Is your problem living in the city rather than California? I live in Fremont, make a bit less than you, and can pay for college without a loan and save. Now I bought my house 14 years ago and don’t owe a lot on it. Yeah, the cost of living here is more expensive than elsewhere, but so are average salaries - and I feel a lot worse for people right out of school making $50K than I do for either of us.
I’m not in AMT territory yet, at least.
And yeah, I do look in the Times and the mansions I could trade my house for in the boonies. On the other hand, they are the boonies.
For a valid comparison, you’d have to go back in time and see the sensitivity of unemployment to changes in the tax rate. 10 years ago you could a job here if you had kind of a pulse, and the tax burden was pretty similar. When I lived in Louisiana, the low tax rate didn’t protect the state from the oil shock.
I do wish people who don’t know anything about the economy of California would stop making bogus statements. First, there have been plenty of spending cuts. In the high school my kids went to, every teacher hired in the past three years has been let go. The real issue is that the Republicans would rather have the state go into default than restore the car tax to what it was before Arnie cut it.
Second, the spending has come in large part not from the politicians but from the people. The lock in of school spending as a percentage of the budget came from a proposition. The 3 strikes law, and the resulting climb in prison population, came from a proposition. The real problem here is that spurred on by the anti-tax fanatics lots of people want services but somehow think they don’t have to pay for them. If you read my other post, you’d know that the problem is not a sudden increase in spending, but a drastic decrease in revenue due to the volatile nature of the sales and income taxes that make up more and more of our revenue thanks to Prop 13. If your income suddenly dropped 30%, could you handle it easily? Unlikely, and not because you’re wasting money. We all have a lot of fixed costs, which are hard to stop suddenly.
Because the government does not create wealth. The government only reshuffles wealth. Business, and most specifically small business, creates wealth, drives job creation, and drives the economy.
I’m not saying that other factors don’t come into play. Obviously the car industry has driven (sorry for the pun) Michigan’s unemployment number very high. And I’m not saying that a higher tax burden is the only reason that certain states are struggling financially. In a prolonged recession like this, virtually all states are struggling financially. Don’t get locked into one specific example. What % of states with high tax burdens have the lowest unemployment numbers? And what % of states with lower tax burdens have the lowest unemployment numbers?
If your state has a lower tax burden, it is MUCH more likely that your state will have lower unemployment numbers as well. This isn’t anything new. It’s basic economics. And it’s right there in the numbers.
Higher tax burdens are a detriment to economic growth and prosperity. And like it or not, states with lower tax burdens have a much better shot at keeping down unemployment rates. Especially during a recession. The state is less dependent on tax revenues, and less effected when the economy goes south. Businesses retains more of their money to spend on wages and driving the economy.
Voyage, I appreciate your comments. I really do. But I don’t have to live in California to understand basic economics. I’ve studied economics for more than twenty years. And have been a business owner myself nearly as long. Economics is a personal passion of mine. I know. Kind of sad, isn’t it
I’m glad that California has looked for some ways to keep some of their expenses down. I’m a registered independent, and could care less about reps or dems. I think it’s interesting that you blame the reps for not wanting to raise ANOTHER tax. So you want to go from the 6th highest tax burden to something higher? And you think this is a good solution to helping the state’s budget and economy?
The best long term solution for your state’s budget is to cut expenses, and to lower taxes. Stimulate the state’s job growth so that MORE people are paying into the system. Not less.
I work in South San Francisco, and my wife in downtown. Fremont would be at least a 45 minute commute (without traffic, which never happens). With kids on the way, and schedules that are not exactly 9-5, that’s not possible. Anywhere down the peninsula with commute times under that are not a whole lot cheaper. We looked at Burlingame and realized San Francisco was probably cheaper!
But, yeah, if I were willing to commute an hour each way, I could probably save some money in the East Bay. There are definitely compromises I could make to get my bills lower. On an austerity budget we could pull it off. Or we could leave the state. And that’s the decision we’ve made.
This is sort of the problem. Yes, average salaries tend toward balancing the more expensive cost of living. But because the salary is higher, it is taxed at a much higher rate, effectively taking a person who is no better off than a person making less money in another area and taxing him to a much greater extent. It’s not my decision to figure out if this is fair or not, but personally, it’s going to make my decision to leave easier.
It annoys me when people say (and you’re hardly the first) “just cut expenses.” First, they have, and second, why should the Dems cut more when the Republicans are unwilling to compromise?
Second, as I noted, when you have a $26 billion gap you don’t close it by cutting waste. The problem mostly comes from a reduction in revenue, not from runaway spending. One of biggest budget items is education, and we’re not exactly close to the top of the country on that - much closer to the bottom. Like I said, if we fire everyone in state government we still have a problem? Do you have any ideas about what more could be cut, or are you just parroting the stuff you heard from the Republicans?
Despite your study of economics, you don’t seem to get the problem of volatility. Sure more jobs right now (not going to happen during the recession in any case) would solve the problem - but what happens during the next recession? The problem is a lot more complicated than “you spend too much” as you’d realize if you followed the situation in depth. The advice to spend less than you earn is not economics, it is household budgeting. BTW I’m not an economist but my daughter has an economics degree from the University of Chicago, and we have written some papers on behavioral economics together - published in peer reviewed journals and conferences. We’re doing a tutorial on engineering economics this fall.
Are you aware that it takes a 2/3 vote to pass a tax here, and a majority vote to spend money? Raising taxes is not so easy, so most of the increases were necessary. And tht tax burden is very unfairly spread - I pay not very much on property tax, probably much less than Fiveyearlurker, but a lot more than my neighbors who have been here longer than me.
The best idea in a while was just introduced by Tom Campbell, a moderate Republican probably running for governor. He wants to hike the gas tax 26 cents of so for a year, then cut it back to a ten cent hike. First, we can afford it, since it is well within the swing we’ve been seeing anyhow. Second, it will cut consumption, and thus the price. Third, it will help the trend to hybrids and better fuel economy, which really took off when we hit $4 a gallon keep going.
Actually, that’s very possible. In the internet age, the tech industry is extremely mobile. And while studios aren’t portable, more and more films are being shot on location in other jurisdictions. Both industries are also conducive to having people maintain out-of-state residences. Both are far more relocatable than, say, heavy industry or agriculture.
I have a friend who founded an internet-based company that works closely with most major studios; logically, it was located in Beverly Hills. He’s since moved it to Texas, in large part for tax reasons.
1 - Wyoming gets $1.11 in federal spending per dollar of federal taxes paid
2 - North Dakota gets $1.64
3 - South Dakota - $1.53
4 - Utah - $1.07
5 - Nebraska - $1.10
6 - New Mexico - $2.03 (!)
7 - New Hampshire - $0.71
8 - Iowa - $1.10
9 - West Virginia - $1.76
10 - Oklahoma - $1.36
Okay, so not all of them get more out of the kitty than they put in, but it’s still food for thought, isn’t it? God knows what’s going on in New Hampshire- responsible governance or something, probably. Wikipedia tells me the lower house of their state legislature is currently dominated by Democrats. Wonder what’s up with that?
Kind of makes you question whether unemployment is more dependent on state income tax rates or whether your Congressmen are bringing home the bacon, so to speak.
Might even want to make you revisit this sort of assumption:
I hate to leave a job half finished, so let’s see if the opposite is true, too - are high-unemployment states getting the shaft in terms of federal dollars?
New Jersey gets $0.61 of its federal tax dollars back.
New York - $0.79
Connecticut - $0.69
Maryland - $1.30
Hawaii - $1.44
California - $0.78
Ohio - $1.05
Vermont - $1.08
8b. District of Columbia - $4.44
Wisconsin - $0.86
Rhode Island - $1.00
I have no idea whether New York’s piece of the pie actually includes the UN dues we never pay.
And so, this…
…is apparently not true. The best long term solution for California’s budget would apparently be to secede from the Union so they can stop subsidizing the freeloaders in flyover country. In case you’re wondering, they’re getting $0.78 on the dollar.
One last thing: my state (Florida) has no state income tax and we’re currently tied for 10th in the highest-unemployment sweepstakes. Go Supply-Side Economics!
Many good things! NH’s pretty awesome when it comes to local governance. The state constitution states that the Governor must pass a balanced budget and cannot carry over deficits from one fiscal year to another. Our spending vs. revenue is usually in line (though the current recession and some overly optimistic projections from the Dems for state revenue a few years ago has certainly made this year a bit more difficult this time around.) As some dopers may well know, NH has one of the lowest tax burdens in the nation - no income tax! Small businesses tend to do well here, and unemployment is usually pretty low. Most of our taxes comes from property taxes, which tend to be a stable source of revenue.
Other fun facts: We have a state congress of 424 members, making it one of the largest English speaking legislatures in the world. Our legislators are only paid $200 for a two year term; small time politics is not a lucrative endeavor in NH.
Low spending + low taxes + low unemployment = a great state to live in. Live free or die!
Sorry for the hijack, but had to sing the praises of my home state.
You make a damn compelling argument, I’ll say that much. When I finally get out of Arizona, I was planning to move to the Midwest, but I might give NH a good long look too. If I have my choice of states to move to, I’d prefer to move to one that has its head screwed on straight.
I know a lot of people who make over a million dollar a year and none of them think they are rich. They live in a high COLA area and own a 3 million dollar home that you could buy for a quarter the price in almost any opther part of the country.
What is the median income in your county? I am going to guess it is less than $100K/year. $250K may not make you filthy rich but I people who make over $1,000,000/year don’t feel rich either when they hang around with other people with that kind of income all day long.
If you are indeed at the 250K-300K level, Obama barely thinks your are rich. You may one day pay higher taxes on the income you earn over 250K but not by much.
Child care is about 12K/year in the DC area. Didn’t you say you make a combined income of $250K+? What sort of child care places are you looking at?
People move in and out of states all the time, good luck to you and your family. There were a few decades when California was experiencing very high population growth and it had nothing to do with taxes.
First of all, what you said was that businesses spend money and accelerate the economy better than government.
Now you are saying that government doesn’t create wealth, it only reshuffles it. Government does a heck of alot more than reshuffle wealth. It provides the environemnt in which wealth can be created.
This is highly anecdotal and focusing on a very narrow metric. How about asking what % of states with low tax burdens have the highest unemployment over the last 30 years and what % of states with the highest tax burdens have the highest unemplyment rates. If I took a snapshot at other points in our history, you would see a very different picture.
OK, explain the economics.
I think we can all agree that taxes distort economic behaviour. It is also true that government services provide the environment in which wealth production can occur. That is merely an argument for reducing unnecessary taxes (which I think everyone agrees with) not for gutting the government.
EVERY state is ENTIRELY dependent on tax revenues unless it has some other source of income (like Alaska and Texas).
What is the difference between a business retaining all of its profits and engaging in more economic activity on the one hand and government taxing some of those profits and spending on things like teachers and roads which also creates economic activity. Whats the big difference?
You hide it well. You talk about economics in sound bites and talking points.
Do you think supply side econmics works? That cutting taxes will result in increased tax revenue? If not then you must think that it is a combination of cutting taxes and cutting spending that will improve the economy.
The first thing you have to do is identify places to cut spending by enough to make a difference.
That is the most retarded system of taxation I have ever heard of. I can understand a cap on real estate tax increases but when you have long time residents of Palo Alto paying $1000/year on a home worth $2 million dollars because they have lived there for 30 years, you are basically robbing Peter to pay Paul and Paul is the long time resident of homes that have quintupled in value.
I don’t think anyone was taking the whole Wyoming/Dakotas data seriously. These are the least poulous states. They have the higest electoral votes per capita in the country.
I don’t think anyone was taking the whole Wyoming/Dakotas data seriously. These are the least poulous states. They have the higest electoral votes per capita in the country so of course they get more pork.
I’d ask what kind of child care he is looking for that should impact their finances so much.
Lots and lots and lots of people, most parents in fact, manage on less and even a lot less (presumably 98.5% of the population manages with less). It may not be easy for them but they manage.
I don’t know his finances (nor is it appropriate here) but clearly they are well off and should be able to manage fine. At least I hope so because if he is screwed then the vast majority of the US is really, majorly, seriously screwed.
Not to mention I cited a person making $1 million/year.
