The fastest growing states in the United States are ones with no income tax. Compare the growth of the nine states without an income tax to the nine states with the highest rates and it’s no surprise the former out grow the latter by leaps and bounds. Businesses and the wealthy are leaving the tax burdens behind to find real hope and change in business friendly climates.

Change in behavior occurs when government policy dictates how much businesses and individuals will pay in taxes, forcing people to make choices and the survival of the fittest and smartest dictates who will move and success versus who will stay and die a financial death.

Two of America’s richest people, Bill Gates and Warren Buffett hold their wealth in tax free non-taxed forms of unrealized capital gains. Incentives matter and when government pays people to not work they choose not to work. When government backs off, lowers taxes and frees money up for investment people go back to work, businesses grow and create climates of prosperity.

According to a 2004 U.S. Treasury report:

“High income taxpayers accelerated the receipt of wages and year-end bonuses from 1993 to 1992—over $15 billion—in order to avoid the effects of the anticipated increase in the top rate from 31% to 39.6%. At the end of 1993, taxpayers shifted wages and bonuses yet again to avoid the increase in Medicare taxes that went into effect beginning 1994.”

Put away your party horns, cancel that trip to Times Square or Las Vegas to bring in the new year of 2011 because the George W. Bush tax cuts are going to end. Fasten your financial seat belt because federal, state and local tax rates are scheduled to rise quite sharply simply by allowing former tax cuts to end, therefore, causing taxes to rise. Don’t be fooled by the deceitful Barack Obama, everyone earning money will get a sharp tax increase across the board and they won’t see it coming until they receive that first paycheck and it’s substantially less in the net income column.

There is a “sunset” provision in the Bush tax cuts which cause them to expire when Congress and the Marxist regime in the White House allow this to happen. It won’t be pretty:

1. Highest federal personal income tax rate will go 39.6% from 35%;
2. Highest federal dividend tax rate go up to 39.6% from 15%;
3. Capital gains tax rate to 20% from 15%;
4. Estate tax rates go up to 55% from zero.

Many  other changes will also occur as a result of the sunset provision in the Bush tax cuts. Even before the sunset provision takes effect the Obama regime has been very busy quietly raising taxes in many forms.

1. Tax rates have been and will be raised again on income earned from off-shore investments;
2. Payroll taxes are already scheduled to rise in 2013;
3. Alternative Minimum Tax (AMT) will be drilling deeper into middle-income taxpayers income;
4. Taxes will increase on Cadillac health care plans;
5. State and local tax rates are also going up in 2011 as they did in 2010.

You say those taxes don’t affect me, I’m not wealthy, I’m not rich, I’m middle-class or below and those evil rich folks need to pay their fair share. Have you ever heard of the “trickle-down” process of unintended consequences? Get ready to bend over.

When people realize that the tax man cometh and his wheelbarrow is bigger than ever before they start planning ahead. You see, smart business owners and those evil rich people don’t like giving up what they worked so hard to build. You see, even those evil rich people have homes, cars and families. Those evil rich business owners who create jobs need money to sustain their business, reinvest to grow, keep jobs and create new ones. Otherwise, unemployment enters the picture and businesses shutter the windows and close the doors.

It’s very simple to figure this out and you don’t need an MBA in economics and financial management to understand that when taxes go up, income goes down. Currently some geniuses are saying we’re in the midst of an economic recovery while unemployment is 9.7-percent and closer to 17-percent when people who have left the job market are factored in.

Barack Obama is no Ronald Reagan, but if your fairly intelligent you already figured that part out.

Conservative economist Arthur Laffer writes:

In 1981, Ronald Reagan—with bipartisan support—began the first phase in a series of tax cuts passed under the Economic Recovery Tax Act (ERTA), whereby the bulk of the tax cuts didn’t take effect until Jan. 1, 1983. Reagan’s delayed tax cuts were the mirror image of President Barack Obama’s delayed tax rate increases. For 1981 and 1982 people deferred so much economic activity that real GDP was basically flat (i.e., no growth), and the unemployment rate rose to well over 10%.

But at the tax boundary of Jan. 1, 1983 the economy took off like a rocket, with average real growth reaching 7.5% in 1983 and 5.5% in 1984. It has always amazed me how tax cuts don’t work until they take effect. Mr. Obama’s experience with deferred tax rate increases will be the reverse. The economy will collapse in 2011.

Yes, you read that last sentence correctly - “The economy will collapse in 2011.”

Smart people are preparing to move their investments. In 2010, without any prepayment penalties, people can cash in their Individual Retirement Accounts (IRAs), Keough deferred income accounts and 401(k) deferred income accounts. After paying their taxes, these deferred income accounts can be rolled into Roth IRAs that provide after-tax income to their owners into the future. Or put into a shoe box or steamer trunk and hidden in the attic or basement.

These acts will cause an unsustainable crash in tax receipts to the government. Deficits and unemployment will rise dramatically and today’s numbers will look good compared to the coming drama about to unfold due to the tax and spend government in place today.

This chaos may be welcome to the Obama regime who want complete control over the United States of America, turning it into a third world country. However, people with businesses and money will move out, some right out of the country and those revenues will be missed.

When businesses prosper government revenues naturally increase to record levels. Your government is using a fiscal policy that reverse that natural stream of money into the Treasury. That trickle you hear is just a small drip right now but the roof will cave in when the flood of taxes are invoked by simply letting the former Bush tax cuts disappear. Indeed!

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