11-10-2010, 09:30 AM
I don\'t know the specifics of the state of Oregon\'s budget, but I\'d be willing to bet that if there has been a decline in revenues following an upper-income tax increase, it\'s the result of the nation\'s worst recession in decades, rather than the result of the tax increase. It is obviously true that as tax rates increase, they will eventually result in less government revenue, but tax rates would have to be very high for this to happen, probably somewhere over 80 percent. Tax rates in the U.S. are nowhere near the level necessary, despite GOP talking points to the contrary.
I would add that Pastor and Fan In Colorado seem to overestimate the impact that tax rates have on where people choose to live. Lots of people live in high-tax states such as California and New York because they have economic opportunities in those states that they wouldn\'t have elsewhere, and the additional taxes they pay do not cancel out the additional income they\'re making. Taxes are lower in Texas than they are in California, but so are salaries. Per capita income in Texas was $36,484 in 2009; in California it was $42,325.
I am not denying that California has enormous problems. The initiative process has gradually strangled the ability of the state government to deal with the state\'s problems. Eventually something has to give. But even on a per capita basis, California is still a much stronger economic engine than Texas. Fan In Colorado talks about the middle class fleeing California by the millions, but California is a highly mobile state. People come and go. Overall the state\'s population has continued to increase. And over the last 20 years, California has remained in somewhere in the range of 10th in the nation in per capita income -- it\'s been as high as 7th and as low as 13, but there\'s no clear trend in either direction.
Lastly, Fan In Colorado notes that Texas\' unemployment rate is near 7 percent -- it\'s actually 7.9 percent -- while California\'s is 12.2 percent. Much of this difference likely has to do with the fact that Texas largely avoided the housing bubble that ended in 2006, while California was one of the bubble\'s epicenters. Ironically, a key reason that Texas avoided the housing bubble is that it has some of the strictest mortgage rules in the nation; for example, there are restrictions on cash-out re-financings, which were a key driver of the housing boom in other Sun Belt states. The mortgage rules in Texas are a relic of the 19th century, and a rare instance where Texas embraces the idea that the government plays an important role in regulating the economy.
I would add that Pastor and Fan In Colorado seem to overestimate the impact that tax rates have on where people choose to live. Lots of people live in high-tax states such as California and New York because they have economic opportunities in those states that they wouldn\'t have elsewhere, and the additional taxes they pay do not cancel out the additional income they\'re making. Taxes are lower in Texas than they are in California, but so are salaries. Per capita income in Texas was $36,484 in 2009; in California it was $42,325.
I am not denying that California has enormous problems. The initiative process has gradually strangled the ability of the state government to deal with the state\'s problems. Eventually something has to give. But even on a per capita basis, California is still a much stronger economic engine than Texas. Fan In Colorado talks about the middle class fleeing California by the millions, but California is a highly mobile state. People come and go. Overall the state\'s population has continued to increase. And over the last 20 years, California has remained in somewhere in the range of 10th in the nation in per capita income -- it\'s been as high as 7th and as low as 13, but there\'s no clear trend in either direction.
Lastly, Fan In Colorado notes that Texas\' unemployment rate is near 7 percent -- it\'s actually 7.9 percent -- while California\'s is 12.2 percent. Much of this difference likely has to do with the fact that Texas largely avoided the housing bubble that ended in 2006, while California was one of the bubble\'s epicenters. Ironically, a key reason that Texas avoided the housing bubble is that it has some of the strictest mortgage rules in the nation; for example, there are restrictions on cash-out re-financings, which were a key driver of the housing boom in other Sun Belt states. The mortgage rules in Texas are a relic of the 19th century, and a rare instance where Texas embraces the idea that the government plays an important role in regulating the economy.