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Saturday, January 30, 2016

What's The Difference?

The four most populous states in the country are California, Texas, Florida and New York.  What are the key differences among these four states?  Why is New York hardly growing, California growing slowly and Florida and Texas growing quickly?  Is it climate?  New York, after all, is substantially colder than the other three.  Is it other environmental factors?  Texas has mosquitos that sometimes seem the size of small birds.  Is it the people?  Florida has a high percentage of elderly residents; California and Texas are heavily Hispanic, and New York has large immigrant populations from all over the world.  Is it culture?  New York has Broadway and museums that none of the others can match.

The main answer as to why the growth rates of these states are so different is economic.  New York has the highest state and local taxes in the country.  California is in the top four.  Florida is in the lower half of state and local taxes and Texas is one of the five lowest in those taxes.  The real question that needs to be answered is why would people pay close to 60% higher state and local taxes to live in New York when they could live in Texas and avoid those higher taxes.  How many businesses locate in the low tax states rather than in the high tax ones, and how many people move to get jobs from those businesses?  The answer is that thousands upon thousands of people move away from the higher tax states each year.  In New York, for example, the area of the state outside the New York City metro area is in substantial and long term decline.  New York City has the economic engine of Wall Street and the high tech areas which push economic growth despite the high taxes.  The rest of the state gets hit head with the full weight of the high tax rates that destroy the economy.  Wide sections of New York state are being consistently depopulated as folks move away to find more vibrant economic areas. 

So are there better state services in New York than in the other states?  The simple answer is NO.  The roads and bridges are not any better maintained in New York.  In truth, some of the worst maintained highways in the country run through New York.  Is the environment any cleaner in New York than the other states?  Again, the answer is NO.  Are the schools better in New York?  New York City spends more on education per pupil than any other large school district in the country, but the graduates of that system do not perform as well.  The New York fire and police departments do great work, but so do those in Texas and Florida.  So where do all those tax dollars go in New York?  Why does New York need so much more cash from residents than Texas does?

The different results achieved by New York and Texas are worth keeping in mind as you consider the message of Bernie Sanders.  He wants to raise spending and taxes by just under twenty trillion dollars.  How many people and businesses will move their economic activities out of the country to a place of lower taxes?  More important, how many businesses will start their new activities outside the USA to avoid the Bernie-tax? 




 

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