Do You Live in a “Death Spiral” State?

Townhall.com ^ | January 6, 2013 | Daniel J. Mitchell

[Kaslin]

Three years ago, I put together a “Moocher Index” that measured the degree to which non-poor people in a state were benefiting from redistribution programs.

As you can see if you click on the nearby table, Vermont was the worst state, followed by Mississippi, Maine, New York, and Massachusetts.

I confessed that my Moocher Index was a crude and imprecise tool, but it was one of my most popular posts in the early days of this blog. Probably because it was a way of measuring the degree to which people were being lured to ride in the wagon of government dependency (a very disturbing trend put in visual form by these two cartoons).

So I was very interested when I found that somebody at Forbes did something vaguely similar and came up with a list of “death spiral” states.

Eleven states make our list of danger spots for investors. They can look forward to a rising tax burden, deteriorating state finances and an exodus of employers. The list includes California, New York, Illinois and Ohio, along with some smaller states like New Mexico and Hawaii. …Two factors determine whether a state makes this elite list of fiscal hellholes. The first is whether it has more takers than makers. A taker is someone who draws money from the government, as an employee, pensioner or welfare recipient. A maker is someone gainfully employed in the private sector. …what happens when these needy types outnumber the providers? Taxes get too high. Prosperous citizens decamp. Employers decamp. That just makes matters worse for the taxpayers left behind. Let’s say you are a software entrepreneur with 100 on your payroll. If you stay in San Francisco, your crew will support 139 takers. In Texas, they would support only 82. Austin looks very attractive. Ranked on the taker/maker ratio, our 11 death spiral states range from New Mexico, with 1.53 takers for every maker, down to Ohio, with a 1-to-1 ratio. …The second element in the death spiral list is a scorecard of state credit-worthiness done by Conning & Co., a money manager… Its formula downgrades states for large debts, an uncompetitive business climate, weak home prices and bad trends in employment. …A state qualifies for the Forbes death spiral list if its taker/maker ratio exceeds 1.0 and it resides in the bottom half of Conning’s ranking. It’s easy to see how California got on our list. It has pampered a large army of civil servants while using every imaginable trick to chase private-sector jobs away, the latest being a quixotic scheme to reduce the globe’s atmospheric carbon.

Not surprisingly, there is considerable overlap between the top states in the Moocher Index and the death-spiral states.

So be forewarned. If you live in California, Hawaii, Maine, Mississippi, or New York, it’s quite likely that you are surrounded by people who want you to work harder and pay higher taxes so they can get more handouts.

Heck, that’s true in most states, so you should worry regardless of where you live. Click here to see a very depressing chart about the nationwide increase in dependency.

So what lessons can we learn? Well, if you look at this map, you’ll notice that none of the states without an income tax are death-spiral states.

And if you look at this map, you’ll see that there’s no overlap between death-spiral states and states with the lowest tax burdens.

Hmmm…sort of makes one think that maybe higher taxes aren’t the right way to solve a fiscal mess. Maybe somebody should inform the President.

Last but not least, here’s a map showing the state-by-state generosity of welfare benefits. I don’t detect any correlation with death-spiral states – except for New York and California.

If you live in either of those two states, you may want to escape before it’s too late.

[equaviator]

It’s a wonder that Michigan is not on that list. Thank you, Governor Snyder!

[07Jack]

I’m surprised NJ did not make the list with its huge tax burdens, massive state employee payroll and pension obligations. Conversely surprised to see South Carolina on the list; a Right to Work State with relatively low taxes....seems I hear that businesses are looking to move to South Carolina.

[KeyLargo]

Yep.

Honest Abe moved from Indiana to Illinois in 1830. He would want to move back now I assume.

Thinking more and more now about moving over the boarder and becoming a Hoosier.

[Be Careful]

California is preparing to establish an ‘Exit Tax’ that they feel is fair to impose on those fleeing the state, because it leaves their burden to those remaining.......go figure.

For sure, next will be a federal bailout.

[ProudFossil]

To show you how stupid the libs are about this: We went to a 12th night party last night. We have known one of the individuals also attending for many years (our wives worked together) and he is a radical liberal. We avoid politics because it can get very ugly. Last night I mentioned and described the Death Spiral statistics. And we are in New Mexico so it was the worse case.

When I said there were 153 state/local government employees, state/local government retirees, and welfare people in the 153 and only 100 private sector people he gave the following reason whay it was so bad. (Be prepared for hurling)

Because the state and city (Albuquerque) have cut so many jobs in the last ten years the number of workers has decreased. When I said those job cuts were in the 153 category he said no, those jobs were lost and they were in the 100 category. I said the 100 category are the private sector jobs, the private working people. He said no, those are jobs for the government people. I said again no, they are private sector. He then said of course they are private sector jobs. They are fully trained, paying taxes, and supporting their families AND ARE NOT DEPENDENT UPON CORPORATE WELFARE LIKE THE 153 CATEGORY.

Heaven help us (although I am beginning to think God has given up on us).

[vetvetdoug]

I have a private business in Mississippi in one of the counties that have a 14% unemployment. There are only 40% of us paying taxes and the other 60% are on government welfare. No wonder there is dependence, obesity and ignorance. Spend one day answering the phone at my business and any questions about a deteriorating society will be confirmed.

[Psalm 144]

It doesn’t matter. We live in a coerced death spiral “union”.

[traditional1]

You're correct. We've reached the point-of-no-return, because we no longer have enough Red States to Amend the U.S. Constitution to it's original intent, and eliminate parasitic lifestyles, alternative lifestyle favoritism, Union control of Government, and Congress that doesn't have to abide by the same Laws as the People.

With soon-to-come Amnesty, and preventing gun purchases by We The People, there is gonna be no exit from White Slavery that we have today.

[Psalm 144]

“there is gonna be no exit from White Slavery that we have today”

Well, there is, but it will not be pretty or legal.

Neither was the revolution against the Crown.

[az_gila]

California is preparing to establish an ‘Exit Tax’ that they feel is fair to impose on those fleeing the state, because it leaves their burden to those remaining.......go figure.

For sure, next will be a federal bailout

---

Perhaps what they need is an “Entry Tax”.

The new entrants need to pay in a lump sum to make up for the taxes they should have paid... /S

[Conservative4Ever]

Whoo Hoo...I live in California. :-) /s

[rcofdayton]

Have you thought about emigration and, if so, where?

[Jean2]

“Heaven help us (although I am beginning to think God has given up on us).”

I have to agree with you on this. If I was god I would too.

[Jean2]

“Heaven help us (although I am beginning to think God has given up on us).”

I have to agree with you on this. If I was god I would too.

[Jean2]

Unfortunatly, I live in Hawaii.

[traditional1]

Thought about it, but not sure WHERE.

TN, or TX sound like reasonable spots.