The SEC "Sucks" or The Tax War Between the States

[shetuck]

Interesting piece in today's Journal by Arthur Laffer (remember the Laffer curve?) about migration to the south...

I guess this is Laffer's way to make a case for the Big Ten being "down" and the SEC's supremacy...

WSJ ($$$): The (Tax) War Between the States

... It has to be infuriating to Northeasterners to learn that people and businesses are "trading up" by moving out of their region to the likes of Georgia and Alabama. But they are. ...

The states losing population are in effect suffering from a slow-motion version of the economic sclerosis ...

Five of the states near the bottom of our competitiveness ratings -- Illinois, Maryland, Michigan, New Jersey and Wisconsin -- have enacted major tax increases in the last two years. Maryland and Michigan just raised business and income taxes on upper-income earners, while arguing that raising the cost of doing business will attract more businesses. More likely it will induce companies to stay away, and people to move out.

Wall Street Journal: The (Tax) War Between the States

By ARTHUR LAFFER AND STEPHEN MOORE
December 10, 2007; Page A19


A record eight million Americans moved from one state to another last year. Where is everyone going, and why? The answer has little to do with climate: California has arguably the nicest climate of any state in the nation -- yet in this decade more Americans have left the Golden State than entered it.

Migration patterns instead reveal which states have the most dynamic and desirable economies, and which are "has-been" states. The winners in this contest for the most valuable resource on the globe -- human capital -- are generally the states with the lowest tax, spending and regulatory burdens. The biggest losers are almost all congregated in the Northeast and Midwest. Liberals contend that tax rates, regulations, forced union laws and runaway government spending don't matter when it comes to creating jobs, high incomes and a higher quality of life. People tell us otherwise by voting with their feet.

The American Legislative Exchange Council has just released a study we've done that presents a 2007 Economic Competitiveness Rating of the 50 states, based on 16 economic policy variables, including taxes, regulation, right to work, the legal system, educational freedom and government debt. Over the past decade, the 10 states with the highest taxes and spending, and the most intrusive regulations, have half the population and job growth, and one-third slower growth in incomes, than the 10 most economically free states. In 2006 alone 1,500 people each day moved to the states with the highest economic competitiveness from the states with the lowest competitiveness.

Of all the policy variables we examined, two stand out as perhaps the most important in attracting jobs and capital. The first is the income tax rate. States with the highest income tax rates -- California and New York, for example -- are significantly outperformed by the nine states with no income tax, such as Texas and Florida. As a study from the Atlanta Federal Reserve Board put it: "Relative marginal tax rates have a statistically significant negative relationship with relative state growth."

cont'd...

 

[NewYorkBuck]

Cities and states compete for people just like companies do. Only difference is with the companies its by the amounts they are giving - with the states its by the amounts they are stealing.

 

[shetuck]

... with the states its by the amounts they are stealing.

tsk! tsk! for the so-called "Blue Dog" Democrats of the South, it's called "fiscal discipline"! i am reminded that the word "discipline" can be used both a noun and a verb!

it was interesting to read Laffer's piece together with today's opinion piece about the death of Paygo...

WSJ ($$$): The Paygo Farce

... Senate Democrats gave up on "paygo," as it's called, when they realized they lacked the votes to offset the $50.6 billion cost of protecting more than 20 million middle-class taxpayers from getting whacked by the Alternative Minimum Tax this year. They've spent the year floating all kinds of tax increases to make up the difference. But in the end they passed an AMT relief bill without a penny to pay for it. Paygo is now pay gone. ...

 

[methomps]

The South will rise again!

 

[shetuck]

This isn't directly related to Laffer's article, but ooc, I looked up numbers (from 2006) to find out how each state ranks ito Federal Income Tax Collection per capita. Obviously DC and PR are *special* cases, but I left them in there for the sake of thoroughness.

IRS Collections, $ per capita* (2006)

_1__DC______________30.02
_2__Delaware________20.18
_3__Connecticut_____14.39
_4__Minnesota_______13.95
_5__New Jersey______12.44

_6__New York________11.13
_7__Massachusetts___10.82
_8__Illinois________10.12
_9__Arkansas_________9.85
10__Nebraska_________9.83

11__Rhode Island_____9.73
12__Maryland_________9.12
13__Colorado_________8.90
14__Washington_______8.87
15__Texas____________8.71

16__Oklahoma_________8.70
17__Pennsylvania_____8.24
18__California_______8.22
19__Virginia_________8.02
20__Georgia__________7.99

21__Ohio_____________7.90
22__Tennessee________7.85
23__North Carolina___7.83
24__Wyoming__________7.68
25__Nevada___________7.66

26__Missouri_________7.61
27__Wisconsin________7.50
28__Kansas___________7.28
29__Florida__________7.26
30__South Carolina___7.20

31__Michigan_________6.94
32__New Hampshire____6.93
33__Louisiana________6.37
34__Indiana__________6.31
35__Oregon___________6.25

36__Alaska___________6.06
37__Iowa_____________5.84
38__Vermont__________5.78
39__Idaho____________5.65
40__South Dakota_____5.60

41__Hawaii___________5.54
42__Arizona__________5.29
43__North Dakota_____5.24
44__Utah_____________5.19
45__Kentucky_________5.16

46__Alabama__________4.82
47__Maine____________4.77
48__Montana__________4.32
49__New Mexico_______3.84
50__West Virginia____3.40

51__Mississippi______3.37
52__Puerto Rico______1.02


* Total IRS Collections [1] / Total Population [2]

[1] Source: Internal Revenue Service
[2] Source: US Census Data

 

[Jagdaddy]

Without going to the trouble to read all that, I'd guess that availability of cheap housing is a large factor in migration. People leave Cali. in droves simply because they can't afford to buy houses there.