Poor leave Calif. at higher rate than rich

Discussion in 'Politics, Religion, Social Issues' started by mactastic, Jul 16, 2009.

  1. mactastic macrumors 68040

    mactastic

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    #1
    One of the oft-unsupported memes we hear around this forum is that California's high taxes drive out the rich. Internet legend has it that California's supposedly outrageous taxation levels have the rich "going Galt" in droves, with disastrous consequences for the state's finances.

    Only it's just not true.
    So can we put a stake through the heart of this zombie lie now?
     
  2. blackfox macrumors 65816

    blackfox

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    #2
    I guess Oregon (my state) better get to work on that border wall, with armed sentries and whatnot...
     
  3. mactastic thread starter macrumors 68040

    mactastic

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    #3
    Funny thing too is that Arizona is having the same kinds of fiscal problems as California (obviously on a smaller scale) due to the same kinds of fundamental problems I have previously identified as being at the root of California's problems. Why is this "funny"? Because Arizona is no bastion of liberalism, yet they wind up in the same situation. How could that possibly be, if liberalism is California's problem?

    Yet people come through here all the time telling us that it's California's high rate of taxation that's causing all these problems. Not that they ever bother to support that position with evidence or anything. Apparently it's enough to just believe certain things.

    Hell, even the supposedly rock-ribbed Texas is begging to get their hands on some of that sweet sweet federal stimulus money to keep unemployment checks flowing. What's the matter Texas? Can't handle your finances?
     
  4. Rodimus Prime macrumors G4

    Rodimus Prime

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    #4
    But that is only about the only part of Texas budget that is suffering and that is brought on by state law. Texas State law will not let the unemployment trust fund grow about a certain level which works fine in a mild recession but when it gets this deep it pushed it pass the limits. I do not agree with how Texas did that part but lets compare it to other states. Texas does have about a 1/2 bil in interested free federal loans on its unemployment. All states have access to those loans for unemployment as it was set up by the federal government as part of requiring the states to have unemployment.

    Texas HAS NOT dip into its rainy day fund yet. So push comes to shove it still has those funds left to tap. It
     
  5. mactastic thread starter macrumors 68040

    mactastic

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    #5
    California's state law is at the heart of this crisis as well. ;)

    California still has rainy day funds available too.
     
  6. MacNut macrumors Core

    MacNut

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    #6
    I thought California was flat broke. How can they have a rainy day fund if they are hemorrhaging money.
     
  7. mactastic thread starter macrumors 68040

    mactastic

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    #7
    Because the governor won't allow it's use unless and until the entire budget gap is solved.
     
  8. synth3tik macrumors 68040

    synth3tik

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    #8
    I'm just glad the state I live in is not $40 billion in debt. Hey and the city of Minneapolis is in the black with no deficit.
     
  9. rhsgolfer33 macrumors 6502a

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    #9
    Not to mention the slow downgrading of different California state bonds that is occurring.

    I'm out of here for multiple reasons, including both taxes and cost of living. The tax burden in California is a few percent higher than most states and only seems to be getting worse. The cost of living here is also quite high, especially when you consider the salary I can command here and what I can command somewhere like Texas. Not to mention the unbearable traffic that comes with traveling almost anywhere in Southern California.
     
  10. Shivetya macrumors 65816

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    #10
    Actually it is driving out the rich, your note just supports the fact that the onerous situation in California is in is driving out everyone.

    The feel-good crowd has through their constant implementation of do-good measures all in the name of protecting the environment is counter to doing well by the poor. They simply made it unaffordable for many, mostly because while they were happy with what they had they didn't want to suffer from having poor people around.

    So they passed rules against sub divisions near them for environmental purposes. They passed rules against big box stores protecting over priced favored stores. The drive up the prices of fuel and power. All of which is dramatically more impacting on the poor. When the poor leave the source of cheap labor goes with it meaning those better off pay more for services driving them to same decision.

    Look, my aunt worked in Sacramento schools for many many years, eventually to retire from there. Even with her plum retirement the cost of living just got to be so ludicrous that to retire in a smaller home would cost her a magnitude more than keeping her large home; she raised two children and always had visiting relatives. She took the only course open which was to move.

    California is another text book example of liberal ideals plowing under the dream the profess to look after. Go look at any large entitlement driven state and see the same result. Go to Michigan, the worker paradise turned into worker hell through high taxation and high payouts to government employees.

    So, no your story proves nothing. The wealth generators left and the poor had less ability to withstand what drove off those providing their jobs.


    The "mega wealthy" don't care. They have their little islands free of middle and lower class. The only time they want them around is when the lawn must be mowed.
     
  11. Desertrat macrumors newbie

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    #11
    mac, I don't recall anybody talking about the rate at which any group is leaving California. Nor do I doubt that the Exodus of poor is greater than of well-off; there are a lot more poor.

    And the income to the state is reduced much more by the leaving of a few wealthy than by a larger number of poor.

    I don't know of any state across the nation which is escaping the effects of this economic downturn. The effects, so far, have been less in Texas, but Texas has always been business-friendly--even when it was controlled by the Democrats. Ann Richards was certainly not hostile, nor was the legislature. Odds are, though, that even Texas is gonna face some shortfall next year, so there will be a special session of the lege to try and deal with it.

    The legislature of California has certainly been aware of the problems due to Prop 13; how long has it been in effect? So, they came to rely on an income tax and on real estate taxes based on recent sales of exotic-value buildings, right? (And sales taxes,of course.)

    Spending rose with Good Times, as legislative spending is wont to do. Unfortunately, even the uber-wise legislators assumed that the Good Times would roll on forever. Then came the Big Oopsie. Now California has learned the ancient lesson that for every Saturday night spree, there is a Sunday morning hangover.

    But don't feel alone. The Beltway Bandits are learning the same lesson.

    As far as Arizona, I don't know that liberal or conservative makes a difference. A high percentage of their population is retirees, I know. Their disposable income is probably down, which means less purchasing. Older people are quicker to pull in their horns in a downturn. If Arizona has an income tax or an intangibles tax, that's an obvious problem...
     
  12. mgguy macrumors 6502

    mgguy

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    #12
    Only, your conclusion is just not necessarily true.

    The fact that a lower income group may have a higher ratio of outgoing vs. incoming residents than does a higher income group doesn't prove that the higher income group isn't losing members to out-migration because of increasing tax rates. To evaluate this hypothesis properly, one would have to know what the outflow rate, or if you prefer the outflow-to-inflow rate-ratio, for wealthy people would be had taxes not been raised. Normally this could be accomplished by conducting an experiment in which high income earners or the wealthy would be randomly assigned either to have their taxes remain the same or to have them raised by a certain amount. Since the random assignment would make them equal on all relevant factors other than having their taxes remain the same or be raise, the difference in their flight rates could then more confidently be attributed to the higher taxes.

    Perhaps the higher flight rate for the lower income group in the study you cited was due mainly to factors other than tax rates (e.g., loss of low-income jobs), while the rate of flight for the higher income group was due primarily to higher tax rates. It could still be true, under this scenario, that higher taxes are causing higher income people to choose to leave the state, even though they are leaving at a lower rate than lower income folks who are leaving due to reasons that are more compelling motivators to them that tax rates. Another possibility is that higher taxes are what is driving out people at all income levels, and that the effect on lower income folks is just greater.

    Drawing conclusions about causality from actuarial studies is risky and the conclusions are often invalidated by the results of better studies that control for the influence of other variables, and that compare like groups of people when evaluation the impact of a suspected causal variable on the some criterion variable for that group of people, in this case wealthy Californians.
     
  13. Desertrat macrumors newbie

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    #13
    I can see why folks are bailing out of the sinking ship. The Chuck Devore website, http://www.chuckdevore.com/blog.asp?artid=94 alleges that "California accounts for 12% of the U.S. Population but 32% of the welfare caseload."

    No wonder they're in deep doo-doo. They've run out of other people's money!

    And a WSJ article claims that Cali is somewhere like #2 in one-way U-Hauls heading toward a better life...
     
  14. SydneyDev macrumors 6502

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    #14
    "Poor leave Calif. at higher rate than rich"

    Puts the lie to socialism doesn't it? All this big government is supposedly "for the poor," and yet it just makes life too expensive for them.

    The market is best at finding innovative ways so everyone can afford stuff, even if their car has a smaller engine and vinyl seats instead of leather.
     
  15. mgguy macrumors 6502

    mgguy

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    #15
    The flow of poorer people out of California may also be accounted for by migration of illegal immigrants who cannot find work in the state. Now that unemployment is so high, it wouldn't be surprising if those who allegedly wouldn't do the work that illegal immigrants do might be having second thoughts and are now competing for those jobs. I don't have any evidence of this (I haven't searched for it but I plan to), but it seems plausible.

    Where has Mactastic gone? He hasn't been around to defend the study that he put forth to support his conclusion that higher taxes are not causing rich people to leave the state.
     
  16. opinioncircle macrumors 6502a

    opinioncircle

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    #16
    Would love to live in Oregon period.
     
  17. Eraserhead macrumors G4

    Eraserhead

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    #17

    Well that would be interesting, except that the article is talking about the rate of departure.

    Which means the probability of them leaving per person. Additionally as they are talking about the poorest 20% and the richest 20% both of those groups are the same size.
     
  18. mgguy macrumors 6502

    mgguy

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    #18
    So what? As I explained in my first post, this study is meaningless for evaluating whether high taxes are contributing to any exodus of wealthy people. It is merely an actuarial comparison of the arrival-departure ratios for the two groups. The fact that the ratio (or departure rate or departure frequency) may be higher for poorer people says nothing about the effect of taxes on the ratio (or departure rate or departure frequency) for the wealthy.
     
  19. skunk macrumors G4

    skunk

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    #19
    Please describe this "socialism" and show how it relates to California in any sense at all. I'm fascinated by your lexicon.
     
  20. Desertrat macrumors newbie

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    #20
    skunk, you might as well give up on worrying about the dictionary and the word "Socialism". Insofar as common usage, it's taken to include government's social services programs as well as governmental ownership/control of production.

    For that matter, given governmental controls over the methodology of running businesses, "fascism" would probably be more accurate as to how this country has evolved over the last forty-some years: "You own it, but we'll tell you how to run it."

    That's why I prefer the term "Statism": Centralized controls over the private sector; public sector being the boss of whatever.

    But, that sort of nitpick doesn't matter. The whole deal has come about due to the optimism of the public and the legislature, that the good times would roll forever. The CalLege figured it could do the big tax-take thing forever, and dispense goodies to the voters in order to remain in office. Oops!

    And so folks are leaving the scene of the failure and heading for greener pastures--the same reason the Okies headed to California 75 years ago. Just a different kind of Dust Bowl, is all...

    'Rat
     
  21. Peterkro macrumors 68020

    Peterkro

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    #21
    "It's a beautiful thing, the destruction of words."
     
  22. SydneyDev macrumors 6502

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    #22
    Socialism is the idea that it's ok for the government to violate individual rights in order to achieve social objectives. But perhaps poor people don't like this being done in their name.
     
  23. Eraserhead macrumors G4

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    #23
    So then America under Bush was socialist as they still had to pay taxes.
     
  24. Peterkro macrumors 68020

    Peterkro

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    #24

    "It's a beautiful thing, the destruction of words."
     
  25. opinioncircle macrumors 6502a

    opinioncircle

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    #25
    No it isn't. What you're talking about is communism, when government substitutes the private ownership to the public ownership of goods. Check your facts pal...
     

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