California and Washington commit the Hidden-Cost Fallacy

From MarginalRevolution: the increase in California's income tax "increased total tax revenue for California — but not nearly as much as intended. Due to departures, the state lost more than 45% of its windfall tax revenues from the policy change, and within two years the state lost more than 60% of those same revenues."

This illustrates the main idea of Chapter Three: 

Consider all costs and benefits that vary with the consequence of a decision [if you miss some that is the hidden-cost fallacy]; but only costs and benefits that vary with the consequence of a decision [if you consider irrelevant ones that is the sunk-cost fallacy].

It looks as if Washington State is making the same mistake: In 2022 they imposed a new, 7% capital gains tax on sales of stocks or bonds of more than $250,000. Soon thereafter, the state's richest man moved to Florida. 

 BOTTOM LINE: People respond to incentives [Chapter One], so make sure your state legislators read Chapter Three.