EXCERPT FROM THIS ARTICLE: Among the 10 fastest-growing metro areas last year were Raleigh, Austin, Las Vegas, Orlando, Charlotte, Phoenix, Houston, San Antonio and Dallas. All of these are in low-tax, business-friendly red states. Blue-state areas such as Cleveland, Detroit, Buffalo, Providence and Rochester were among the biggest population losers.
You can tell a lot about prosperity in America by observing the places people are moving to and where they are packing up and moving from. New Census Bureau data on metropolitan areas indicate that the South and the Sunbelt regions continue to grow, while the Northeast and Midwest continue to shrink.
Among the 10 fastest-growing metro areas last year were Raleigh, Austin, Las Vegas, Orlando, Charlotte, Phoenix, Houston, San Antonio and Dallas. All of these are in low-tax, business-friendly red states. Blue-state areas such as Cleveland, Detroit, Buffalo, Providence and Rochester were among the biggest population losers.
This migration isn’t accidental. Workers and business owners are responding to clear economic incentives. Red states in the Southeast and Sunbelt are following the Reagan model by reducing tax rates and easing regulations. They also offer right-to-work laws as an enticement for businesses to come and set up shop. Meanwhile, the blue states of the Northeast, joined by California, Minnesota and Illinois, are implementing the Obama model of raising taxes on businesses and the wealthy to fund government “investments” and union power.
The contrast sets up a wonderful natural laboratory to test rival economic ideas. (more…)
Betsy McCaughey is a former Lt. Governor of New York and author of Beating Obamacare.
Governors buying into Medicaid expansion are acting venally and short-sightedly.
On Fox News’ “Special Report” columnist Charles Krauthammer said it was “honorable” for Florida Governor Rick Scott to recommend the state buy into the Obama health law’s Medicaid expansion, despite Scott’s earlier opposition. In truth Scott’s decision is venal and short sighted. If the Florida legislature agrees to expand Medicaid, it will doom Florida to bankruptcy and Floridians to enormous state tax hikes in the coming years. The expansion will add 42% to the state’s Medicaid enrollment.
Packing the Medicaid rolls is Obamacare’s primary way of dealing with the uninsured. The law lays out a red carpet for politicians to expand their state’s Medicaid programs, adding richer benefits and many more enrollees. The health law promises the federal government will pay 100% of the cost of the expansion until 2018, and then 90% of the cost thereafter. That’s a 9-to-1 match.
In the past, states have set eligibility rules based on what state budgets can handle. This expansion puts the feds in control, and it’s way beyond what states can afford.
That’s why this red carpet invitation is a trap. The federal government usually breaks its promises. What will happen then? It’s inconceivable that states will be able to undo the expansion and reduce the burden. Taking back entitlements is generally a political impossibility. Instead state taxpayers will be clobbered with huge new bills. (more…)
EXCERPT FROM THIS ARTICLE: The Departments of Defense, State and Justice are authorized by the Constitution and are generally accepted legitimate federal government functions. Most of the rest ought to be done at the state and local levels or by the private sector. The current spending and debt crisis eventually will force debate on the role of the federal government — which programs necessitate taxpayer funding and which can be eliminated. The time is closer than most think — just ask any Greek citizen or resident of Stockton, Calif.
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The current debate about the debt vote is minor league compared to what will happen when the government literally cannot spend more than it is taking in. That time may be nearer than you think. It is true that the U.S. government can always “print” money to pay its bills, but at some point, printing more money becomes self-defeating because the resulting increase in the government bond interest rate and required interest payment will spiral out of control. At that point, the government will be forced to operate on a pay-as-you-go basis, as any individual or business is forced to do when they can no longer get credit. Several California cities are now in this situation.
The U.S. government now receives about $200 billion a month in revenue and spends about $320 billion a month. Any responsible business or individual faced with a situation where receipts are only 60 percent of expenditures would make changes before their credit was cut off or, at the very minimum, have a plan for which bills to pay first — but not the U.S. government.
It appears that President Obama is once again going to produce a budget that assumes very high levels of deficit spending can go on forever. It also appears that Senate Democrats will continue to not bother to pass a budget. Note that the purpose of a budget is to allocate scarce resources (your money) and to make sure that spending does not exceed the funds that are available. Senate Majority Leader Harry Reid is the ultimate spoiled child, accusing the taxpayers of engaging in child abuse by not giving him an unlimited allowance. (more…)
The Republican National Committee chose to hold its recent winter meeting in Charlotte because North Carolina was a rare bright spot in last year’s presidential election. Although it was the high-profile site of the Democratic National Convention, North Carolina became one of just two states won by Barack Obama in 2008 that went for Mitt Romney in 2012. (The other was Indiana.) So being in North Carolina made Republicans feel a little better.But not much. The 168 members of the RNC grappled with the consequences of losing the presidential race, losing the Senate and losing seats in the House. Everybody knew something was wrong with the party. To fix things, some emphasized outreach to Hispanics. Some emphasized modernized voter turnout efforts. Some emphasized the search for better candidates. No one pushed just one solution; most saw the answer as a mix of those and other ideas.
But they might also start by asking themselves the most basic of questions: Other factors aside, did Republicans in 2012 address the concerns of the overwhelming majority of Americans who cite the economy and jobs as the nation’s most pressing issue?
The answer, mostly, is no. But some Republicans did. At the RNC’s opening night event, at the NASCAR Hall of Fame, members heard from one of those Republicans, new North Carolina Gov. Pat McCrory.
McCrory first ran for the state’s top office in 2008. He lost to Democrat Bev Perdue in what became a brutal lesson in the overwhelming power of the Obama wave. “In ’08, I got killed by the Obama ground machine,” McCrory recalls. “We didn’t even know it was happening. The amount of money Obama put on the ground was something we’ve never seen before in North Carolina.”
Defeated, McCrory reassessed and decided to run again in 2012. But he knew he had to run a smarter race the second time around. He started earlier. He thought through his positions and the way he articulated them. He built relationships with more people across the state. He worked harder.
The new and improved McCrory stressed jobs, the economy and education. He highlighted — and did not run from — his 14 years of experience as mayor of Charlotte, even though that big-city resume was not a plus with many rural voters. He took advantage of Perdue’s disastrously bad performance as governor. And on Election Day, McCrory defeated Democratic rival Walter Dalton by nearly 12 points. (more…)
EXCERPT FROM THIS ARTICLE: A new analysis by economist Art Laffer for the American Legislative Exchange Council finds that, from 2002 to 2012, 62% of the three million net new jobs in America were created in the nine states without an income tax, though these states account for only about 20% of the national population. The no-income tax states have had more stable revenue growth, while states like New York, New Jersey and California that depend on the top 1% of earners for nearly half of their income-tax revenue suffer wide and destabilizing swings in their tax collections.
In the case of North Carolina, a new study by the Civitas Institute concludes that a tax reform that shifts more of the burden to consumption from income would increase average annual personal income growth by 0.38% to 0.66%. That’s enormous over time and would lead to much higher state tax revenues. North Carolina’s top income tax rate is 7.75%, which is higher than that of most nearby states that it competes with for investment. Virginia’s top rate is 5.75% while Tennessee has no personal income tax.
Washington may be a tax reform wasteland, but out in the states the action is hot and heavy. Nine states—including such fast-growing places as Florida, Tennessee and Texas—currently have no income tax, and the race is on to see which will be the tenth, and perhaps the 11th and 12th.
Oklahoma and Kansas have lowered their income-tax rates in the last two years with an aim toward eliminating the tax altogether. North Carolina’s newly elected Republican Governor Pat McCrory has prioritized tax reform this year and wants to reduce the income tax. Ditto for another newcomer, Mike Pence of Indiana, who has called for a 10% income-tax rate cut. Susana Martinez, New Mexico’s Republican Governor, has called for slashing the state corporate tax to 4.9% from 7.6%, and the first Republican-controlled legislature since Reconstruction in Arkansas is considering chopping its tax rates by as much as half.
Associated PressLouisiana Gov. Bobby Jindal (more…)
EXCERPT FROM THIS ARTICLE: when Californians voted to raise their top rate to 13.3% last month, they were voting to reduce revenue for the federal Treasury and thus increase the political pressure to raise tax rates on all Americans. The state and local tax loophole helps disperse and disguise the real cost of big government. As Mr. Obama likes to say, this is reverse Robin Hood.
One post-election budget surprise has been President Obama’s resistance to John Boehner‘s proposal to get $800 billion in new revenue by closing tax loopholes. Here’s one likely reason: the high tax rates of his blue-state Democratic brethren.
One of Mr. Boehner’s ideas, taking a cue from Mitt Romney, would impose a limit on annual deductions. During the campaign Mr. Romney suggested a range for a deduction cap, anywhere from $17,000 to $50,000 a year, and many liberal pundits praised the idea on equity grounds.
Since the affluent tend to itemize their deductions more than do average taxpayers, and since the affluent pay higher marginal tax rates, they tend to benefit more from deductions. Ergo, limit deductions and you raise the effective tax rate (not the marginal rate) of the affluent. (The effective tax rate is the share of total income paid in taxes, while the marginal rate is the tax on the next dollar earned.) Such a reform would help tax efficiency and equity, and the economy would benefit from fewer investment distortions. (more…)
Kicking off his recent campaign to raise taxes via Proposition 30, California Gov. Jerry Brown cited the New Testament warning that of those to “whom much is given, much will be asked.” He meant that the rich should pay more taxes, but his statement proved true in a different way: In successfully pushing for the governor’s initiative, California’s rich and powerful government unions spent tens of millions of dollars on advertising and getting out the vote.
California’s tax hike was but one example of how, despite spending $400 million to help re-elect President Obama, America’s labor unions had plenty of money to pour into crucial state campaigns. In many of these campaigns, labor thwarted efforts to cut taxes, rolled back laws it disliked, and generally cemented its reputation as the leading defender of big government at the state and local levels.
The campaign for Prop. 30 attracted $120 million in spending by both sides, according to the National Institute for Money in State Politics. Of the four top supporters of the tax hike, three were government unions: The California Teachers Association gave $11.5 million, the Service Employees International Union (which represents 350,000 government workers in the state) kicked in $10.7 million, and the American Federation of Teachers put up another $4.2 million. The only nonunion among the biggest givers: California’s Democratic Party, which spent $5.1 million supporting the take hike.
The California Teachers Association along with other unions supported Prop. 30 at a rally in San Francisco on Oct. 20. (more…)
Driving across California is like going from Mississippi to Massachusetts without ever crossing a state line.
Consider the disconnects: California’s combined income and sales taxes are among the nation’s highest, but the state’s annual deficit is still about $16 billion. It is estimated that more than 2,000 upper-income Californians are leaving per week to flee high taxes and costly regulations, yet the state government wants to raise taxes even higher. California’s business climate already ranks near the bottom in most surveys. Its teachers are among the highest paid, on average, in the nation, but its public-school students consistently test near the bottom of the nation in both math and science.
The state’s public employees enjoy some of the nation’s most generous pensions and benefits, but California’s retirement systems are underfunded by about $300 billion. The state’s gas taxes — at over 49 cents per gallon — are among the highest in the nation, but its once-unmatched freeways, like 101 and 99, for long stretches have degenerated into potholed, clogged nightmares unchanged since the early 1960s.
The state wishes to borrow billions of dollars to develop high-speed rail, beginning with a little-traveled link between Fresno and Corcoran — a corridor already served by money-losing Amtrak. Apparently, coastal residents like the idea of European-style high-speed rail — as long as the noisy and dirty construction does not begin in their backyards.
As gasoline prices soar, California chooses not to develop millions of barrels of untapped oil and even more natural gas off its shore and beneath its interior. Home to bankrupt green companies like Solyndra, California has mandated that a third of all the energy provided by state utilities soon must come from renewable energy sources – largely wind and solar, which currently provide about 11 percent of the state’s electricity and almost none of its transportation fuel.
How to explain the seemingly inexplicable? “California” is a misnomer. There is no such state. Instead there are two radically different cultures and landscapes with little in common, the two equally dysfunctional in quite different ways. Apart they are unworldly; together, a disaster. (more…)
