Leftists Never Have Enough Of Our Money...

[Starlight]

Too much taxation is bad. Too little is also bad.

That seems tautological. 'Too much' and 'too little' are, by definition, not the right amount.

As far as I'm aware there aren't really good analyses out there about what the 'right' amount of taxation is. However a couple of back-of-the-envelope analyses I've done over the years:

This is a plot of happiness of OECD countries on the vertical axis (as reported by the UN World Happiness Report, higher is happier) plotted against the percent of the country's GDP that the government takes in taxes on the horizontal axis (according to the OECD database). (Apologies if TWeb's graphics upload feature doesn't make it very clear to read, bigger version here)

happiness plot3.jpg

The automatically generated trendline indicates that increasing happiness on average correlates with higher taxation. Also, the country at the top right of the graph, is Denmark, which has the highest taxes and is also the happiest country.

Another way of looking at it is to compare the US states with each other. WalletHub.com provides rankings of the 51 US states (50+DC) based on the amount of taxation that a median household in those states pays, and it ranks the states 1 (lowest taxed) to 51 (highest taxed). It also provides happiness data, ranking the states from 1 (happiest) to 50 (least happy), with DC not included in that list.

Here is that data graphed (larger version):

Happiness v Taxes for US States.gif

The automatically generated trendline indicates that higher taxed states (to the right) are on average happier (closer to the bottom of the graph) than are the lower taxed states (to the left end).

So two totally different data-sets (US States, OECD countries) both demonstrate correlations between higher taxes and higher happiness. Denmark, at highest happiness, has taxes such that the government revenue from also sources (income tax, company tax, sales tax, tariffs etc) is about 50% of GDP. So generalizing wildly from our data, I would say that higher taxes generally seem to be 'better' (in the sense that the people who live in those regions are happier), and the optimal amount for taxation looks like it could be about 50% of GDP, which strikes me as a aesthetically pleasing number (in the economy the government spending half and the private industry is spending half, it's an equal public-private partnership, midway between the libertarian "no government, the free market is all" and the communism "the state runs everything"). Although, to be clear, the data is consistent with even higher taxes than Denmark's being optimal (e.g. 70% could be the happiness-optimal tax rate), we simply don't have good data at those taxation levels because no modern Western country operates in that region of taxation.

[Teallaura]

California Democrats want businesses to give half their tax-cut savings to state

Wouldn't it be easier to just ask employers to leave the state?

[Teallaura]

Of course, the right assumes the move was motivated by taxes. Florida also has sunshine, warmer climes, and is one of the predominant retirement locations for poor and rich alike. So did anyone ask the man why he moved?

...

Um, you missed his point - he wasn't claiming that particular person was moving specifically because of taxes; he was pointing out that the number of wealthy persons who do move in response to taxation doesn't have to be great to have an adverse economic effect. A mass exodus is unnecessary - it's the amount of wealth affected that matters.

[Sparko]

company's leaving California over taxes is largely a myth

a list of article detailing thousands of company's leaving California over taxes

And despite ALL of that hype, California's economy continues to rank 6th or 11th, depending on how you count it, in the world.

hype? really Carpedm? wow.

Just say, "ok I was wrong"

[carpedm9587]

I can't help but feel you've missed my point.

Possible.

[carpedm9587]

That's rating the relative size of California's economy, in other words, how many dollars they have to play with, not its economic health. In reality, California is spending way more than it brings in and is on the verge of bankruptcy. The only thing keeping it from tipping over are Federal dollars.

Of California’s $252.5 billion in total estimated government spending for fiscal year 2015, the federal government provided $93.6 billion, or 37 percent. That works out to a stunning $6,451 for every man, woman and child in the state.

The breakdown of California’s federal funding, by department, includes: 52 percent for Health and Human Services (Medicaid); an average of 25 percent of all state and local government’ general revenues for Labor and Workforce Development, 14 percent for Education; 6 percent for Transportation; 2 percent for Legislative, Judicial and Executive; and 1 percent for General Government, which includes Natural Resources, Environmental Protection, Corrections and Rehabilitation, State and Consumer Services.

Breitbart News reported in May that Moody’s Global Credit Research fiscal stress-tests found that California was already the least prepared large state to weather the next recession. The credit rating service followed up in August with a warning to municipal bondholders that the plummeting financial condition of many California counties, cities, school districts and other agencies would soon result in large numbers of municipal bankruptcy filings.

The only time in the last 40 years California that suffered a 3.7 percent or more of GDP decline was the 4.4 percent plunge in 2009 during the Great Recession. Given the state’s precarious financial condition, any cut-off of federal funds by the Trump Administration could bankrupt California and many of the state’s local government entities.

http://www.breitbart.com/california/...ng-bankruptcy/

As usual, for Brietbart, they leave out the context to make a slanted point. California is one of about 10 states that actually puts more into the Federal coffers than it takes out. That has been true for a long time. It tends to be true of blue states. So that $6K+ per man woman and child is counter-balanced by almost $7K each man woman and child contributes to the federal coffers.

[carpedm9587]

That seems tautological. 'Too much' and 'too little' are, by definition, not the right amount.

As far as I'm aware there aren't really good analyses out there about what the 'right' amount of taxation is. However a couple of back-of-the-envelope analyses I've done over the years:

This is a plot of happiness of OECD countries on the vertical axis (as reported by the UN World Happiness Report, higher is happier) plotted against the percent of the country's GDP that the government takes in taxes on the horizontal axis (according to the OECD database). (Apologies if TWeb's graphics upload feature doesn't make it very clear to read, bigger version here)

[ATTACH=CONFIG]26093[/ATTACH]

The automatically generated trendline indicates that increasing happiness on average correlates with higher taxation. Also, the country at the top right of the graph, is Denmark, which has the highest taxes and is also the happiest country.

Another way of looking at it is to compare the US states with each other. WalletHub.com provides rankings of the 51 US states (50+DC) based on the amount of taxation that a median household in those states pays, and it ranks the states 1 (lowest taxed) to 51 (highest taxed). It also provides happiness data, ranking the states from 1 (happiest) to 50 (least happy), with DC not included in that list.

Here is that data graphed (larger version):

[ATTACH=CONFIG]26097[/ATTACH]

The automatically generated trendline indicates that higher taxed states (to the right) are on average happier (closer to the bottom of the graph) than are the lower taxed states (to the left end).

So two totally different data-sets (US States, OECD countries) both demonstrate correlations between higher taxes and higher happiness. Denmark, at highest happiness, has taxes such that the government revenue from also sources (income tax, company tax, sales tax, tariffs etc) is about 50% of GDP. So generalizing wildly from our data, I would say that higher taxes generally seem to be 'better' (in the sense that the people who live in those regions are happier), and the optimal amount for taxation looks like it could be about 50% of GDP, which strikes me as a aesthetically pleasing number (in the economy the government spending half and the private industry is spending half, it's an equal public-private partnership, midway between the libertarian "no government, the free market is all" and the communism "the state runs everything"). Although, to be clear, the data is consistent with even higher taxes than Denmark's being optimal (e.g. 70% could be the happiness-optimal tax rate), we simply don't have good data at those taxation levels because no modern Western country operates in that region of taxation.

So we have correlation. I'd like to see causation...

[carpedm9587]

Um, you missed his point - he wasn't claiming that particular person was moving specifically because of taxes; he was pointing out that the number of wealthy persons who do move in response to taxation doesn't have to be great to have an adverse economic effect. A mass exodus is unnecessary - it's the amount of wealth affected that matters.

Since the argument was about the myth of taxation making people flee, the impact of a single person on the economy doesn't seem particularly relevant, unless someone can show that they left because of taxation issues. People will move - and it will impact governments. The question is, will taxation cause wealthy individuals or businesses to flee. The evidence does not support that claim on a broad basis.

[Teallaura]

And they wonder why businesses are pulling up stakes and moving out of California.











[ATTACH=CONFIG]26065[/ATTACH] XXXXXXXXXXXXXXXXXXXXXx HAPPY SQUIRREL APPRECIATION DAY! XXXXXXXXXXXXXXXXXXXXXx [ATTACH=CONFIG]26065[/ATTACH]

The "rich fleeing high-tax states" mantra has been repeatedly shown to be largely a myth: https://www.theguardian.com/inequali...naires-threats

[/h]While travel may be a classic “luxury good”, migration is not. Moving one’s home, life and family to a different place is mostly about people who have a poor economic fit with where they live, earn below-market incomes, and are struggling to find a livelihood. Higher income earners show low migration levels because they are not searching for economic success – they’ve already found it.

When millionaires do move, they admittedly tend to favour lower-tax states over higher-tax ones – but only marginally so. Around 15% of interstate millionaire migrations bring a net tax advantage. The other 85% have no net tax impact for the movers.

Furthermore, almost all of the tax-migration moves are to just one low-tax state: Florida – where low-income taxes comingle with sun, sand and palm trees. Other low-tax states such as Texas, Tennessee and Nevada do not pick up any net tax-migration. So while some millionaires have moved to lower tax states over the years 1999-2011, the flows have been too small to change the geography of the economic elite in America.

*emphasis mine

Since the argument was about the myth of taxation making people flee, the impact of a single person on the economy doesn't seem particularly relevant, unless someone can show that they left because of taxation issues. People will move - and it will impact governments. The question is, will taxation cause wealthy individuals or businesses to flee. The evidence does not support that claim on a broad basis.

Your own source establishes that it isn't a myth. Impact is very relevant to MM's follow up.

[carpedm9587]

*emphasis mine

Your own source establishes that it isn't a myth. Impact is very relevant to MM's follow up.

The studies show the effect is nominal, not definitively linked to taxes, and the 15% is about people, not dollars, so there is no data I can find that substantiates MM's point. One rich person from one state left and had a negative impact on the budget, and we don't even know if the move was tax motivated. I don't see a case being made here for the claim that high taxes create a "flight of the rich" phenomenon.

[rogue06]

Bottom line, you will always be able to find stories of companies leaving because of one disaffection or another. They are counterbalanced by all of the companies moving in AND starting up. Your list does not paint a balanced view. California's international standing does...

Looks like those various news and business sources are pretty concerned about the number of companies pulling up stakes (or choosing to expand elsewhere) and not seeing it as some natural ebb and flow. Perhaps they understand something that you don't?

California's burdensome taxes and regulations are killing the goose that lays the golden eggs.

[carpedm9587]

Looks like those various news and business sources are pretty concerned about the number of companies pulling up stakes (or choosing to expand elsewhere) and not seeing it as some natural ebb and flow. Perhaps they understand something that you don't?

California's burdensome taxes and regulations are killing the goose that lays the golden eggs.

Those articles focus on one thing: companies that have decided to leave. What is completely missing from the story is new companies emerging, companies moving in, and the net impact on the economy. Your argument, Rogue, is one-sided. So is your list of articles. A complete picture requires all sides.2,455.93

Since the election, I've been making a point of wandering various fora with various political bents. I've found that each fora tends to cherry-pick articles, stories, and stats that re-affirm their pre-existing mindset. My radar has become somewhat tuned to the phenomenon. That is what I see being done with this "taxes make businesses/rich people flee" story.

[rogue06]

Those articles focus on one thing: companies that have decided to leave. What is completely missing from the story is new companies emerging, companies moving in, and the net impact on the economy. Your argument, Rogue, is one-sided. So is your list of articles. A complete picture requires all sides.2,455.93

Since the election, I've been making a point of wandering various fora with various political bents. I've found that each fora tends to cherry-pick articles, stories, and stats that re-affirm their pre-existing mindset. My radar has become somewhat tuned to the phenomenon. That is what I see being done with this "taxes make businesses/rich people flee" story.

If they were being replaced as fast as they were leaving nobody would be concerned. Simple as that.

[Sparko]

Those articles focus on one thing: companies that have decided to leave. What is completely missing from the story is new companies emerging, companies moving in, and the net impact on the economy. Your argument, Rogue, is one-sided. So is your list of articles. A complete picture requires all sides.2,455.93

Since the election, I've been making a point of wandering various fora with various political bents. I've found that each fora tends to cherry-pick articles, stories, and stats that re-affirm their pre-existing mindset. My radar has become somewhat tuned to the phenomenon. That is what I see being done with this "taxes make businesses/rich people flee" story.

So if nobody is leaving and California is paying more than they are taking and all that, then why do they need to take 1/2 of the federal tax cut and why is the California Governor asking for more money from the federal government?

Seems to me you are the one who is being selective in your information. No matter what anyone says, even in direct contradiction to your previous statements, you just minimize it or dismiss it. You have your blinders on.

[carpedm9587]

So if nobody is leaving and California is paying more than they are taking and all that, then why do they need to take 1/2 of the federal tax cut and why is the California Governor asking for more money from the federal government?

The answer to that appears to be in the first article you posted. The Fedeeral tax cut disproportionately benefits large businesses and the wealthy, and they are looking to more evenly balance the scales by harvesting some of that gain to use for programs for the poor/disenfranchised. Whether the initiative passes remains to be seen.

Seems to me you are the one who is being selective in your information. No matter what anyone says, even in direct contradiction to your previous statements, you just minimize it or dismiss it. You have your blinders on.

You are welcome to your perspective, Sparko. I make an effort to dig out both sides of issues when and where the information is available. When someone presents one side of an argument, as is being done by many here, I simply don't swallow it whole. If that makes me "blind," in your eyes, so be it. You might note, however, that your characterization of my point misses what I actually said by a good deal. I did not say "no one is leaving." I said there is a myth about wholesale flight due to taxes that is well documented, the effect is actually fairly slight and the evidence doe snot even show that the flight is unambiguously tied to taxes. I also noted that the other side, what business are coming in and what new ones are starting, is completely missing from the discussion.