Kould Kim Kardashian Kontribute More Kash to Kalifornia?

by Beth Connolly on December 30, 2011

by Beth Connolly

In a remarkable vault from lowbrow to highbrow, millionaire entertainer and eternal tabloid favorite Kim Kardashian has recently become the subject of a “millionaire tax” debate across financial journalism sites like Forbes, the Wall Street Journal, and CBS MoneyWatch.  Formerly, her foibles, such as the infamous (and lucrative) 72-day wedding to Kris Jennings, were adequate fodder only for snarky gossip rags.

The debate began with the Courage Campaign, a California-based group that accuses Kardashian of not paying her fair share of taxes.  As community budgets and services are cut across the state, the campaign finds it outrageous that Kim gives only 10.3% of her income to the state.  (In 2010, that would be roughly $1.25 million, assuming her reported $12 million 2010 income was entirely taxable.)  They urge Americans to tell Kim to pay more taxes.

William McGurn took issue with their stance in his December 27 column, “Taxing Kim Kardashian,” published in the Wall Street Journal.

Poor Kim Kardashian. Well, poor may not be the right word. By all accounts—especially those she televises for her reality shows—Ms. Kardashian manages quite comfortably on her income. According to the New York Post, that includes as much as $17.9 million that she raked in for her well-publicized August wedding to NBA star Kris Humphries.

Public morality can be a tricky thing, however, and apparently Ms. Kardashian has now crossed a line.

It’s not her split from Mr. Humphries only 72 days after their wedding, which raised questions about whether the marriage was simply one big publicity stunt. Nor was it the earlier sex tape that earned her celebrity and riches. Only a prude would object to that.

No, Ms. Kardashian’s sin is this: She pays what she owes in state taxes under California law, instead of the much larger amount that some self-appointed advocacy group thinks she ought to be paying.

McGurn argues that raising taxes would drive millionaires out of the state, and result in a significant loss of tax revenues.  He also takes issue with the entire philosophy of the millionaire’s tax:

The point here is that faith in the millionaires tax has moved beyond argument. It matters not that even if the state sucked every last dime from Ms. Kardashian and those who share her tax bracket, it still wouldn’t fix California’s troubles. Nor will believers be swayed by evidence that our governments have been spending more and more for vital public services and getting less and less in return.

They will not be swayed because they are not being driven by their economics. They are being driven by their conception of immorality: the idea that millionaires have more than they should—and that any wealth they have is not something they have earned but something the state has allowed them to keep. It says much about the progressive Puritanism of our age that what these folks really find most sleazy about Ms. Kardashian is not her sex tape or her marriage, but that she’s unembarrassed about making money.

The Kardashian Klan on the Red Carpet

Alain Sherter on CBS MoneyWatch responds, Not a chance, buddy (Group says Kim Kardashian isn’t paying her fair share in taxes.)  Only 30% of Americans change their state of residency during their lifetime (really? Doesn’t that seem a low number?).  Millionaires are even less likely to do so, Sherter hypothesizes, because they typically own a home(s), have a steady job, and are raising a family.  Plus, all Americans have family and other social ties in their home state, and moving is an enormous expense for an established family.  Historically, states that have instituted a tax on very high earners, such as New Jersey, have seen very little emigration and seriously increased tax revenues.  (Do these stats take into account, though, the residents who simply report living 7 months out of the year at their winter homes in Texas or Florida?)

Sherter also quotes economist Jeffrey Thompson from UMass Amherst, who argues that rich people actually like paying taxes because they appreciate the services and jobs that the government creates with their taxes.  But does the government actually use taxpayer money to create more jobs than a millionaire might create by investing her funds in a start-up business or new company?

Forbes contributer Robert Wood followed up on December 28 with a kleverly alliterated article (In Taxes, Kim Kardashian Is More Buff Than Buffett) arguing that McGurn’s piece, by constituting coverage of Kardashian in the venerable Wall Street Journal, effectively solidifies Kardashian’s status as a real businesswoman.

If even the Wall Street Journal feels secure Kibitzing about the Kardashians, Kim and her Klever Klan have transitioned from mere reality stars to major media. The Kardashianization of the staid Wall Street Journal is Kataclismic, katapulting Kim into the financial mainstream.

Kim's Future Home?

Yes, and news just broke that KK is mainstream enough to earn a $600,000 check for hosting a New Year’s Eve party at swanky club Tao tomorrow night in Vegas.  Hope she likes it there, since it’s likely to be her new home once the California tax that Courage Campaign lobbies for is passed.

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