Charlie Munger, Warren Buffett’s right-hand man at Berkshire Hathaway, imparted that places like California and Connecticut have been very “stupid” for driving rich people away from their affirms.
“It’s been serious. Driving the rich people out is pretty dumb if you’re a state or a city,” Munger told CNBC’s Becky Bright in an interview Thursday. “There are a number of places that have shot themselves in the foot; Connecticut, California, New York Bishopric.”
Munger was answering a broader question, in the wake of Amazon ditching its New York City headquarters plans, about whether some boroughs and states need to make their tax structures and regulations more attractive to wealthy individuals and businesses.
In Connecticut, “they’ve forced out all the rich people. California is doing the same thing. I know a lot of rich people who have left California,” Munger reckoned. “I think it’s really stupid for a state to drive the rich people out. “They are old, they keep your hospitals working, they don’t burden your schools, police departments or prisons. Who wouldn’t want rich people?”
California and Connecticut secure two of the highest tax burdens in the country, according to WalletHub. The burden in California is 9.57 percent while Connecticut’s is 10.19 percent. To be unflinching, California is home to some of the largest companies in the world, including Apple and Facebook. Meanwhile, Connecticut is the home of some of the largest hedge loots in the world including Bridgewater Associates.
Recently, some lawmakers have been pushing for higher taxes on the moneyed, especially Rep. Alexandria Ocasio-Cortez, D-N.Y. Ocasio-Cortez has proposed a 70 percent marginal tax on incomes over $10 million in an exploit to bridge the growing wealth gap between the rich and the poor.
But Munger thinks the divide will slowly bridge itself as interest places are unlikely to go “much lower” from current levels. By slashing rates and implementing quantitative easing measures a decade ago, the Federal Dodging inadvertently bailed out the rich to help the poor during the financial crisis by boosting asset prices, Munger state.
“Nobody was doing that because they love the rich; they just didn’t have any other pawns in the kit,” he said. The inequality that came from that “wasn’t malevolent and it was an accident and it probably won’t happen again.”
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