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Thread: updated study on effect of rising state taxes vs economic growth and tax revenues

  1. #1
    Banned Melonie's Avatar
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    Default updated study on effect of rising state taxes vs economic growth and tax revenues

    this is an important enough topic to merit its own thread ...


    (snip)"[50% income tax increase proposing Illinois Governor - sic] Mr. Quinn and other tax-raising governors have been emboldened by recent studies by left-wing groups like the Center for Budget and Policy Priorities that suggest that "tax increases, particularly tax increases on higher-income families, may be the best available option." A recent letter to New York Gov. David Paterson signed by 100 economists advises the Empire State to "raise tax rates for high income families right away."

    Here's the problem for states that want to pry more money out of the wallets of rich people. It never works because people, investment capital and businesses are mobile: They can leave tax-unfriendly states and move to tax-friendly states.

    And the evidence that we discovered in our new study for the American Legislative Exchange Council, "Rich States, Poor States," published in March, shows that Americans are more sensitive to high taxes than ever before. The tax differential between low-tax and high-tax states is widening, meaning that a relocation from high-tax California or Ohio, to no-income tax Texas or Tennessee, is all the more financially profitable both in terms of lower tax bills and more job opportunities.

    Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts."(snip)

    (snip)"We believe there are three unintended consequences from states raising tax rates on the rich. First, some rich residents sell their homes and leave the state; second, those who stay in the state report less taxable income on their tax returns; and third, some rich people choose not to locate in a high-tax state. Since many rich people also tend to be successful business owners, jobs leave with them or they never arrive in the first place. This is why high income-tax states have such a tough time creating net new jobs for low-income residents and college graduates.

    Those who disapprove of tax competition complain that lower state taxes only create a zero-sum competition where states "race to the bottom" and cut services to the poor as taxes fall to zero. They say that tax cutting inevitably means lower quality schools and police protection as lower tax rates mean starvation of public services.

    They're wrong, and New Hampshire is our favorite illustration. The Live Free or Die State has no income or sales tax, yet it has high-quality schools and excellent public services. Students in New Hampshire public schools achieve the fourth-highest test scores in the nation -- even though the state spends about $1,000 a year less per resident on state and local government than the average state and, incredibly, $5,000 less per person than New York. And on the other side of the ledger, California in 2007 had the highest-paid classroom teachers in the nation, and yet the Golden State had the second-lowest test scores."(snip)

    (snip)"One last point: States aren't simply competing with each other. As Texas Gov. Rick Perry recently told us, "Our state is competing with Germany, France, Japan and China for business. We'd better have a pro-growth tax system or those American jobs will be out-sourced." Gov. Perry and Texas have the jobs and prosperity model exactly right. Texas created more new jobs in 2008 than all other 49 states combined. And Texas is the only state other than Georgia and North Dakota that is cutting taxes this year."(snip)


    from


    Last edited by Melonie; 05-18-2009 at 01:23 PM.

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    God/dess Deogol's Avatar
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    Default Re: updated study on effect of rising state taxes vs economic growth and tax revenues

    Man, and I thought California bums were bad with their following you around and entitlement - look at those state government bums up there! Run rich man! Run!

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    Default Re: updated study on effect of rising state taxes vs economic growth and tax revenues

    you gotta love this. The about to be taxed 'rich' have figured out a way to avoid the proposed NY state tax increases without having to sell their houses and move physically ...



    (snip)"Secession fever is burning hotter among Republicans in the state Senate these days, leading GOP Sen. Andrew Lanza to hope that his plan for breaking Staten Island away from New York City will get a jump start.

    Long Island state Sen. Kenneth LaValle and Assemblyman Fred Thiele Jr., both Republicans, this week called for a task force to study the feasibility of statehood for Long Island. Suffolk County legislators, including County Comptroller Joseph Sawicki, have endorsed the idea.

    The reason: The $1.5 billion payroll tax imposed by the Legislature to help bail out the Metropolitan Transportation Authority.

    "Secession is certainly in the water," said Lanza (R-Staten Island), who plans to introduce his secession legislation in the Senate before the Albany session concludes at the end of June. "People are waking up and seeing the bill that they have to pay. More and more, they are seeing through the nonsense, that something's not right."(snip)

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    Banned Eric Stoner's Avatar
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    Default Re: updated study on effect of rising state taxes vs economic growth and tax revenues

    Quote Originally Posted by Deogol View Post
    Man, and I thought California bums were bad with their following you around and entitlement - look at those state government bums up there! Run rich man! Run!
    There are many reasons why states like California, N.Y. and N.J. are in serious fiscal trouble. The BIGGEST reason is an expanding state workforce with increasing salaries and expanding benefits.

    Here's how it works in N.J. and to a lesser extent in N.Y.
    Step 1- Work as a cop or teacher or other civil servant.
    Step 2- Retire and collect pension.
    Step 3- Get a job on a public commission or get elected to something.
    Step 4- Retire and collect pension number 2.
    Step 5- Get another job and qualify for a third pension. AND
    Step 6- Get wife hired and let her collect a pension.
    Step 7 - Steer business to mistress AND
    Step 8- Get children into Rutgers on scholarship AND
    Step 9 - Get them hired in a politcally connected job.

    And of course while "serving" vote self pay increases; increased pension benefits and top grade health care. Vote against
    any meaningful reform or savings and absolutely oppose any improved ethics rules.
    There are numerous variants. McGreedy was both mayor of Woodbridge AND a state legislator. Sharpe James also did double duty as Mayor of Newark and a state legislator. The all time record is three (3) simultaneous publicly funded paychecks for one individual and his WIFE was also collecting a public pension AND a state paycheck. Read "THE SOPRANO STATE " for more examples.

    While New York doesn't permit the multiple hat - wearing that New Jersey does, it DOES permit outside jobs for legislators. Many work for law firms that directly benefit from state policy and collect lobbying fees. And there is LOTS of pension stacking. Plus legislators wear multiple hats and collect "lulus" for serving as committee and sub-sommittee chairpeople; hire their wives and children for their staffs ; vote themselves pay raises and benefits increases and vote against any meaningful reform. The "staffs" are the real joke as Assembly members just do whatever Shelly Silver wants them to while the Senate marches to whatever tune the Majority Leader plays. In reality, they could dispense with their Albany offices and travel, lodging and meals and just mail in their votes.
    Last edited by Eric Stoner; 05-19-2009 at 08:49 AM.

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