 30 years of experience in private equity, private credit, hedge funds, and wealth management.
