Stimulus Plan Saves the States – from What?
The citizens of New York and California – at least those who know how to earn a living – must be thrilled with the money their states are receiving from the federal spendulus plan. This plan was designed to help those states with the most Democrat votes, was it not?
The Stimulus Payoff: More Runaway Taxes
This brings the state income tax rate in New York up to 8.97%. For those unfortunate enough to work in New York City, the combined state and local income tax rate now tops out at a whopping 12.62%! (And let’s not forget that in New York, dividends and capital gains are taxed as ordinary income.)
Congratulations state taxpayers – your faith in government has been vindicated! All hail to the stimulus plan!
The politicians are using the stimulus money to maintain spending at record deficit levels and then demanding that state taxpayers take care of the difference. New York in fact is increasing state spending on top of the stimulus money.
What kind of people can continue to live in a tax environment like that? Years ago I lived in upstate New York. Mrs. ToughMoneyLove was born and raised in NYC. I am amazed that voters in those states continue to bend over and take that kind of governmental abuse.
I’ve remarked before – only half in jest – that we ought to just evacuate California (at least those who are there legally) and let nature take its inevitable course with earthquakes and wildfires.
Upstate New York (excluding Albany) probably has some value but I’m not so sure about New York City. Wall Street has become permanently tainted by its own greed. Perhaps we should announce that we feel so bad about the Dutch taking advantage of those Manhattan Indians that we would like to deed New York City over to the U.N. They would be perfect for each other, competing over who could engage in the most extravagant spending with the lowest return on taxpayer investment.
Please Get Me Out of Here
It seems that Mr. ToughMoneyLove is not the only observer with a negative outlook on California, New York, and the ten or so other states who are trying to tax their way out of huge budget deficits but without a lot to show for it.
The term “runaway taxes” in this context has another meaning: people are literally running away. As well they should.
According to a report released in December 2008 by the California Department of Finance, more people have left the state than have moved into the state, four years running. During the last fiscal year, 135,173 more people moved out of California than moved in from other states. The only factor that prevents an actual decrease in California’s population is the euphemistically described “international immigration”. The demographers call this net “domestic out-migration.” I call it fleeing the tax and spend monster.
Remember the Kurt Russell movie “Escape from New York”? The sequel is now playing.
Does anyone see the stimulus plan reversing these domestic out-migration trends? I don’t, as long as there are better places for hard working Americans to go, which there are.
North Carolina is one of those states that is experiencing an influx of New Yorkers. Why is that?
The population of North Carolina is approximately 9.2 million. The state budget runs around $21 billion annually. Does it make sense to you that in a reasonable world, one should be able to roughly extrapolate state budgets from state populations? Excluding states that can live off of their abundance of natural resources, like Alaska, comparing budgets by population makes a lot of sense to me as well. So how does that work with New York compared to North Carolina?
New York state has a little more than twice the population of North Carolina, at 19.4 million. A reasonable person might estimate that New York’s state operating budget would be a little more than twice that of North Carolina, say $45 billion. That reasonable person would be way off the mark. The actual 2009 budget number is $121 billion, a figure that New York politicians say is an “austerity” budget.
There we have it folks. New York has twice the population of North Carolina but spends six times as much.
It must be the road salt.
Seriously, what do New Yorkers have that North Carolinians do not, other than more stimulus money? Better weather? Lower taxes? A best in class public university system? Free rent? The answers are “no” across the board. (But New York can claim Charlie Rangel and Donald Trump as their own. Such a deal.)
I’m sure I could find other examples of state budgets that are grossly disproportionate to state population. With the trend toward domestic out-migration in these states, and reluctance on behalf of tax and spend politicians to change their ways, the magnitude of disproportion will only increase.
Time for Tough Love in New York and California?
People with ambition and visions for the future are leaving states like New York and California, taking their money and tax base with them. Maybe we should let these states fall into a GM-like death spiral, go bankrupt, throw out the bum politicians, and let those left behind start over. Sending more stimulus money is only stimulating more spending, more taxing, and more out-migration. I pity those who cannot escape it.
I see one long term benefit of the out-migration from states with high taxes and real estate bubbles. If the smart people can leave faster than the stay-behinds can breed replacements, eventually these states will lose Congressional seats and Electoral Votes. Then the politicians will start pandering to the rest of us.
Image credit: Kaptain Kobold