Do High Taxes Chase Out The Rich?

A new study suggests that taxing millionaires sends millionaires to somewhere that doesn't tax millionaires.

A new study suggests that taxing millionaires sends millionaires to somewhere that doesn’t tax millionaires.

CNBC (“In Maryland, Higher Taxes Chase Out Rich: Study“):

A new report says wealthy Maryland residents may be moving out due to recent tax hikes – a finding that is sure to escalate the battle over taxing the American rich.

The study, by the anti-tax group Change Maryland, says that a net 31,000 residents left the state between 2007 and 2010, the tenure of a “millionaire’s tax” pushed through by Gov. Martin O’Malley. The tax, which expired in 2010, in imposed a rate of 6.25 percent on incomes of more than $1 million a year.

The Change Maryland study found that the tax cost Maryland $1.7 billion in lost tax revenues. A county-by-county analysis by Change Maryland also found that the state’s wealthiest counties also had some of the largest population outflows.

In total, Maryland has added 24 new taxes or fees in recent years, Change Maryland says. Florida, which has no income-tax, has been a large recipient of Maryland’s exiled wealthy.

While I’m sympathetic to the finding—it just makes sense that very high taxes will drive people who don’t need to live in that area to sustain their income away—the fact that this particular study was conducted by a group with an agenda and that the study fit the group’s agenda certainly makes me cautious in taking it as definitive.

Some argue, however, that there is little real evidence that higher state taxes drive out large numbers of high earners.  Neil Bergsman, director of the Maryland Budget and Tax Policy Institute, said while a number of people left the state between 2007 and 2010, others moved in. The net loss, he said, is “very small,” he said.

What’s more, he points out that the wealthy usually move because of a job change, life change or retirement rather than taxes.

“There is no evidence that tax structures are a significant determinant in their location choices,” Bergsman said.

What’s more, he said, Maryland is still minting high-earners and has among the highest incomes and highest concentration of millionaires in the country.

But, presumably, people with highly marketable skills are more likely to seek jobs elsewhere if they can keep more of their earnings in the new locale. Ditto retirement: a lot of people move to states with low tax rates for the low tax rates. But there are obviously other factors at work.

Maryland is a particularly interesting case because its wealthiest areas are adjacent to the District of Columbia and said wealth is owing to that proximity. Moving from, say, Bethesda, Maryland to McLean, Virginia can be done without changing jobs or social networks.

Indeed, it’s quite typical in this area for people who work in DC to live in either DC, Maryland, or Virginia. Some even live further out—Delaware or West Virginia, for example. It’s easy to do. In my own office, most of the younger staffers live in the District while those of us with families tend to live in either Maryland or Virginia.

Granting that none of us are subject to a millionaire’s tax, that very fact would seem to indicate that tax policy isn’t the primary driver of where people choose to live. I live in Virginia because my late wife and I both worked in Virginia when we bought our house and it wouldn’t make much sense, for a variety of reasons, to move closer to the office at this juncture. Yes, Virginia’s tax rates are more favorable. But it’s also cheaper to live in the sort of house and neighborhood I prefer, schools are better, and so forth.

Other studies in New Jersey, Connecticut and Rhode Island have also failed to offer proof that taxes are the main driver of out-migration by the top earners. (See here and here). In some states, weather is a bigger driver of out-migration by the wealthy than taxes.

The two linked articles, both to other pieces by the same author, demonstrate just how hard it is to evaluate the question. For one thing, “millionaires” or “the rich” aren’t a constant; a Maryland millionaire who doesn’t show up on the list the next year might not be a millionaire that year. And we don’t do a great job of tracking individual moves, making it hard to accurately gauge the relative tax burdens before and after. And, of course, the reasons people move are manifold, making it hard to evaluate the motives in any case.

FILED UNDER: Economics and Business, Taxes, US Politics, , , , , , , , , , ,
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College. He's a former Army officer and Desert Storm veteran. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. C. Clavin says:

    A bunch of rich people moved to Florida?
    Now there is a ground-breaking study.

    FLA has no income tax…but ask someone who lives there about property taxes.

    This is probably a more accurate view of the subject…
    http://www.bloomberg.com/news/2012-06-25/states-lacking-income-tax-get-no-boost-in-growth-bgov-barometer.html

  2. Franklin says:

    I wouldn’t doubt that there’s some effect, but I almost stopped reading at the sentence “the study, by the anti-tax group Change Maryland”. Thankfully, you pointed out the same. It’s just not a useful study and it was a waste of their money to conduct it.

  3. OzarkHillbilly says:

    Do High Taxes Chase Out The Rich?

    The two linked articles, both to other pieces by the same author, demonstrate just how hard it is to evaluate the question.

    Damn James, first you get my hopes up, than you bring me crashing back down. I thought maybe there was a sure fire way to rid ourselves of the leeches.

  4. What’s more, he points out that the wealthy usually move because of a job change, life change or retirement rather than taxes.

    […]

    In some states, weather is a bigger driver of out-migration by the wealthy than taxes.

    Why link garbage science that doesn’t even bother addressing, much less controlling, for confounding variables?

  5. Ron Beasley says:

    A couple of years ago Oregonians passed at tax increase on the wealthy and large corporations and we were told that people and corporations would leave. They didn’t!

  6. Jeremy R says:

    So “Too Big To Fail” apparently applies to the uber wealthy now too. They’ve gamed/rigged the system to first concentrate the nation’s wealth into their own pockets and now they have so much of it that governments can’t risk losing their favor and incurring their wrath. So the take away is that states should now race to the bottom in offering them better and better tax breaks & incentives & lowered rates in order to keep them or entice them over from other states? Why even waste the time incrementally outbidding each other — states may as well just set their rates to 0 as the Hamptons-set feels they so richly deserve in their self-congratulatory Randian-fantasy-addled minds.

  7. Modulo Myself says:

    Do high taxes force the high net worth into exile? Yes.

    Will the ACA cause doctors to commit suicide rather than see budget controls? Yes.

    Will the continuance of Social Security force children to slaughter their grandparents rather than pay FICA? Yes.

    If a law prohibits Wal-Mart from forcing workers to go without bathroom breaks, will the economy collapse and the Dark Ages ensue? Yes.

    If government can issue a tax, will they be able to give you a choice of concentration camps or a leading part in gay porn? Yes.

  8. al-Ameda says:

    Okay, we can expect that the rich will be abandoning places like – Greenwich CT, Beverly Hills, Georgetown DC, Palo Alto CA, Manhattan NY, Chicago’s north shore, or La Jolla CA – to move (en masse) to Oklahoma, Florida, Nevada and Arizona?

    So many of these studies presume that the only reason people locate to a city, a region or a state is the tax rate.

    This all about the new version of “Waiting For Godot” only today we call it “Waiting For The Job Creators.” We might as well call it “Waiting For The Easter Bunny.”

  9. JKB says:

    Seems to me this is to complex to really get at. If someone is a salaried worker making over $1 million/year then they may be established in the community but also could easily force their employer to fork over $1 million + 6.25% after the tax increase. So really, the millionaire tax is a tax on business/enterprise so the effect may be more in business growth or movement.

    The whole DC area is fairly unique, as Willie Sutton said, you go where the money is. Beltway bandit jobs are hard to do from outside DC. Reports are the young Wall Streeters are moving to better climes hollowing out the cash cow of NYC. That can happen because they just need proximity to each other not particularly NYC to do business.

    It would be better to look to see if Maryland has many startups and whether those hang about so that the payoff is subject to the millionaire tax. Outside of the university with government grants, is their much innovation going on in Maryland or the whole DC metro area. I mean innovation not targeted at separating the taxpayer and their money, but rather something that benefits society by creating wealth.

    I wonder if there was less compensation taken by business owners during the expropriation period with cash piling up in the business to be drawn off later. Was the tenure a particularly strong “plow the profits into the business” period?

  10. Tsar Nicholas says:

    Do High Taxes Chase Out The Rich?

    Do bears shit in the woods?

    That said, obviously weather too plays a major role. Amenities. Schools. Crime rates. Housing. Etc. To pretend that taxes don’t affect behaviour, however, would be cognitively dissonant.

    The real question, though, which for obvious reasons seldom is addressed, and in any event wouldn’t prominently be reported, is how businesses behave when confronted with anti-business laws and regulations (e.g., higher taxes, enviro regs, expansive overtime, etc.) and with other unfavorable elements of business climates (e.g., high workers’ comp. costs, etc.). The answer is pretty f’n obvious: Businesses move. They vote with their feet. They bring jobs with them and they leave jobs behind them. The California-Nevada phenomenon in the 00’s is one of the starkest, loudest examples. The recent and ongoing exodus to Texas is another. The decline of the Northeast is another. The growth of the South and Southwest is another. These aren’t coincidences. Policies matter.

  11. PJ says:

    @James Joyner:

    While I’m sympathetic to the finding—it just makes sense that very high taxes will drive people who don’t need to live in that area to sustain their income away—the fact that this particular study was conducted by a group with an agenda and that the study fit the group’s agenda certainly makes me cautious in taking it as definitive.

    Have you actually read the study?
    Because I can’t find it, and if you have a link it would be helpful.

    I can’t find the study on their site, just copies of reports in the media about their study.
    Is there anything more than a press release?
    What is their study actually based on?

    Between 2007 and 2010, there was a net migration of 30,700 from Maryland.
    The law is from 2007.
    But.
    Between 2004 and 2007, there was a net migration of 56,500 from Maryland.
    Precognition?

    I’m guessing their “study” is based on the same site as my numbers.

    From the faq from that site:

    5. Since you are the Tax Foundation, aren’t you trying to imply that taxes are why people move between states?
    No. Taxes are one of hundreds of factors that go into a person’s decision to move. Others include age, technology, job prospects and the quality/quantity of government services provided. If one looks anecdotally at the data, he/she will see that people move from high-tax states to low-tax states and vice versa. A true study that sought to quantify the importance of taxes for locational decisions would need to account for as many other factors as possible, in addition to possible serial correlation issues between variables, especially taxes.

  12. Tsar Nicholas says:

    Oops, “leave joblessness behind them,” that is. Even mild dyslexia is a bitch.

  13. PJ says:

    The data is really from the IRS.
    But the Tax Foundation does have a nice interactive service that’s easier to use, but that one doesn’t include counties.

  14. Your tiny little states are a poor example 😉

    Out west you need to swap the whole package, home, job, everything to get the other tax rate. In the girly tiny states, you commute.

  15. C. Clavin says:

    “…To pretend that taxes don’t affect behaviour, however, would be cognitively dissonant….”

    I’ve lived in 6 different States. Never once before moving to any of them did I question the tax rate.
    Of course I never had Rick Perry funneling me millions in tax payer dollars to move, either.
    The funny thing is that if Obama did the same thing the team of Doug/Tsar would be whining about Government picking winners and losers.
    But for those two if it’s your team doing the funneling…

    “policies matter”.

    What a deep steaming pile of bunk.

  16. BTW, people move to Nevada for cheap desert housing, but the weather so bad that you have to leave your AC on, even when you are out of state, to keep your furniture from being warped and destroyed. (I hear they typically leave the AC at 85F when out of town, if you can believe it.)

    LOL, there may be a tax angle, but it is also “cheap house in the desert” madness.

  17. James Joyner says:

    @john personna: It’s not so much that Virginia and Maryland are tiny; Virginia certainly isn’t. It’s that the rich areas in both consist of a tiny handful of counties that border DC and are separated only by Potomac River. The same phenomenon exists in the New York City metroplex, where people commute in from Connecticut and New Jersey and thus have real options.

    If your job is in Los Angeles, though, you’re not close enough to Arizona to commute. Indeed, most of California’s money is on the Pacific Coast rather than adjacent to Arizona, Nevada, or Oregon.

  18. John D'Geek says:

    it just makes sense that very high taxes will drive people who don’t need to live in that area to sustain their income away

    (Emphasis mine)

    Even those that do need to live in the area can — and often will — have a significant behavior change. I read (Buisiness Insider, IIRC) one article about how much the “uber-wealthy” of NYC save by maintaining two residences instead of one. That way they can avoid millions in taxes … at the expense of maintaining two residences and counting days in the city.

    This does affect the rest of us. In Northern New Jersey, many (such as myself;not even six figures FWIW) will not purchase property — taxes are so high that I can rent for the cost of just the property taxes.

    I suspect that a truly scientific analysis would find a “breaking point”, where behavior changes because of cost.

  19. @James Joyner:

    Right. And when we move out of California, it may be taking our (high tax rate state) winnings off the table, rather than anything else. I’m considering a year in South Africa myself … this high tax rate state is hugely productive.

    I don’t have high faith in these sorts of studies for that reason. It is impossible to decode the “moving for tax rate opportunity” group from the rest. And I think the “moving for tax rate” group is really small.

    Thinking about it more, I know middle-class engineer types who moved to Texas for jobs and low cost housing. Is that because Texas had low tax, or because New Braunfels, TX was basically empty, compared to Irvine, CA?

  20. KariQ says:

    @Tsar Nicholas:

    Businesses move. They vote with their feet. They bring jobs with them and they leave jobs behind them. The California-Nevada phenomenon in the 00′s is one of the starkest, loudest examples.

    Unfortunately, the facts don’t bear this out. I don’t Nevada enough to comment, but California’s state and local taxes haven’t changed significantly in decades, so whatever has changed in California’s business climate, it’s not taxes: http://taxfoundation.org/article/californias-state-and-local-tax-burden-1977-2009

    Also, I keep seeing editorials and scare ads telling me that businesses are fleeing the state, but so far, studies haven’t really found this to be true: http://www.ccsce.com/PDF/Numbers-July09-Fleeing-Calif.pdf

    The pdf at the second link discusses studies of California’s business and population growth. The conclusions are that very, very few business relocate away from California (about 11,000 jobs per year leave the state because of business relocation, California’s working population is 18 million); the migration out of state is more a result of property values and economic growth than tax rates; and it turns out wealthier individuals are less likely to leave the state than those in lower income brackets.

  21. Yes, Virginia’s tax rates are more favorable. But it’s also cheaper to live in the sort of house and neighborhood I prefer, schools are better, and so forth.

    “But” seems an odd choice of conjunction, making it seem as though the low tax rates and the lower cost of living are completely conincidental.

  22. @KariQ:

    The area around Henderson NV had:

    – cheap land
    – cheap electric power from Hoover Dam
    – easy shipment to Southern California markets

    That alone, even in a tax-equal environment, would have caused many businesses to move. Once a critical mass built, a boom economy in Henderson, moreseo.

  23. michael reynolds says:

    I’ve been on both ends of this as a guy who did move from one state (MN) to another (IL) to cut my tax burden, and as a guy who moved from Italy where obviously I had no state income tax to CA where the state bends me over.

    In both cases there were other factors. We cut our taxes 5% moving from Minneapolis to Chicago – but just as important, we got Charlie Trotter and Tru and a big city and, sad to say, better weather.

    The move to CA was painful — 10% painful — but we looked at every other option: Texas, Florida, Washington state and decided that 10% was a reasonable price to pay to be in California rather than Texas or God help us, Florida.

    Bottom line: it’s never just money, and anyway a disappearingly small percentage of the population has my kind of job where I can relocate at will. I call bullsh!t on this.

  24. anjin-san says:

    I’ve lived in California for 53 years. I’ve known people that have left because of the high cost of living, because they were able to leverage homes in CA into much nicer homes in other states, because they wanted to live overseas. because of work opportunities, and because of the fear of earthquakes.

    I’ve never known anyone to leave because of taxes.

  25. Heh, here is the “millionaires per 1000” for each state (2006).

    That Hawaii is number one might show that these guys aren’t choosing states for tax rate.

    For the states I’ve mentioned, California is 6th, Nevada is 21st, and Texas is 28th.

    I’d submit that is because money is made in high tax states. After that, if you’ve got enough, you go to Hawaii.

  26. @anjin-san:

    We should note that selling (safer than leveraging) California homes is cashing out of the rich state economy. Homes here are expensive because people have money.

  27. (Do natives really fear earthquakes? scoff.)

  28. Mikey says:

    I take such studies with a sizable grain of salt. How do you control for all the other confounding factors, which number in the dozens? I don’t see how they could do it and still end up with something useful.

    I will say that when I moved from Michigan to the D. C. area nine years ago, I asked my soon-to-be boss and co-workers which state (Virginia or Maryland) had the more advantageous tax structure. The unanimous answer was Virginia, so that’s where I chose to live. But if, tomorrow, Maryland became better and Virginia worse, I would not move. I like my neighbors, the school my son attends is great, I have a 15-minute ride to work (which I would NOT trade for a commute from Maryland).

  29. Ben says:

    Even if I’m willing to accept their thesis here, that high taxes chase the rich from some states to others, I’m not sure that’s relevant to the question of whether higher federal taxes would chase the rich from the country. There is substantially more pain involved in leaving a country than a state. On top of all the logistical crap required to actually emigrate and move your assets and property to another country, it also becomes much, much harder and more expensive to ever go back and see your family and friends.

    A few years ago I moved from Massachusetts to Rhode Island, and the only red tape I had to go through was re-registering my car and getting a new license. And I’m only 20 minutes farther from my family.

  30. the Q says:

    “To pretend that taxes don’t affect behaviour, however, would be cognitively dissonant…”

    Yes, its pretty obvious that lowering taxes on the rich has resulted in the predictable wealth stratification and its concomitant political instability.

    Like I tell all my idiot wingnut pals, “gee guys, back in the 40s and 50s and 60s and 70s there were sections in LA called Bel Air and Beverly Hills and Brentwood even when marginal tax rates were 71% – 90% for this cohort.

    How was that possible, since we all know that America really started in 1981 when St. Ronnie rescued us from that bastard Jimmy Carter and the evils of the New Deal and confiscatory marxist tax rates.

    Because its cognitively dissonant for wingnuts to admit that lower tax rates have little to do with economic activity, its impossible to have a coherent debate about this.

    The highest sustained GDP growth the U.S. experienced in the 50s – 70s came with extraordinarily high marginal rates. How is that possible if all we hear from the post 1981 dickhead faction is that fettering this elite with the shackles of higher taxes stunts economic activity and growth?

    Its ridiculous to assert that a guy making $15 – 100 million dollars annually is gonna say to himself, “thats it, Obama is raising my taxes by 10%, so I will only be making $13.5 – $90 million this year, so fuck it I am calling in sick today and am only gonna work 50 hours this week just to show “the man” how oppressed I am.

    Lets compare eras, 30 years post St. Ronnie vs. 30 years post FDR….well if you are in the bottom 60% of the income quintiles, you are presently being fucked under St. Ronnie’s legacy.

    30 years after FDR, the middle and poor were thriving and gaining ground as all segments of society were lifted by these policies.

    I know some of you dyed in the wool wingnuts will scream and cry that there are many factors for this decline, but you are all full of wingnut batshit.

    The single most important issue the past 30 years for the wingnut faction has been TAX cuts. No other issue gets this much attention or rabid defense.

    Yet when the point is made that America did just fine with ridiculosuly high rates, the retort is “no one paid this much since there were loopholes.

    Google the salary of Charles Wilson, the mid-century CEO of GM (also Ike’s Treasury secretary and “whats good for GM is good for america” fame). Wilson was one of the highest-paid corporate executives in America, earning $586,100 (and paying, incidentally, $430,350 in taxes – or 73%).

    Now wingnuts, repeat after me, “America was a backward, immoral Marxist dystopian socialist hell-hole just waiting to be saved by St. Ronnie and his war on taxes.

    Again, baby boomers go fuck yourselves. It is a generational thing. Boomers are clueless selfish dullards who like Santayana warned will repeat history since they are immune to learning from it.

    I will bet a lung that most on this site are 35 – 55, so I will forgive the 1960s babies, but you others have no excuse other than your own ignorance and downright stupidity.

    There can be no other rational explanation for a complete lack of historical myopia.

  31. Herb says:

    @michael reynolds:

    “Bottom line: it’s never just money, and anyway a disappearingly small percentage of the population has my kind of job where I can relocate at will. I call bullsh!t on this.”

    I second this….

    Not only is the decision more complicated than money or tax liability, I suspect nearly in all cases, lowering one’s tax burden is an afterthought as opposed to an inspiration.

    Also, I seriously doubt the millionaire moves to a place with a smaller burden because he/she cannot “afford” their tax burden. They can afford it, they just don’t want to pay. And that’s fine. I can afford to get cable TV, but I don’t want to pay for it, so I watch my TV over the air. It’s a choice I made because I’m cheap. These millionaires who “can’t” pay the taxes are in the same boat, just not as willing to own their own decisions.

  32. Gromitt Gunn says:

    Every state is going to make money somehow. Here in Austin, TX, the majority of transplants coming in think they’re moving to some sort of No Taxes paradise with cheap housing.

    And then they find out that sales tax is roughly 8.5%. And that property taxes amount to approximately 50% of your mortgage payment. And that the highways are a complete clusterf*$k due to an unwillingness to raise the gas tax. And that unless you live in one of a few specific areas, you’re going to have to shell out for private school tuition. Etc.

    I have a coworker who lives in a very desirable part of Austin whose monthly property tax bill on a 2 bedroom bungalow is within $100 of the monthly rent on my 1 bedroom apartment.

    Every government needs revenues to function. It is just a question of how they get them.

  33. the Q says:

    “To pretend that taxes don’t affect behaviour, however, would be cognitively dissonant…”

    Yes, its pretty obvious that lowering taxes on the rich has resulted in the predictable wealth stratification and its concomitant political instability.

    Like I tell all my idiot wingnut pals, “gee guys, back in the 40s and 50s and 60s and 70s there were sections in LA called Bel Air and Beverly Hills and Brentwood even when marginal tax rates were 71% – 90% for this cohort.

    How was that possible, since we all know that America really started in 1981 when St. Ronnie rescued us from that bastard Jimmy Carter and the evils of the New Deal and confiscatory marxist tax rates.

    Because its cognitively dissonant for wingnuts to admit that lower tax rates have little to do with economic activity, its impossible to have a coherent debate about this.

    The highest sustained GDP growth the U.S. experienced in the 50s – 70s came with extraordinarily high marginal rates. How is that possible if all we hear from the post 1981 dickhead faction is that fettering this elite with the shackles of higher taxes stunts economic activity and growth?

    Its ridiculous to assert that a guy making $15 – 100 million dollars annually is gonna say to himself, “thats it, Obama is raising my taxes by 10%, so I will only be making $13.5 – $90 million this year, so fuck it I am calling in sick today and am only gonna work 50 hours this week just to show “the man” how oppressed I am.

    Lets compare eras, 30 years post St. Ronnie vs. 30 years post FDR….well if you are in the bottom 60% of the income quintiles, you are presently being fucked under St. Ronnie’s legacy.

    30 years after FDR, the middle and poor were thriving and gaining ground as all segments of society were lifted by these policies.

    I know some of you dyed in the wool wingnuts will scream and cry that there are many factors for this decline, but you are all full of wingnut batshit.

    The single most important issue the past 30 years for the wingnut faction has been TAX cuts. No other issue gets this much attention or rabid defense.

    Yet when the point is made that America did just fine with ridiculosuly high rates, the retort is “no one paid this much since there were loopholes.

    Google the salary of Charles Wilson, the mid-century CEO of GM (also Ike’s Treasury secretary and “whats good for GM is good for america” fame). Wilson was one of the highest-paid corporate executives in America, earning $586,100 (and paying, incidentally, $430,350 in taxes – or 73%).

    Now wingnuts, repeat after me, “America was a backward, immoral Marxist dystopian socialist hell-hole just waiting to be saved by St. Ronnie and his war on taxes.

    Wingnut response “the world was different back then and the comparisons are false” in 4….3….2…1…..

  34. the Q says:

    jdfljowiern

  35. PD Shaw says:

    In addition to James’ point about the ease of stayng in the D.C. area while changing state residency, “the rich” generally own multiple residences, including vacation homes in Florida. For them, transferring tax residency is simply a conceptual migration aided through the magic of lawyers and tax accountants.

  36. wr says:

    @Tsar Nicholas: To stay at the Four Seasons generally costs $400 to $500 per night. By the logic of this “poll,” rich people would be fleeing the Four Seasons because there are rooms at Motel 8 for fifty bucks a night.

    Maybe there are some losers who will flee a place they love because they have to pay a couple extra dollars in taxes, but I suspect that most wealthy people consider taxation as only one part of their decision of where to live.

  37. anjin-san says:

    @ John Persona

    Only transplants leave because of earthquake fears. I lost an attractive blonde neighbor in early 1990, back to Colorado she went…

  38. jan says:

    People can make the case, or deny it, whatever makes their point to fit into their own political agenda. However, reality will rule. In the end what shakes out will be those states which have RTW laws, taxes that don’t choke out work incentives, and generally have less government intrusions into their personal/professional lives will enjoy lower UE, state deficits and have a more contented populace dwelling there. Most of the states who are currently below the deficit/unemployment fray of the national average are ones having R governors, including the much touted Ohio.

  39. Gromitt Gunn says:

    @jan: Holy crap. I didn’t even have to expend more than two minutes of effort to disprove this.

    Monthly unemployment rates, May 2012:
    http://www.bls.gov/web/laus/laumstrk.htm

    “Lefty” states with below average unemployment include Vermont (# 4 !!), Iowa, Minnesota, Massachusetts (# 11 !!), Hawaii, Delaware, and Maryland.

    Right to Work States and/or states with “R” governors with above average unemployment include Alabama, Idaho, Indiana, Tennessee, Arizona, Kentucky, Florida, Mississippi, Georgia, South Carolina, and North Carolina.

    The twelve states with the highest employment are all across the spectrum of blue/red/purple, and include Florida, New York, Georgia, Illinois, South Carolina, Nevada, New Jersey, and Mississippi.

    Doing a scan of the list, I am confident that there is currently almost no correlation between Right to Work status or which party controls each governorship and the unemployment rate.

  40. Ben says:

    @jan:

    Most of the states who are currently below the deficit/unemployment fray of the national average are ones having R governors, including the much touted Ohio.

    And yet, Vermont, New Hampshire, Massachusetts, Minnesota, Hawaii, Montana, Delaware, Maryland, and West Virginia all have D governors and are well below the national average for unemployment; in fact they’re all below 7% as of the most recent numbers I could find. That’s quite a lot of exceptions to your rule.

    Damn, someone beat me to it. Anyways, the point still stands. Jan is talking out of her posterior orifice.

  41. LaurenceB says:

    For more on this subject, head on over to The National Review Online and watch the Conservative Intelligentsia (such as it is today) discuss at great length the case of Denise Rich, who is renouncing her U.S. citizenship to avoid paying high taxes.

    Oh… Except that that part about high taxes was all pretty much made up.

    (face palm)

  42. anjin-san says:

    Most of the states who are currently below the deficit/unemployment fray of the national average are ones having R governors,

    More Fun Facts from Fox?

  43. michael reynolds says:

    I think it’s unfair to accuse Jan of talking out of her nether orifice. She’s just regurgitating Fox News and lacks apparently any skepticism so long as she’s being told what she wants to believe, and she has no independent understanding of politics so she doesn’t anticipate how easily she’ll be refuted.

    So, your basic dim conservative.

  44. jan says:

    This is the 8th year that 650 business leaders responded to a survey sponsored by Chief Executive, giving their ratings of the best and worst states to do business with. These business leaders graded all 50 states based on a variety of considerations, “including taxes, regulation, quality of workforce and living environment.”

    The results were: 9 out of the 10 best states have republican governors. Broadening it out further — 20 of the 25 top states have republican governors.

    Just like people hang out with people they are socially compatible with and like being around, so does business go where there is a cooperative business environment in which they can operate. It’s called using ‘common sense’ thinking. And, where business determines it wants to open up shop, so do jobs.

  45. jan says:

    @michael reynolds:

    “I think it’s unfair to accuse Jan of talking out of her nether orifice. She’s just regurgitating Fox News and lacks apparently any skepticism so long as she’s being told what she wants to believe, and she has no independent understanding of politics so she doesn’t anticipate how easily she’ll be refuted.”

    I can’t tell if you are just a tool of social progressives, or simply have blinders glued to your perspective. But, your responses are often without thoughtful consideration, and simply join in with the cawing of the crows here.

  46. jan says:

    …BTW, Michael, if you would just stay off of MSNBC, and the like, you might actually learn something that doesn’t involve the left’s regurgitation of life and news.

  47. @jan: Wow Jan, a survey based on what 550 CEOs rank their favorite states? Scientific!

  48. C. Clavin says:

    Jan,
    The list of states you link to is esentially the same list of Red States that depend on the welfare they get from Blue States to survive…yup…your Republican Governor heros are running Welfare Queens. They are failures. Let ’em secede…they wouldn’t last.
    8 of the top 10 from your list take more in federal aid than they return in taxes. The other two in the top ten barely keep themselves off the list.
    http://www.flickr.com/photos/michaelpinto/2987025203/
    Just a thought…but maybe they should raise their tax rates a little so the rest of us can stop sending them support checks. ( It’s easy to keep your taxes low when you are mooching off the Federal Government.)
    I had no idea you were so pro-welfare.

  49. @jan:

    So how do your “free states” rank in the millionaires list? And if they are low, why?

    … geez, I know conservatives love to name Texas, but it’s a poor state on the federal dole. And that’s even with the massive oil wealth.

  50. Al says:

    Other studies, discussed and linked here say the opposite, that people move for job related, rather than tax related reasons.

    (Yeah, yeah. I know. “NPR is teh biased!”)

  51. @jan: Here’s some actual data, that you so loudly lament for; the top ten states based on GDP per capita are :

    District of Columbia
    Delaware
    Alaska
    Connecticut
    Wyoming
    Massachusetts
    New York
    New Jersey
    Virginia
    Washington

    At least 7 of those 10 are solid blue states states.

  52. And a list by median income. California is 8th, Nevada 18th, Texas 25th.

    Oregon is 24th, which is kind of interesting. That it would be so close to Texas with such a radically different political philosophy tells us that taxes are not a big factor in driving, or limiting, success.

  53. jan says:

    @James:

    Wow Jan, a survey based on what 550 CEOs rank their favorite states? Scientific!

    Scientific? Business decisions are not necessarily based on scientific data but rather on business opportunity, creativity and receptivity. Relating to that follows job formation. We’re not talking about CERN or Darwinism, but rather acumen and experience related to business formation. BTW, this survey was based on 650 CEO responses this year, not 550. So, your perusing of the article was just that, a windshield appraisal so that you could ready an oppositional scientific response.

  54. @jan:

    So where is the promised land? Where has small government created more wealth than all those nasty tax-mad liberal states can do?

    Why, as you’ve been asked so many times, does the Federal government have to tax the Blue States to prop up the Red States?

    Isn’t that, fundamentally, opposite from everything your logic and prejudice tells you it should be?

  55. @jan: So the 650 CEO respondents are more influential you your opinion that actual GDP per capita data? Is that what you’re trying to say?

  56. (Delaware did beggar a lot of other states with their corporate tax haven, but we’d probably all be better off if they’d not been able to do that. States with a PO Box in Delaware have real operations in other states, where they free-ride on services.)

  57. “[corporations] with a PO Box in Delaware”

    @James:

    It’s truthy!

  58. michael reynolds says:

    @jan:
    Jan, you’ve just been blown out of the water nine different ways. This happens almost every time you comment. That’s because you don’t know what you’re talking about and you credulously pass along whatever you heard on the official GOP propaganda channel. It’s like talking to someone from North Korea and hearing them explain how Kim Jong Il had hundreds of holes-in-one and single-handedly invented nuclear fusion. It’s GIGO – Garbage In, Garbage Out.

  59. @jan: Also, neither 550 (nor 650) is ever really considered to be a valid sample size. You can type all you want about ‘business acumen,’ but all it really amounts to very little, terms of statistical validity.

  60. sam says:

    Tsk, tsk. Boys, boys, let’s show a little charity here. I mean, look, we really ought to refrain from hauling out the clubs every time jan the baby seal shows up. I mean, c’mon:

    So, your perusing of the article was just that, a windshield appraisal so that you could ready an oppositional scientific response.

    Where’s your compassion?

  61. anjin-san says:

    The results were: 9 out of the 10 best states have republican governors.

    How many CEOs do you know? A lot of CEOs would define a “good” place to do business as “one that lets me do what I want”. Why is, say Nevada, a good state to do business in? Because if you are willing to write checks, they will let you do more or less as you please.

  62. mattb says:

    @jan:

    Scientific? Business decisions are not necessarily based on scientific data but rather on business opportunity, creativity and receptivity.

    You may not like Jan’s opinions, but respect her honesty when it comes to explaining how those opinions are formed. Here and in other places she’s been extremely up front about how she forms her opinions.

    (And, for the record, there seriously is no sarcasm intended in this comment).

  63. Herb says:

    @jan:

    “BTW, this survey was based on 650 CEO responses this year, not 550. So, your perusing of the article was just that, a windshield appraisal so that you could ready an oppositional scientific response. “

    As has been pointed out, the survey just isn’t very good scientifically. As a talk piece for a corporate executive website, sure, alright.

    The truth is that, with such incomplete data (we don’t know each state’s final score, nor the industries these executives work in) it’s not even wise to make a correlation must less state a causation.

    What makes a state “great” is different for every company, and even every industry. Not much coal-mining goes on down in Florida, but not very many oranges are grown in Wyoming. Here in Colorado we have no need of the ship-building industry, but aerospace…it’s big.

    Texas is indeed a great place to do business. It’s got a large area, a robust population, a coast and plains, not to mention several dense urban areas filled with infrastructure, skilled workers, demand, and yes…regulatory friendliness. But to make it all about politics misses the point.

  64. al-Ameda says:

    @jan:
    You’re right Jan,

    Alabama and Mississippi are 2 of the most desirable states in the union to relocate to – low income taxes, low unionization, RTW laws, low property taxes, Bible Belt values – I can imagine the wealthy of Greenwich, Beverly Hills, Manhattan, San Francisco, and Brookline and Martha’s Vineyard are now planning their moves.

  65. mattb says:

    @Herb, with sanity, ftw.

  66. C. Clavin says:

    One of those Republican Governors that Jan fantasizes about was President…he squandered a budget surplus, started two wars he didn’t have the balls to finish, and left us with the worst economic crisis since the Great Depression.
    She should probably work on some new fantasies.

  67. grumpy realist says:

    @john personna: Except that all the other states have this thing called a “foreign corporation” which has to be registered as well. You just end up paying a lot of licensing fees no matter where you are. The nice thing about Delaware is they’ve streamlined 99% of the processes and are very internet-friendly. (As opposed to other states which insist you dealing with them by snail mail.)

  68. the Q says:

    Well, if we go by Jan’s superficial extrapolations we can use California the whipping boy for all things liberal as an example.

    If we look at the gloomy May jobs report we find that of the 69,000 payroll jobs created nationwide that month, 34,000 were from California which is just about 50% of all new jobs created in the country.

    So, eat shite Texas.

    Jan, I guess this means that since half of all NEW jobs in the WHOLE country, were created in Cali we must therefore have an economy thats twice as good as the rest of America with policies which should be emulated by those slackers in Texas.

  69. wr says:

    @jan: So according to your steely logic, you and your small business left California years ago. And yet you’re still here. Or so you claimed before. Maybe now that that’s inconvenient you will magically be living in Nevada.

  70. wr says:

    @jan: “…BTW, Michael, if you would just stay off of MSNBC, and the like, you might actually learn something that doesn’t involve the left’s regurgitation of life and news. ”

    I realize that taking legitimate accusations against yourself and ludicrously accusing your opponent of the same thing is the only rhetorical tool the Romney campaign has at hand, but honestly it’s even more pathetic to see you trying it. You are the only poster here who cuts and pastes hundreds of words from rabid right-wing sites instead of making a single point of your own. You are the only one who repeats RNC talking points on a daily basis.

    Maybe you think this will immunize you against charges of being a shilll, but really it just makes you look stupid.

  71. KariQ says:

    @john personna:

    (Do natives really fear earthquakes? scoff.)

    Nope. It’s just another thrill ride to us. Though some are more thrilling than others.

    I’ve known people who have moved out of California and the reasons they mention have always included real estate prices; I’ve never heard one mention taxes. Most of them have also regretted the move and wanted to come back but couldn’t because they couldn’t afford a house here.

  72. An Interested Party says:

    You may not like Jan’s opinions, but respect her honesty when it comes to explaining how those opinions are formed. Here and in other places she’s been extremely up front about how she forms her opinions.

    It’s not Jan’s honesty that deserves no respect, it’s her opinions…

  73. matt says:

    @Gromitt Gunn: When I moved to Texas some years ago I had no idea there wasn’t a state income tax. Like you said though they get their money through different means including the ridiculous number of fees charged by the state for everything. Even subscribing to an online MMO resulted in me being charged a fee by the state..

  74. anjin-san says:

    @ mattb

    Here and in other places she’s been extremely up front about how she forms her opinions.

    Well, she has claimed several times she never watches Fox, but she spits out Fox talking points pretty constantly, and the other day she mentioned a Frank Luntz focus group she was watching, so it is not a stretch to say she had lied about her viewing habits.

    Recently she was telling me about the community she lives in, where “no one seems to care about race”. Apparently, it is a place unique on earth. She went on and on about the wonderful values in her community, and made a point of how I would not be comfortable there, with all the specialness that is in the air.

    Of course I grew up about 15 minutes away from where Jan is, and am currently about 20 miles up the road, but she is apparently able to glean all sorts of things from the fertile ground of Sonoma that are beyond my ken…

    Sorry – Jan is full of it. I don’t think she is just a bad person in the way Florack or Jenos is, but her clues don’t have a clue.

  75. anjin-san says:

    Most of them have also regretted the move and wanted to come back but couldn’t because they couldn’t afford a house here.

    Most of the people I have know that left CA regretted it later, but as you said, it tends to be a one way ride when you leave.

  76. Tlaloc says:

    I think the more interesting question is: if a tax drives millionaires away, is that a bad thing?

    On the one hand you lose out on the tax money. On the other hand it also probably means you lose out on the manipulation of the state government through lobbying efforts. That’s assuming of course that most millionaires care mostly about the government of their own state, an assumption which obviously has some exceptions (such as the Kochs and Buffets of the world).

  77. wr says:

    @An Interested Party: “It’s not Jan’s honesty that deserves no respect, it’s her opinions… ”

    Oh, be fair. In the immortal words of Dan Aykroyd, it’s a floor wax AND a dessert topping.

  78. michael reynolds says:

    @anjin-san:

    What kills me is of course that without Leftie, intellectual, urban, college-educated money flooding into Sonoma from San Francisco and New York and LA, buying up Sauvignon Blanc and Zinfandel and patronizing expensive restaurants and B&B’s, Jan’s paradise would be a somewhat more scenic version of Iowa.

  79. Ron Beasley says:

    @john personna: Oregon is a strange state. You have the Portland Metropolitan Area and Eugene which are blue and the rest of the state is red. When you think of Oregon you think rain but two thirds of the state looks like Nevada. Intel’s largest operation is in the Portland area – that’s where they do all of their R&D. All of the microprocessors are born there. The largest solar panel manufacturer in the US is there. But get out of the Portland area and things are tough. Logging used to be the big thing here but the trees have all been cut and towns have died. No oil or gas here thank god but there is wheat and tons of it is shipped to Asia.

  80. G.A. says:

    …BTW, Michael, if you would just stay off of MSNBC, and the like, you might actually learn something that doesn’t involve the left’s regurgitation of life and news.

    🙂

  81. @jan: The most common determinant of where a company relocates to is the closeness to the decisionmaker’s golf club… so unless Jan is postulating a massive positive externality from particular golf clubs (quasi-randomly distributed) site location decisions are at best satisficing decisions, not optimizing decisions.

  82. @Ron Beasley:

    My point was that all those little things seem to matter more than tax rate. Oregon had, I thought, high tax, but ranks above Texas in income. It turns out Oregon only has medium tax (ranking 21st in the nation for state-local tax burden. Texas is quite low of course, ranking 50th. Of course, why then is Oregon ahead in income?

    The top few states on tax burden look a lot like the list of high income states:

    New Jersey, New York, Connecticut, Wisconsin, Rhode Island, California, Minnesota …

  83. Rob in CT says:

    The nice thing about Delaware is they’ve streamlined 99% of the processes and are very internet-friendly. (As opposed to other states which insist you dealing with them by snail mail.)

    And see, if THIS was what was being discussed when people say “business friendly” then I’m totally receptive. Modernizing things so following the rules is less annoying/painful/expensive is a good thing. Of course, that might involve actual work for the legislators, instead of being wined and dined by lobbyists and then signing off on a tax break.

  84. @Rob in CT:

    Delaware was pretty aggressive in “beggar thy neighbor.” Remember, they were also a credit card haven:

    Delaware has also attracted some major credit card banks because of its relaxed rules regarding interest. Many U.S. states have usury laws limiting the amount of interest a lender can charge. Federal law allows a national bank to “import” these laws from the state in which its principal office is located.[3] Delaware (amongst others) has relatively relaxed interest laws, so several national banks have decided to locate their principal office in Delaware. National banks are, however, corporations formed under federal law, not Delaware law. A corporation formed under Delaware state law benefits from the relaxed interest rules to the extent it conducts business in Delaware, but is subject to restrictions of other states’ laws if it conducts business in other states.

    So while, as Rob notes, some states have clawed back some corporate income … I’m not sure that Delaware looks that virtuous on the details.

  85. I need to finish my second cup of coffee …

    So while, as grumpy realist notes, some states have clawed back some corporate income … I’m not sure that Delaware looks that virtuous on the details.

  86. mattb says:

    @anjin-san:

    Well, she has claimed several times she never watches Fox, but she spits out Fox talking points pretty constantly, and the other day she mentioned a Frank Luntz focus group she was watching, so it is not a stretch to say she had lied about her viewing habits.

    A lot comes down to what is meant by “watches” Fox. I suspect that it’s on in the background from time to time… and that if she needs cable news that’s where she does first. But does Jan, “watch” (i.e. sit down and watch an entire Hannity broadcast), no I don’t think she does.

    That said, it’s clear that she spends a LOT of time on Right Wing Newspapers, Blogs, and Opinion Sites — just look at the source of all her links. Which means shes getting the same general talking points, just from a different location.

    And the same would generally be true of someone who only frequented leftwing meda — talking points tend to circulate fast, because they are, you know, talking points.

  87. Some interesting stuff here, at Do Marginal Tax Rates Affect GDP?

    The conclusion:

    The null hypothesis should not be rejected. Research shows that Top marginal Tax rates have no statistically significant relationship with Gross Domestic Product. Marginal Income tax rates do not affect GDP because, in accordance with Hausser’s law, they stay relatively constant to GDP over time.

    This conclusion should not be surprising to government economists, as presumably, any change in the tax code that is not accompanied by changes in spending would have to be revenue neutral in order to balance the budget. The tax burden itself has, in aggregate, seemed resistant to change and therefore has resisted an effect on GDP. Changes in the Marginal tax rates do not, therefore, determine the reallocation of revenues, but rather what class is financing the reallocation of revenues.

    Taken at face value, this thread and threads like it are really about that last bit “class is financing the reallocation of revenues.”

    Arch-conservatives would prefer that CEOs and billionaires allocate resources in our economy, Arch-liberals would prefer apparatchiks. Moderates would attempt to balance the two.

  88. al-Ameda says:

    I find it interesting that two of the most harsh critics of liberalism and of locales where liberal dominate the political and economic discussion – Michael Savage and David Horowitz – choose to live in the Peoples’ Republics of The San Francisco Bay Area and Santa Monica, respectively.

    Why don’t they choose to live where taxes are lower?

  89. anjin-san says:

    @ al-Ameda

    How Savage makes it through life without happy meals is a mystery…

  90. al-Ameda says:

    @anjin-san:

    How Savage makes it through life without happy meals is a mystery…

    I believe that Miguel lives on the Tiburon Peninsula, a crucible of Marin County Marxism.

  91. Drew says:

    Do High Taxes Chase Out The Rich?

    Well, duh. Was this really intended to be serious?

  92. C. Clavin says:

    Drew once again proves he got to be the worlds greatest corporate financier with absolutely no intelligence…simultaneously destroying Romney’s only argument for the Presidency.

  93. C. Clavin says:

    I sure wish all those red states with low taxes and no regulations would secede so I could stop sending them 30 cents of every tax dollar. Then…when they fail because they can’t balance their budgets the Blue states can take them over and run them right.

  94. Trumwill says:

    @john personna: A lot of people seem to be under the impression that if you just keep calling Texas a beneficiary state, it will become true…

    It is a medium-income state with a really low cost of living (taxes are a part of that, though I agree that they are not the driving factor). Last I checked, they got less per-capita from the feds than does California. Granted, California has a less generous tax-to-spend ratio with the government, but that’s thanks to the high federal taxes they pay, not that we’re sending substantially more to Texas than to California.

  95. john personna says:
  96. Trumwill says:

    John, according to that link, Texas receives 91 cents for every $1.00 it pays in taxes. California receives $1.09.

    (Texas has been on the “donor” side of every map I’ve seen, though I have to confess that this is the first time I have ever seen California on the “beneficiary” side.)

  97. jan says:

    CNBC’s 10 top as well as 10 least business friendly states in America

    A continuing pattern noted in yet another survey (non-scientific) is that 9 out of the 10 most business friendly states have RTW laws (exception being CO), while the bottom 10, 7 of the 10 are forced union states (exceptions being NE, MS, LA)..

  98. jan says:

    @anjin-san: @michael reynolds:

    “What kills me is of course that without Leftie, intellectual, urban, college-educated money flooding into Sonoma from San Francisco and New York and LA, buying up Sauvignon Blanc and Zinfandel and patronizing expensive restaurants and B&B’s, Jan’s paradise would be a somewhat more scenic version of Iowa. “

    There you go again dwelling on your liberal assumptions of another’s habits etc.

    The one aspect of ‘me’ you have pegged correctly is the sauvignon blanc, my favorite being Nobilo from New Zealand, sold at Trader Joe’s. I also like champagne, fireplaces, books, working with the land, construction, alternative medicine, jazz, anything that has a saxophone in it. I prefer cafes to pricey restaurants, thrift stores to department stores/boutiques, long walks to gyms, and only watch TV when I’m in Sonoma for half a month, where we have cable because there is no reception for anything else. Otherwise, I am in S. CA dealing with the everyday facets of our business.

    I am a ‘tom-boy’ not a high maintenance woman. And, am told that I can hold my own in conversations as well as public speaking gigs. I am a prolific writer as well, and have little time for all the activities you seem to proclaim is part of my ‘Fox’ profile. Perhaps, you need to stop compartmentalizing people and simply look at them as individuals with a myriad of different traits.

    @anjin-san:

    “Of course I grew up about 15 minutes away from where Jan is, and am currently about 20 miles up the road, but she is apparently able to glean all sorts of things from the fertile ground of Sonoma that are beyond my ken…”

    You seem like a bitter sort of fellow, anjin…always looking for the worst in people. I don’t know where you are located in Sonoma, but probably inland around the vineyards, the liberal enclaves of wine-tasting country. You’re a recovering addict, so probably don’t indulge, which I give you great credit for. I am in a coastal community, small and very much on the fringe in the neighboring towns. That Frank Luntz group, you singled out that I was watching, was very interesting, as it was comprised of a 50/50 group — those who voted for Obama in ’08 and those who didn’t. Did you watch it? if you didn’t then why throw aspersions out simply because it was on a network you don’t like?

  99. anjin-san says:

    @ Jan

    Actually, I get along pretty well with a lot of the people in here & have a high opinion of many – calling BS on you does not make me a bitter guy – sorry. And I don’t live in Sonoma, I am a little south of you, but I’ve lived my entire life right around the corner. I don’t think there is a lot about life in the north bay you can school me about.

    inland around the vineyards, the liberal enclaves of wine-tasting country.

    You sound kind of bitter Jan. Why the need to label everyone and classify them by socio-economic group? Why the need to try and build yourself up at the expense of others, simply because you disagree with their politics? What have you got against people who live near vineyards?

    Frank Luntz group, you singled out that I was watching

    You can watch anything you like. Just don’t tell us you “never” watch Fox.

  100. anjin-san says:

    jazz, anything that has a saxophone

    Who do you listen to? Bean, Pres? Later stuff – contemporary? This is what I have on at the moment:

    http://www.youtube.com/watch?v=sCQfTNOC5aE

  101. @Trumwill:

    Hmm. Either I looked at that chart backwards the first time around, or was running from some other data. It looks like for now I have to concede though.

  102. More here:

    When you compare the 50 laboratories of democracy after sorting them based on how their citizens voted in November 2008, only 10 Democratic-voting states are net recipients of federal subsidies, as opposed to 22 Republican states. Only one red state (Texas) is a net payer of federal taxes, as opposed to 16 blue states. One blue state (Rhode Island) pays as much as it gets.

    Political scientists have been wrestling with this apparent paradox for years. One explanation sometimes offered is that the red states, on average, have smaller populations. In “Political Determinants of Federal Expenditure at the State Level,” published by the journal Public Choice in 2005, two University of Alabama at Tuscaloosa economists, Gary Hoover and Paul Pecorino, note that residents of low-population states have more per capita representation in Congress, since every state, regardless of population, has two senators. That edge, Hoover and Pecorino argue, translates into more federal handouts. The results are conspicuous in the case of homeland security grants, where small, rural, relatively low-risk states get much more money per capita than urban states that face bigger terrorist threats.

    But red-state lawmakers’ ability to bring home the bacon isn’t the main reason for the paradox. Red states, on average, are also lower-income states. Because of the progressive federal income tax, states with higher incomes pay vastly higher federal taxes. These payments are unlikely to be matched by federal spending directed back into those states.

    So the general pattern is there, that red states are lower income, but Texas is the exception on federal dollars.

    More there about why poor states vote “red.”

  103. James Joyner says:

    @john personna: Don’t forget that the red states also have the lion’s share of military bases. I can’t offhand think of a major Army base that’s in a blue state and all of the huge one’s—Bragg (NC), Hood (TX), Benning (GA), Knox (KY), Riley (KS)–are in red states. There are a handful of major non-Army bases in California but California was a die-hard red state, at least at the presidential level, as recently as 1988.

  104. @James Joyner:

    The spending side gets complicated. California still has a big aerospace and military equipment industry.

    For the purposes of this thread, I’m really focusing on incomes and tax levels. Do high taxes chase out the rich? No. The high tax states retain more rich, the high tax states continue to make more money.

    Perversely, the red states, the ones who want to lower taxes on the rich, are poor.

  105. Mikey says:

    @James Joyner: Ft. Lewis (now Joint Base Lewis-McChord) is in Washington state. That’s a pretty big one.

  106. mattb says:

    @James Joyner: One larger “Blue” base is Ft. Drum in Northern NY, home to the 10th Mountain Division.

  107. Rob in CT says:

    This looks like a pretty comprehensive take on the whole blue state/red state federal taxes/transfers thing:

    http://www.economist.com/blogs/dailychart/2011/08/americas-fiscal-union

  108. Rob in CT says:

    California comes out in the black, but only slightly.

    The top “donor” states are Delaware, Minnesota, Jersey, Illinois, Connecticut, Ohio, Michigan, Nebraska and Mass.

    The top “welfare” states/territories are Puerto Rico, New Mexico, Miss, W. Virginia, Montana, Alabama, North Dakota, Maine, Maryland (includes D.C.) and Alaska.

    Now look, I’m fine with our fiscal union and thus do not begrudge transfers from CT to, say, Mississippi. I don’t have a serious problem with wealth redistribution. However, for those who *do* complain about redistribution, I think this information should be considered. Because it seems to me there are quite a few businesses that make a lot of money selling things to customers whose money comes (directly or indirectly) via redistribution from other states. If you are against redistribution of wealth, you have to consider whether you are against such transfers. If you are against our fiscal union, consider Europe’s present situation – a single currency w/o fiscal union (and certainly w/o political union) is a recipe for disaster. Without transfers, you have to have the ability to devalue (which, presently, countries like Spain don’t have). Thus, the rational endpoint for a “no redistribution” hardliner is to advocate breaking up the USA. Actually no, because there would still be wealth redistribution within states. And within counties. And within towns. Mein Gott! It’s redistribution all the way down!

    😉

  109. wr says:

    @jan: Yes, Jan. A “busines friendly” state is one that doesn’t force businesses to actually pay the costs of employing workers, but instead allows them to underpay and forces the government to pick up with slack with health care, food stamps and other such programs. If I’m Wal-Mart, I love the fact I can pay minimum wage, knowing that my employees need Federal aid simply to eat on those wages. In less “business friendly” place, businesses are actually forced to pick up the full costs of hiring their workers, rather than sticking the taxpayers with much of it.

  110. Mikey says:

    @Rob in CT: I guarantee the money coming in to Virginia, Maryland, and DC is not transfer payments or “welfare” but rather salaries to government workers and purchases of goods and services from government contractors.

    Not a big difference in the grand scheme, but I think it is important to note in the context of the ongoing discussion.

  111. John D'Geek says:

    @James:

    Also, neither 550 (nor 650) is ever really considered to be a valid sample size.

    Speaking of non-scientific …

    Medical professionals often use smaller sample sizes; it’s all but required in psychology. The question is “how representative of the whole is the sample”, not “is it big enough to give me the warm fuzzies”.

    “What is the margin of error in that sample?” and “is that sample representative?” are valid concerns; “that’s not big enough” is nothing but, pardon the technical term, “poppycock”.

  112. @John D’Geek: Please John, I’ve worked on multiple exit polls. For lack of a better idiom, you’re talking out of your arse. Per Wikipedia:

    Larger sample sizes generally lead to increased precision when estimating unknown parameters. For example, if we wish to know the proportion of a certain species of fish that is infected with a pathogen, we would generally have a more accurate estimate of this proportion if we sampled and examined 200, rather than 100 fish. Several fundamental facts of mathematical statistics describe this phenomenon, including the law of large numbers and the central limit theorem.

    Did you fall alseep too often in your undergrad stats classes or something?

  113. John D'Geek says:

    @grumpy realist:

    Except that all the other states have this thing called a “foreign corporation”

    I don’t get to say this very often, but thanks for beating me to it. 😀