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Author Topic: California: High taxes + poor public services = large outflow of wealth?  (Read 792 times)
syntaxmachine
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« on: May 14, 2014, 11:16:10 PM »

Arthur Laffer -- former economic adviser to Reagan and author of the eponynmous Laffer Curve -- has just written an article about the outflow of wealth from California that has occurred over the last seventeen years.

http://news.investors.com/ibd-editorials-brain-trust/050814-700188-california-golden-years-are-over-as-high-taxes-overregulation-push-jobs-out.htm?ref=HPLNews&p=full

Synopsis: California's high taxes and poor public services are driving wealth out of the state. That California's taxes are higher than the national average is uncontroversial. That the state's public services are poor is (to Laffer) indicated by fewer public employees per 10,000 than the national average in several categories, in addition to pieces of evidence such as low test scores coming out of California public schools; that wealth is leaving the state is indicated by the net AGI leaving the state -- a little over $45 billion -- from 1992-2009. The article concludes with a somewhat discursive bookend regarding the overly high salaries of public employees in California, underwritten by public sector unions and the Democratic politicians beholden to them.

Simply put, Laffer's argument is that the existence of both high taxes and poor public services best explains the demonstrated outflow of wealth -- when a relatively large share of your income is being siphoned away and the only result is inferior public services, you head for greener pastures. Pending a better explanation, I think we ought to accept this claim.

Are Laffer's arguments pretty reasonable? Could there be some other explanation for the data? Would the issue be resolved if California's public services were world class? How much might beggar-thy-neighbor policies on the part of rival states -- e.g., Texas enticing Californians to migrate -- be exacerbating the outflow of wealth?
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Roger Bacon
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« Reply #1 on: May 14, 2014, 11:32:44 PM »

Will these ex-Californians bring their politics to Texas and create a similar situation down the road?  Huh
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SCRUBS
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« Reply #2 on: May 15, 2014, 05:06:36 AM »

Will these ex-Californians bring their politics to Texas and create a similar situation down the road?  Huh

More than likely...
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Archer77
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« Reply #3 on: May 15, 2014, 05:24:10 AM »

Will these ex-Californians bring their politics to Texas and create a similar situation down the road?  Huh

When the demographics flip.
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A
RagingBull
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« Reply #4 on: May 15, 2014, 08:52:35 AM »

Take a look at Colorado and Florida...they leave systems that are inefficient and vote for the same type of jackasses (that created the problems in states from which they fled) when they land in Colorado, Florida, Texas...

Will these ex-Californians bring their politics to Texas and create a similar situation down the road?  Huh
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