Oregon and Tax revenues

I was amused by the complaint from Oregonians about "Bush's tax break for the rich" (now to be known, I guess as "The Bush-Obama tax break for the rich"). Oregon had one of the least progressive "progressive" tax rates with individuals making $14,000 paying the same marginal rate as billionaires such as Phil Knight of Nike. Almost every other state had higher rates for wealthier individuals. But Oregon finally attempted to fix this.

"Oregon raised its income tax on the richest 2% of its residents last year to fix its budget hole, but now the state treasury admits it collected nearly one-third less revenue than the bean counters projected. The sun also rose in the east, and the Cubs didn't win the World Series.

In 2009 the state legislature raised the tax rate to 10.8% on joint-filer income of between $250,000 and $500,000, and to 11% on income above $500,000. Only New York City's rate is higher. Oregon's liberal voters ratified the tax increase on individuals and another on businesses in January of this year, no doubt feeling good about their "shared sacrifice."

Congratulations. Instead of $180 million collected last year from the new tax, the state received $130 million. The Eugene Register-Guard newspaper reports that after the tax was raised "income tax and other revenue collections began plunging so steeply that any gains from the two measures seemed trivial."

One reason revenues are so low is that about one-quarter of the rich tax filers seem to have gone missing. The state expected 38,000 Oregonians to pay the higher tax, but only 28,000 did. Funny how that always happens. These numbers are in line with a Cascade Policy Institute study, based on interstate migration patterns, predicting that the tax surcharge would lead to 80,000 fewer wealthy tax filers in Oregon over the next decade."

http://online.wsj.com/article/SB10001424052748704034804576026233823935442.html?mod=googlenews_wsj

The most important part is the last paragraph. Although one could argue now that $130 million extra is better than nothing, what will happen over the next decade if this tax leads to 80,000 wealthy tax filers leaving the state?