Category: Blue State Exodus

MLLG

A Tale of Two States: New York and Florida

George Noga

New York spends $6,400 (125%) more per person than Florida – and for what?

A Tale of Two States: New York and Florida

By: George Noga – March 26, 2023

Refugees are fleeing en masse from NY to FL, and it is easy to see why. The mystery is why everyone doesn’t. Let’s begin with some numbers which reveal much (but definitely not all) of the calculus for bolting from NY. A resident of Miami pays no (as in zip, zero, nada) state or local income tax, while denizens of the big apple pay 14.8%. New Yorkers pay 8.875% in sales tax versus 6% in Miami. Florida’s constitution caps residential real estate taxes which generally hover around only 1% of value.

The NY budget calls for spending $227 billion ($11,500 per resident); the FL budget contains spending of $115 billion ($5,100 per capita). NY spends twice as much as FL even though FL has 2.5 million more people. Florida’s economy is growing at twice the rate of NY and its unemployment rate is half that of NY. Estate taxes in NY are 16%, while FL has no state inheritance or estate tax. And a moving van costs 500% more in NY. But there is much more to the story than is revealed by the numbers alone.

New York is where safety, civility, culture and liberty go to die.

Paying double in taxes might be okay if NY was a Garden of Eden and its sky-high taxes resulted in la dolce vita for its inhabitants. However, New York has toxic governance based on identity politics, Kafkaesque regulation, stratospheric living costs, mandatory unionization and crumbling infrastructure. Its failed government schools are run by unions and are petri dishes for dysfunction and social pathologies. Crime is rampant while gun control is uber-strict. There is massive public debt, unfunded liabilities and tanking credit ratings. NY bollixed the pandemic response and, in obeisance to teachers’ unions, shuttered schools for years causing irreparable harm.

New York is a woke sanctuary state that tolerates homelessness, open drug use and human filth. NY decriminalizes arson, looting and shoplifting, while defunding police and eliminating cash bail. NY pits people against each other based on race, income, age, ethnicity and gender. NY’s stagnating economy hemorrhages its most productive citizens. NY schools teach the 1619 Project, CRT and encourage young children to question their gender without parental involvement. Housing is scarce, dilapidated and costly with rent control and eviction bans. Environmentalism run amok doubles the cost of energy. New York is where safety, civility, culture and liberty go to die.

Each and every one of the horrors of life in New York listed above is non-existent in the free state of Florida. Will the last person to leave NY kindly turn off the lights?

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

More Liberty Less Government – mllg@cfl.rr.com – www.mllg.us

Facebook  Twitter  Pinterest  Linkedin  Youtube

Soaking the Rich and Big Corporations

George Noga

As blue states hemorrhage tax base, they raise taxes and cut services.

Soaking the Rich and Big Corporations

By: George Noga – July 17, 2022

I begin with new IRS data that show the fiscal effects of the ongoing blue state to red state migration. This is followed by the paradox of the massive Trump tax cuts that actually produced (just as we predicted) a veritable gusher of new tax revenue.

Starting next week, I lighten up my posts for the remainder of July with blogs of a personal nature. Some long-time readers have suggested I try this; please stay tuned.

Tax Base Migration from Blue to Red States is Accelerating

The massive human and financial migration from blue to red states is surging, fueled in part by working from home. Just released IRS adjusted gross income (AGI) for 2020 shows NY lost $20B, CA $18B and IL $9B; other big losers were MA, NJ, and MD, all deep blue. The big winners were FL $24B, TX $6B, AZ $5B, SC $4B, NC $4B, NV $3B and TN $3B. Other winners were CO, ID, UT, WY and MT – mostly deep red.

Blue states are trapped in a vicious circle; they lose tax base, then to make up the lost revenue they raise taxes, cut services and neglect infrastructure. They lose even more tax base, and the cycle repeats. When will they learn?

The annual loss of tax revenue is $1.6B for NY, $1.4B for CA and $700M for IL. The loss of AGI has a compounding effect, as the lost income from the current year is added to prior losses. For red states, AGI gains also are compounded. As blue states hemorrhage tax base, liberals respond by raising taxes, cutting services and neglecting infrastructure, which causes even more people to flee, which further erodes the tax base and culminates in a vicious circle. Meanwhile, red states are in virtuous circle and use the tax revenue gained from blue states to further cut taxes, improve services and rebuild infrastructure. Will the last person leaving New York please turn off the lights?

Trump Tax Cuts are Soaking the Rich and Large Corporations

I have blogged repeatedly that the only way to soak the rich is by cutting – that’s right cutting – taxes. The 2003 Bush tax cuts resulted in the biggest tax increase on the rich in US history as their share of taxes doubled. The same thing is happening with the 2017 Trump tax cuts. Moreover, it also is occurring with respect to corporate taxes.

Hauser’s Law: Tax revenue is a constant share (around 18%) of GDP whether the tax rate is 90% or 28% – for reasons explained below.

Individual income tax revenue is up 68% while corporate tax revenue is up 21%. Overall revenue is up an astounding 39%. Just as we predicted, lower rates resulted in more revenue; yet, progressives want to jack up rates for class warfare purposes. Progressives really don’t want to soak the rich; they want only to appear to be soaking the rich. If they really wanted to soak the rich, they would cut taxes.

Lower tax rates work due to Hauser’s Law, i.e. when tax rates are low, the rich are disincentivized to take measures to reduce their taxes. When rates are high, the wealthy work, save and invest less; they barter, retire earlier, hide, defer and underreport income, convert income to capital gains and defer gains without offsetting losses.

With high rates, high-income taxpayers use tax shelters; seek tax-free income; change the amount, location and composition of taxable income; exploit ambiguities and loopholes; shift income to corporations and/or to lower-bracket family members. They lobby aggressively for tax breaks, move to low tax venues, transition into the occult economy, employ top tax lawyers and accountants and much, much more.

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

Next week we lighten things up with: Travels with George 1968 to 1972.

More Liberty Less Government – mllg@cfl.rr.com – www.mllg.us

Laboratories of Democracy – Part IV Bonfire of the Blue State Vanities

George Noga

Thirty lessons for America from the blue state laboratories of democracy

Laboratories of Democracy – Part IV

Bonfire of the Blue State Vanities

By: George Noga – April 11, 2021

Welcome to the final post in the series; the previous three parts are easily accessible on our website: www.mllg.us. The raison d’etre of laboratories of democracy is to learn from laws adopted in one or more states without risk to the rest of America. The successful experiments then may be emulated and the failed ones rejected.

Wide chasms exist between red and blue states. Blue states are hemorrhaging jobs, people, tax base and political power to red state America. We explain the causes of this tectonic shift by identifying the major reasons people flee blue states. We whittled the reasons down to the thirty horrors presented below, which are not listed in any order.

  1. Spending/Taxes: Blue states spend/tax more; NY spends double FL per person.
  2. Economic opportunity: Blue states suffer stagnation and depopulation.
  3. Jobs: Blue states are losing jobs at a fast pace – especially middle class jobs.
  4. Minimum wage: High minimums are harmful, devastating Seattle restaurants.
  5. Demographics: Depopulation results in malaise and loss of opportunity.
  6. Public safety: Sanctuary cities, abolition of cash bail, defunding police.
  7. Homelessness: Heavily concentrated and tolerated mainly in blue states.
  8. Rent control: This devastates housing stock along with bans on evictions.
  9. Economic freedom: States with least freedom all are blue; most freedom red.
  10. Shrinking middle class: Blue states are home only to the rich and poor.
  11. Political correctness: Runs amok in blue states – harms civility and culture.
  12. Housing: Zoning, NIMBY and unions create shortages and drive up costs.
  13. Right to work: Absence of RTW laws reduces jobs and freedom.
  14. Unfunded liabilities: Unions and corruption cause huge unfunded obligations.
  15. School quality: Disaggregated and COL adjusted, blue state schools lag.
  16. Gun control: Such laws infantilize people decreasing freedom and safety.
  17. Drug legalization/decriminalization: Numerous problems created as a result.
  18. School choice: Hostile to charter, private, magnet and voucher schools.
  19. One party politics: Lack of competition results in corruption and stagnation.
  20. Civility and culture: There is less tolerance and a toxic culture.
  21. Regulation and bureaucracy: These go hand-in-hand degrading daily life.
  22. School curricula: Hostile to parental values; teach fake 1619 project.
  23. Public health: California had Typhus outbreak and rodent infestations.
  24. Cost of living: Much higher than in red states but results in no added value.
  25. Law and order: Looting, arson, mayhem tolerated during the summer of love.
  26. Energy policies: Unreliability, outages, rolling blackouts and sky-high cost.
  27. Wokeness: This is a code word for socialism and casts a pall over everything.
  28. Covid management: Lockdowns, delayed reopenings and shuttered schools.
  29. Infrastructure: Roads, bridges, airports are neglected despite confiscatory taxes.
  30. Happiness/Quality of life: Gini coefficient shows less happiness in blue states.

We do not assert all of the 30 horrors are found only in blue states. We do assert that every one of the 30 is much more likely to occur and to be more extensive and more virulent in blue states. It is possible to quibble with this or that one of the horrors, but it is impossible to take the 30 in the aggregate and not get the picture. Although I tried, I could not conjure one thing that is better in blue state America – maybe you can.

America owes thanks to its founders for creating a federalist system that includes a political safety valve where each state can serve as a laboratory of democracy. The lesson from the laboratories of democracy couldn’t be any clearer: progressive policies fail and fail miserably. America is voting – and voting decisively – with its feet and the result is a landslide victory in favor of more liberty and less government.

Coming April 18th is MLLG’s always special Earth Day posting.

Click here to join our mailing list

Laboratories of Democracy – Part I Americans Are Voting With Their Feet

George Noga

Blue states are hemorrhaging people, jobs, taxes, seats in Congress and electoral votes.

Laboratories of Democracy – Part I

Americans Are Voting With Their Feet

By: George Noga – March 21, 2021

We have blogged often about the differences between red state and blue state America. The exodus from blue states, already a torrent, became a flood due to the pandemic. Blue-to-red migration affects our demographics, representation in Congress, tax base and electoral votes. Its effects on America truly are profound and far reaching. Our four-part series, Laboratories of Democracy, presents a comprehensive analysis.

Part I – Americans Vote With Their Feet (March 21)

Part II – Sixty Years of Liberal Governance (March 28)

Part III – My Travels in Blue State America (April 4)

Part IV – Bonfire of the Blue State Vanities (April 11)

Laboratories of democracy is deeply rooted in our federalist system wherein states enjoy enormous latitude. They even take opposite positions – such as on legalization of marijuana. If one state tries a new approach and it works, it can be emulated by others; the converse also is true. Laboratories of democracy originated with Supreme Court Justice Louis Brandeis who wrote: “A single state may serve as a laboratory and try novel social and economic experiments without risk to the rest of the country.”

Americans always have voted with their feet – fleeing high tax jurisdictions for lower cost venues. The following is from a 1755 letter published by the Boston Gazette. “The taxes in Boston continue very high. Many inhabitants are gone into the country; the (tax) burden now falls on a smaller number; the rich complain of their rates and are moving into country towns where they are greatly eased. I love my native town but my taxes are so large that I am resolved to move my family into the country.”

Will the last person leaving blue state America please shut off the lights?

High taxes remain a principal impetus behind out migration from blue states. However, this avalanche of depopulation increasingly is about other factors such as quality of life, economic opportunity, civility, culture, jobs, spending, safety, freedom, housing, right-to-work, schools, gun control, corruption, regulation, public health, cost-of-living, energy policies and, most recently, the response to the Covid pandemic.

We begin with the most recent official government data, in some cases extrapolated to the present. Sixteen states (nearly all blue) lost population since 2010. Texas gained 5 million and Florida 3+ million. California began to shrink for the first time. The 2020 census radically alters the balance of power in Congress and the Electoral College by shifting up to ten seats (and electoral votes) from blue to red, a swing of up to 20 seats (votes). The losers (80% blue) are NY (2), CA, RI, PA, WV, OH, MI, IL, MN. The gainers (80% red) are TX (3), FL (2), NC, CO, MT, AZ, OR. Also, population loss reduces federal dollars for many programs that are funded based on population.

Blue states are losing more than people, money and votes; they are hemorrhaging jobs, and tax base and leaving a trail of sinking bond ratings, economic stagnation, fiscal deficits and underfunded pensions. Disproportionately, it is the affluent who are fleeing blue states and taking their tax base with them. In the past five years NY and CA lost and TX and FL gained $50 billion in AGI (adjusted gross income). The eight states with the biggest AGI loss all are blue, while the eight largest gainers all are red. People fleeing blue states earn an average of $20,000 more per year than those arriving. Over 25% of retired blue state teachers have their pension checks sent to red states.

It isn’t just about economics; it’s about freedom and happiness. The top five states in the index of economic freedom are red (SD, ND, TN, ID, OK) while – you guessed it – the five worst states are blue (NY, CA, NJ, HI, VT). People in red states are happier; the Gini coefficient for happiness closely tracks the blue/red divide. The divergent responses of blue/red states to Covid put the blue state exodus on steroids. The ten states with the best jobs data since the pandemic are all red, the ten worst all blue.

We close with a stark comparison. New York spends $180 billion per year, or twice the budget of Florida, although FL has 10% more people. New York City alone spends as much as Florida. Just as the real minimum wage always is zero, so it is with tax rates. Sky-high tax rates generate zero tax revenue from NY taxpayers who flee to FL.

Redistribution is part of progressive DNA and they are redistributing their taxes, jobs, people and political power to red states and we don’t even have to say thank you.

Our series continues March 28th with: Sixty years of liberal governance.