Despite dim-witted socialists’ dreams of creating infinite revenue to pay for all their “free stuff,” levying high taxes on the most productive people creates economic doom loops. Like downward spirals, doom loops are self-reinforcing vicious cycles that beget further negative consequences. They also are notoriously difficult to stop once they come into being.
The socialist doom loop is a phenomenon that has occurred in some form or fashion wherever and whenever socialist economic systems have been enacted. Sometimes it happens via what is called “brain drain,” wherein the brightest and most entrepreneurial people flee socialist societies due to lack of opportunity. Other times, it can result in massive capital outflows.
The situation in Seattle, Washington, is particularly worrisome, considering Mayor Katie Wilson’s recent comments concerning whether millionaires will migrate from the city given the state’s new millionaire tax.
“I think the claims that millionaires are going to leave our state are, like, super overblown,” Wilson said to cheers and applause at Seattle University in mid-April. “And if — the ones that leave, like, bye,” Wilson added.
READ MORE: New Socialist Seattle Mayor Katie Wilson Laughs Off Wealth Flight
Wilson, a democratic socialist who never met a tax on the wealthy she didn’t like, could not be more off base when she mocks and ridicules millionaires.
“We have a large structural budget deficit at the city that we’re going to have to figure out how to deal with in this upcoming budget cycle,” Wilson recently admitted.
Unsurprisingly, her solution to the looming budget shortfall is “to look at what our options are in terms of progressive taxation.”
In 2027, Seattle faces a budget deficit of at least $127 million.
To be fair, Wilson inherited a fiscal mess from her predecessor, who used smoke-and-mirror tactics to make the budget appear less dire while he was in office.
The Seattle City Council acknowledges that the fiscal outlook is “inherently unsustainable.” They even warn “that few clear options, other than potentially drastic and immediate cuts, remain to respond to future fiscal challenges.”
But that is not what Mayor Wilson has in store for Seattle.
On Valentine’s Day, Wilson gave a speech describing the city as “filthy rich,” suggesting “progressive taxes on high earners are sustainable and lucrative.”
That is a ludicrous assertion. As the Washington Policy Center notes, taxing the rich “downplays migration risks, and ignores the delayed nature of behavioral responses to taxation.”
What’s more, Seattle’s budget has ballooned over the past few years.
In 2018, Seattle’s population was about 743,000 residents. That year, the city budget totaled $4.6 billion.
This year, the city will allocate $8.9 billion in total for a population of approximately 800,000 residents!
Earlier this year, Wilson delivered her State of the City Address, in which she implored the “city council to fund shelter expansion,” “expand childcare and early education as public goods,” “expand access to affordable food,” increase rent subsidies, etc.
“I am determined to add 1,000 new units this year, with services matched to people’s needs, and we are on our way to reach this goal,” Wilson proclaimed.
With little to no signs of spending cuts in the offing, one cannot help but assume that Wilson’s socialist spending spree will make Seattle’s “inherently unsustainable” budget situation even more untenable.
That is, unless you believe, like Wilson apparently, that wealthy Seattleites, the business risk-takers, will stay put no matter how high you tax them.
I believe, as history demonstrates, that productive people are much more likely to relocate to a more tax- and business-friendly environment across state lines.
Unlike the Soviet Union, East Germany, North Korea, and Cuba, socialist cities in the United States cannot erect giant fences to keep people stuck under their socialist systems.
In the United States, fortunately, the states serve as the laboratories of democracy. If Washington, California, and New York seek to soak the rich, the rich have every right to move to a state that is more economically attractive to them.
For now, at least, socialist doom loops are exclusively restricted to cities and states that choose to tread down the terrible road of socialism. The real nightmare scenario for Americans is a socialist doom loop at the national level, which could be more likely than most Americans realize, given the soaring popularity of socialism among America’s youth.
Chris Talgo ([email protected]) is editorial director at The Heartland Institute.
Editor’s Note: The 2026 Midterms will determine the fate of President Trump’s America First agenda. Republicans must maintain control of both chambers of Congress.
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