The Myth of High-Benefits/High-Tax Government of California

While it's chic to complain about the evil of taxes and government, there's an implicit assumption that higher taxes translate to more government services (the age old argument between liberals and conservatives generally revolve around how much government services, and therefore government size, is optimal.)

But do higher taxes actually bring about superior public goods? William Voegeli, in this op-ed piece in the Los Angeles Times, doesn't think so. He compared California (a high-benefit (supposedly)/high-tax state) to the low-tax state of Texas:

One way to assess how Americans feel about the different tax and benefit packages the states offer is by examining internal U.S. migration patterns. Between April 1, 2000, and June 30, 2007, an average of 3,247 more people moved out of California than into it every week, according to the Census Bureau. Over the same period, Texas had a net weekly population increase of 1,544 as a result of people moving in from other states. During these years, more generally, 16 of the 17 states with the lowest tax levels had positive "net internal migration," in the Census Bureau's language, while 14 of the 17 states with the highest taxes had negative net internal migration.

These folks pulling up stakes and driving U-Haul trucks across state lines understand a reality the defenders of the high-benefit/high-tax model must confront: All things being equal, everyone would rather pay low taxes than high ones. The high-benefit/high-tax model can work only if things are demonstrably not equal -- if the public goods purchased by the high taxes far surpass the quality, quantity and impact of those available to people who live in states with low taxes.

Today's public benefits fail that test, as urban scholar Joel Kotkin of NewGeography.com and Chapman University told the Los Angeles Times in March: "Twenty years ago, you could go to Texas, where they had very low taxes, and you would see the difference between there and California. Today, you go to Texas, the roads are no worse, the public schools are not great but are better than or equal to ours, and their universities are good. The bargain between California's government and the middle class is constantly being renegotiated to the disadvantage of the middle class."

As a long-time resident of California (whose paycheck got even smaller as the State forcibly imposed a higher withholding), I don't mind paying higher taxes if I got something out of it - so it's intriguing to find out that the reality may just be the opposite: Link


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I agree that you cannot just focus on "net internal immigration" state vs. state to determine public goods provided by a state. This is a fairly complex idea (public goods) that cannot stand decision making by one metric alone. I'd love to see a qualitative & quantitative state by state comparision to compare benefits & quality of life just based on public services (parks, health, etc.).
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Many problems with this one.

First, state taxes are in general much less than federal taxes. High-tax states tend to have higher per capita incomes, resulting in federal grants to states that tend to move benefits from high-tax states to low-tax states. So high-tax states get better states benefits, but are penalized by the federal government's policies.

Second, those people that move to low-tax states- they're moving there from high-tax states. They may not realize it, but they've become accustomed to all the services those taxes provide. When a critical mass of such people arrive (as is starting to happen now with New Yorkers in many parts of North Carolina), these new arrivals start demanding the services they used to take for granted. Taxes rise.

If there is validity to the claim that people prefer low-tax states, it is (at least in part) either because of a form of arbitrage- some services are being offered in states while residents of other states indirectly pay for them, or because of the ability of citizens to become accustomed to services (consider them the norm) and not take them into account when deciding to move, as opposed to more easily quantified items like taxes.
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Forgetting the fact that Enron, a Texas firm, bankrupted the state of California in 2001 effectively forcing higher than needed taxes to balance the budget... and Hurricane Katrina generated a mass population migration from New Orleans to Houston in 2006... these "facts" regarding the two states over the 2000-2007 time span... are dubious at best.
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Taxes are not a necessary method to move money around or else the the so-call war on poverty would have been won after the billions and trillions thrown into entitlement programs that great majority people don't deserve. Why should the "rich" invest their money in our economy when all they get is grief from the politicians and greedy but lazy people, which they get a better bang for their buck overseas. Unions and foolish regulations have helped wiped out most of the manufacturing jobs in our country. The unions keep asking for more without considering that the company finds that paying someone else less halfway around the world, since those people would rather have a job than starve. I would rather have LESS government on all levels, since they helped cause this mess anyhow! They don't deserve our money and they should not just give away our money, since it is not their money and they work for us! They love to spend, but when they need to stop: they just look for more ways to steal more of our money.
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It isn't true that the best schools are the ones with the most money. In El Paso where I teach, one of our schools receives no Title I funding because of our demographics. We have no infocus in every classroom, no smart boards, no classroom computers, nothing but desks, chalk, a projector and whatever the teacher buys herself. And yet we're also one the top performing schools in the district, and this with a sizable population of students who are stilllearning English. The school's performance is based on the teachers inside the school.

While I think the above article is more accurate than some give it credit for, in a way I wish they were right that fewer people were moving here--and not just for oil jobs which is such a cliche notion, as if all we have are cows and drills--because some of those people moving will settle and then vote in the very restrictive taxes that they moved to escape.
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