PDA

View Full Version : Texas vs. California



road kill
02-09-2011, 08:37 AM
California taxes away jobs while Texas adds them


While many states have been struggling through the economic downturn, there's been a giant neon sign hanging over Texas that says "OPEN FOR BUSINESS."


More recently, "Texas created 129,000 new jobs in the last year -- over one-half of all the new jobs in the U.S. In contrast, California lost 112,000 jobs during the same period," according to "Texas vs. California: Economic growth prospects for the 21st Century," a new report by the Texas Public Policy Foundation released in October.

Texas is home to 64 Fortune 500 companies -- more than any other state in the union. (California has 51 and New York has 56.) For five years in a row, Texas has topped Chief Executive magazine's poll of the best state to do business.

Meanwhile, California is ranked dead last in the Chief Executive's survey. California state treasurer Bill Lockyer even went so far as to pen a Dec. 20 op-ed in the Los Angeles Times denying "the claim that we have a hostile business climate."

So why are businesses flocking to Texas and fleeing California? Well, as a recent headline from The Economist put it, in California "They paved paradise and put up the parking taxes."

Texas has no personal income tax. With a top rate of 10.3 percent, California has the third-highest state income tax after Oregon and Hawaii.

The tax advantage goes much deeper. The Tax Foundation cites California as having the 33rd highest corporate income tax topping out at 8.8 percent -- much higher than Texas' modest 1 percent gross receipts tax on business.

California's capital gains tax is the highest in the country, whereas Texas levies no tax on capital gains. California's sales tax is the second highest in the nation and its energy taxes are the highest in the country.

And as California's taxes have gotten higher, the state's revenue has become more unstable.

"When you're taxing income that high you're not taxing wage income, your taxing capital gains and dividends, which is tying you to the most volatile form of taxation -- the corporate income tax," Kail Padgitt, economist and author of the Tax Foundations' annual State Business Tax Climate Index.

"That's the problem for California -- boom-time budgeting. Texas is more dependent on property taxes and stable forms of taxation and Texas' two year budget cycle requires more planning, and that's helped them."

The result is that California is inordinately dependent on taxing the wealthy, which has proven to be a poor economic strategy. The decline in tax revenues from households making over $200,000 accounts for 93 percent of California's total decline in tax revenues since 2007.

When states tax wealthy earners too much, they often get up and move to where the tax burden is lower -- such as Texas.

While high-tax states like California are foundering, not-tax states are thriving. From 1997 to 2008, Texas and the other nine states with no personal income tax created 89 percent more jobs and had 32 percent faster personal income growth.

The lessons learned from California's progressive taxation apply to the whole country. A 2008 survey by the Organization for Economic Co-operation and Development found "taxation is most progressively distributed in the United States" -- even more so than socialist Europe.

If there are benefits of having high progressive tax rates, California shows that economic stability and job creation aren't among them.

http://washingtonexaminer.com/opinion/columnists/2011/02/california-taxes-away-jobs-while-texas-adds-them#

__________________________________________________ ________

2 divergent strategys
2 divergent results



RK

M&K's Retrievers
02-09-2011, 08:52 AM
California taxes away jobs while Texas adds them


While many states have been struggling through the economic downturn, there's been a giant neon sign hanging over Texas that says "OPEN FOR BUSINESS."


More recently, "Texas created 129,000 new jobs in the last year -- over one-half of all the new jobs in the U.S. In contrast, California lost 112,000 jobs during the same period," according to "Texas vs. California: Economic growth prospects for the 21st Century," a new report by the Texas Public Policy Foundation released in October.

Texas is home to 64 Fortune 500 companies -- more than any other state in the union. (California has 51 and New York has 56.) For five years in a row, Texas has topped Chief Executive magazine's poll of the best state to do business.

Meanwhile, California is ranked dead last in the Chief Executive's survey. California state treasurer Bill Lockyer even went so far as to pen a Dec. 20 op-ed in the Los Angeles Times denying "the claim that we have a hostile business climate."

So why are businesses flocking to Texas and fleeing California? Well, as a recent headline from The Economist put it, in California "They paved paradise and put up the parking taxes."

Texas has no personal income tax. With a top rate of 10.3 percent, California has the third-highest state income tax after Oregon and Hawaii.

The tax advantage goes much deeper. The Tax Foundation cites California as having the 33rd highest corporate income tax topping out at 8.8 percent -- much higher than Texas' modest 1 percent gross receipts tax on business.

California's capital gains tax is the highest in the country, whereas Texas levies no tax on capital gains. California's sales tax is the second highest in the nation and its energy taxes are the highest in the country.

And as California's taxes have gotten higher, the state's revenue has become more unstable.

"When you're taxing income that high you're not taxing wage income, your taxing capital gains and dividends, which is tying you to the most volatile form of taxation -- the corporate income tax," Kail Padgitt, economist and author of the Tax Foundations' annual State Business Tax Climate Index.

"That's the problem for California -- boom-time budgeting. Texas is more dependent on property taxes and stable forms of taxation and Texas' two year budget cycle requires more planning, and that's helped them."

The result is that California is inordinately dependent on taxing the wealthy, which has proven to be a poor economic strategy. The decline in tax revenues from households making over $200,000 accounts for 93 percent of California's total decline in tax revenues since 2007.

When states tax wealthy earners too much, they often get up and move to where the tax burden is lower -- such as Texas.

While high-tax states like California are foundering, not-tax states are thriving. From 1997 to 2008, Texas and the other nine states with no personal income tax created 89 percent more jobs and had 32 percent faster personal income growth.

The lessons learned from California's progressive taxation apply to the whole country. A 2008 survey by the Organization for Economic Co-operation and Development found "taxation is most progressively distributed in the United States" -- even more so than socialist Europe.

If there are benefits of having high progressive tax rates, California shows that economic stability and job creation aren't among them.

http://washingtonexaminer.com/opinion/columnists/2011/02/california-taxes-away-jobs-while-texas-adds-them#

__________________________________________________ ________

2 divergent strategys
2 divergent results



RK

Which one most resembles the Federal Government?

Home of Boxer and Pelosi regards,

road kill
02-09-2011, 08:53 AM
Which one most resembles the Federal Government?

Home of Boxer and Pelosi regards,

Don't forget Jerry Brown, Dianne Feinstein and Maxine Waters!!:shock:

RK

Roger Perry
02-09-2011, 09:11 AM
Don't forget Jerry Brown, Dianne Feinstein and Maxine Waters!!:shock:

RK

Maybe who the Governor was for the last 8 years had something to do with it.;-)
Arnold Schwarzenegger (http://www.chacha.com/topic/arnold-schwarzenegger) has been the Governor of California since 2003. He had never run for office before becoming the Governator.

M&K's Retrievers
02-09-2011, 09:15 AM
Oh, Texas has it's share.

Buzz
02-09-2011, 12:19 PM
Funny, I read another view this morning.



What California should learn from the Texas budget crisis


Billions of dollars in government red ink. Classroom spending near the bottom of national rankings and heading down. Desperate appeals to Uncle Sam for emergency funds to stave off cuts to the poor and elderly.

All this points to the obvious question: What's the matter with Texas?

Texas? Yes, the so-called Texas Miracle is in trouble. Unemployment soared and state tax revenue came in sharply below estimates during the recession, and the deficit mushroomed.

California's Legislature has won national renown for its dysfunction, but Texas lawmakers know how to squeeze dysfunction until it squeals. The late Molly Ivins reported years ago that when a good-government group ranked the Texas Legislature 38th among the 50 states, the reaction among knowledgeable Texans was, "You mean there are 12 worse than this?"

Get the monthly that has L.A. talking. Subscribe to Los Angeles Times Magazine at a special introductory rate.

Maybe things have improved in the Texas statehouse since Ivins' day. But given that the legislators put off action on the budget this year so they could first debate an anti-abortion measure, a balanced-budget amendment for the U.S. Constitution and a voter-ID law, maybe not.

Pondering the problems of Texas isn't merely an exercise in schadenfreude, the pleasure one takes in the misfortune of others (some examples evoked by the puppets of the show "Avenue Q": "Football players getting tackled; CEOs getting shackled "). The goal is to gain perspective on our own crisis and the conventional proposals to address it. The bottom line is that fashioning fiscal policies strictly along low-tax lines doesn't protect you from budget deficits or business slumps or make your residents necessarily happy or healthy.

The budget crises afflicting states coast to coast arise from a combination of the nationwide recession and obsolete or wrongheaded state taxing schemes. The National Council of State Legislatures says that at least 15 states face large deficits this year and 35 in fiscal 2012.

As things stand now, the council's figures place California's projected 2012 deficit at $19.2 billion, or 18.7% of its general fund, and the Texas deficit at $7.4 billion, or 17% of its budget. States with broad-based tax policies that balance property, income and sales taxes are best equipped to ride out economic cycles, because those levies don't all move in lockstep with the economy. Neither California, with its over-reliance on income and sales taxes, nor Texas, which has no income tax, qualifies.

Many state budgets will get worse before they get better, because federal stimulus funds used to close their gaps over the last two years are drying up. That points to a fact that hasn't been widely remarked upon: President Obama's stimulus program helped both California and Texas indeed, many states manage their deficits.

While Texas Gov. Rick Perry sucked up to the "tea party," declaring himself opposed to "government bailouts" and prattling about seceding from the union, he papered over his state's budget gap with $6.4 billion in Recovery Act funds, including increased federal handouts for education and Medicaid. So when you, the California taxpayer, hear talk of the Texas Miracle, you should take pride in having helped pay for it.

The supposed superiority of Texas over California in fiscal policy long has been a conservative article of faith. In 2009 the libertarian American Legislative Exchange Council published a report co-authored by the conservative economist Arthur Laffer underscoring the contrast. The report posited that "Texas' superior policies over the past several years are making the Lone Star State more resilient to the current economic downturn."

But Texas was hardly immune to the recession. From 2006 through 2010, the unemployment rate in Texas soared from 4.4% to 8.3%. Yes, that's a better showing than California, which went from 4.9% to 12.5%, but the difference may reflect the huge effect on California's economy of the popping of the housing bubble, which jumped our unemployment rate to a new magnitude and is likely to keep it there for a while.

The Laffer report focused chiefly on tax policy, its guiding principle being the lower, the better. Yet Texas' resistance to raising taxes to cover the cost of state government hasn't proved to be any more sustainable on the banks of the Rio Grande than it is on the shores of the Pacific.

With a Republican legislative majority in Austin adamantly refusing to raise taxes to cover a shortfall estimated at as much as $27 billion over the state's two-year budget cycle, budget drafters are talking about shutting dozens of nursing homes, taking a hatchet to college financial aid and university budgets and paring K-12 spending by $5 billion a year.

That last action could drop Texas out of its 2009-10 rank of 37th among states and the District of Columbia in per-pupil spending, as calculated by the National Education Assn., depositing it firmly in the cellar with California (42nd).

Laffer's admiration notwithstanding, part of the problem in Texas is fiscal stupidity. Californians love to cut their own taxes and expand spending programs; Texas in 2005 cut property taxes, which fund the schools, by one third, while increasing business taxes. But the business tax doesn't bring in as much money as the property tax did, and is more vulnerable to the economic cycle besides. The result was a widened budget deficit.

Curiously, Texas' reputation as a low-tax, business-friendly state survives although its state and local business levies exceed California's as a percentage of each state's business activity (4.9% versus 4.7% in 2009, according to a report by the accounting firm Ernst & Young). What's different is that Texas business taxation relies more on property, sales and excise taxes and government fees than California, which relies on taxing corporate income.

Of course, one reason many business owners and executives favor Texas over California is that the Lone Star State doesn't have a personal income tax a big deal when you're pulling in a Texas-size paycheck.

But self-interest aside, what's at stake from fiscal policy in both states is the same the services and programs that really matter to business owners, such as functioning schools, high-caliber universities and serviceable transport infrastructure.

Even more important are the measures that point to public well-being. In many categories, California and Texas are closer together than either state's residents would probably find comforting.

But here are a few where they're not: Texas ranks 49th in the nation (that is, third worst) in teen births; California 22nd. In providing prenatal care to expectant mothers, Texas is dead last, California eighth. Texas ranks 34th in median family income, with $47,143; California 13th, at $56,852. This is the harvest of its "superior policies," and given the current budget crisis, it's bound to get worse. Miraculous.

Michael Hiltzik's column appears Sundays and Wednesdays. Reach him at mhiltzik@latimes.com, read past columns at latimes.com/hiltzik, check out facebook.com/hiltzik and follow @latimeshiltzik on Twitter.

BonMallari
02-09-2011, 02:53 PM
Texas vs Calif is one subject I am qualified to comment on...I grew up and was educated in Southern Calif, but spent summer vacations in Texas, after graduating college I moved to Texas for the better part of 12 years, before moving back to Calif...the state has changed for one HUGE reason, the influx of minorities from both Asia and Mexico, when I grew up Calif was a solid conservative state, and nothing more so than my original home town of Buena Park in Orange County, the real OC, home of the first John Bircher's of the world, I went to an all white HS,being Asian, I was the minority..In my old neighborhood now I would be the majority

the change in demographics of the state have EVERYTHING to do with the politics of the state, you have never seen more entitlement programs, affirmative action, quotas than in Calif. Minimum wage in Calif is a full two dollars higher than the rest of the country, gun restrictions are the tightest..

How people continue to FT and HT in the state is beyond me...makes me ill to think about what has happened there. If we dont tighten our immigration laws and our borders the same thing will happen to other states too

dnf777
02-09-2011, 03:15 PM
. If we dont tighten our immigration laws and our borders the same thing will happen to other states too

Amen to that.

Both democrats and republicans would probably agree to that. So WHY, after eight years of Bush and a republican congress, and now Obama, with a democratic congress, HAS NOBODY DONE SQUAT ABOUT IT???

(that's a rhetorical question)

I hope we have not reached the point of no return, but I'm afraid we have, as evidenced by the fact that BOTH parties are afraid to take a stand against immigration. (STOPPING illegal immigration, and curtailing LEGAL immigration to needed skills and professions)

BonMallari
02-09-2011, 03:18 PM
Amen to that.

Both democrats and republicans would probably agree to that. So WHY, after eight years of Bush and a republican congress, and now Obama, with a democratic congress, HAS NOBODY DONE SQUAT ABOUT IT???

(that's a rhetorical question)

I hope we have not reached the point of no return, but I'm afraid we have, as evidenced by the fact that BOTH parties are afraid to take a stand against immigration. (STOPPING illegal immigration, and curtailing LEGAL immigration to needed skills and professions)

pure and simple VOTES, or at least potential votes

huntinman
02-09-2011, 03:44 PM
Political correctness is killing us. What Europe is going through will be here soon. Look at Detroit (Dearborn), Minneapolis is not far behind with the Muslims having their own isolated culture. The Obama administration will not even say who we are fighting or call terrorists what they are. We are in deep ....

TxHillHunter
02-09-2011, 08:11 PM
If we dont tighten our immigration laws and our borders the same thing will happen to other states too

INCLUDING Texas..... we have very high numbers of illegals and children of illegals absorbing school budgets and entitlement dollars that were never intended as such.

freefall319
02-11-2011, 05:58 PM
You won't get an argument from me. If it were'nt for my job we'd left this state a long time ago. Don't get me wrong, the duck hunting is good, the weather is mild and if I drive 2 hours east I'm at 9,000' in the Sierra's and 2 hours west I'm sittin' on the beach tossin'em back but damn, the taxes & crime are getting out of control here.

Hew
02-11-2011, 07:19 PM
You won't get an argument from me. If it were'nt for my job we'd left this state a long time ago. Don't get me wrong, the duck hunting is good, the weather is mild and if I drive 2 hours east I'm at 9,000' in the Sierra's and 2 hours west I'm sittin' on the beach tossin'em back but damn, the taxes & crime are getting out of control here.

Stuck in Lodi again, Mr. Fogerty? ;-)

Uncle Bill
02-12-2011, 10:34 AM
Stuck in Lodi again, Mr. Fogerty? ;-)


Don't 'spose your reference to CCR slipped past him? heh heh heh heh.

But I know how he feels about Awnoldland, my son lives in that Sac valley as well. He married a gal from a family that have lived their entire lives in that locale, so it's hard to get her and their 3 kids to move out. Might take the fault line to open too close to their abode to convince them they need to get out.

UB

freefall319
02-12-2011, 11:15 AM
Stuck in Lodi again, Mr. Fogerty? ;-)

Stuck, na, my wife & little one's would leave today if I wanted. It's just hard to leave a job making what I do with the time off and beni's that I have. So for now we'll stick it out. But, if the right oppertunity came up we'd blow this popcicle stand.