Posted on 06/18/2016 11:23:17 AM PDT by napscoordinator
In 2012, voters in California approved a measure to raise taxes on millionaires, bringing their top state income tax rate to 13.3 percent, the highest in the nation. Conservative economists predicted calamity, or at least a big slowdown in growth. Also that year, the governor of Kansas signed a series of changes to the state's tax code, including reducing income and sales tax rates. Conservative economists predicted a boom.
Neither of those predictions came true. Not right away -- California grew just fine in the year the tax hikes took effect -- and especially not in the medium term, as new economic data showed this week.
Now, correlation does not, as they say, equal causation, and two examples are but a small sample. But the divergent experiences of California and Kansas run counter to a popular view, particularly among conservative economists, that tax cuts tend to supercharge growth and tax increases chill it.
California's economy grew by 4.1 percent in 2015, according to new numbers from the Bureau of Economic Analysis, tying it with Oregon for the fastest state growth of the year. That was up from 3.1 percent growth for the Golden State in 2014, which was near the top of the national pack.
The Kansas economy, on the other hand, grew 0.2 percent in 2015. That's down from 1.2 percent in 2014, and below neighboring states such as Nebraska (2.1 percent) and Missouri (1.2 percent). Kansas ended the year with two consecutive quarters of negative growth -- a shrinking economy. By a common definition of the term, the state entered 2016 in recession.
(Excerpt) Read more at washingtonpost.com ...
I’m under the impression that Kansas held on pretty well through much of the period from 2008 up until oil and ag commodities fell in 2014. So, they’re just beginning to feel the effects of the downturn. Whereas, California was hit badly and early on, but the large urban areas at least have recovered. I’d say the effects of Kansas tax cuts have yet to make an impact, and the effects of California tax increases have yet to show up in statistics. All parts of the country aren’t at the same stage of recession simultaneously.
We’d need to look at all such cases before we could deduce an effect. Did other things hit Kansas that did not hit California or vice versa?
“Old saying...”...lonesome as a tourist in Kansas.”
Tourists drop loads of money in California every day 365 days per year and one day extra on leap year.
Some of my wife’s relatives from the Mid West wanted to come out the week after labor day, which starts two months of incredible great weather. Kids are back in school. Those without kids take advantage of that time of the year, and there are more people in that population each year.
We tried to tell them to make flight reservations early, they didn’t listen and now there are none.
California has benefitted from an infusion of cash from the federal government.
Not True. Both California ranked #46 and Kansas #47 re dependence on US tax $’s.
https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700/
A huge part of Kansas economy depends on oil, gas, and aviation. All of these have done not so well in recent years.
The referenced article overlooks problems concerning state taxation v. constitutional restraints on federal government taxation that are wrongly ignored.
Regarding federal taxation, the article ignores that a previous generation of state sovereignty-respecting justices had clarified that Congress is prohibited from appropriating taxes in the name of state power issues, essentially any issue that Congress cannot justify under its constitutional Article I, Section 8-limited powers.
“Congress is not empowered to tax for those purposes which are within the exclusive province of the States.” —Justice John Marshall, Gibbons v. Ogden, 1824.
And given that the corrupt Washington cartel is taxing and spending for many things that it cannot justify under Congress’s Section 8-limited powers, unconstitutional federal taxation gets us back to Kansas.
More specifically, consider that while Kansas cut taxes to try to boost its economy, Kansas, like all the other states, continues to arguably lose state revenues because of unconstitutonal federal taxes that its citizens are paying, taxes that corrupt Congress spends on things that it cannot justify under its Section 8-limited powers as previously mentioned.
So given that things might have turned out differently for Kansas if the feds weren’t stealing state revenues through unconstitutional taxes, the pro-tax comparison of California taxes versus Kansas taxes might not hold water.
And Kansas personal property tax on vehicles is the worst in the country. Which is why you see so many out of state car tags in Kansas. Residents are evading the tax by tagging in other states.
And how about comparing MD to TX? As wrench said, “Cherry picking statistics”.
Another reason Trump was right to ban this sorry birdcage liner.
California is even putting 2 billion into a rainy day fund to pay debt? they will never see daylight they just keep digging the hole deeper every year.
Because you’ve got the cause and effect reversed in this instance. They increased taxes precisely BECAUSE their economy was improving in CA. And they cut taxes in KS because their economy was weakening. In effect the strength of the economy determined whether taxes would be increased rather than the reverse.
Ok, I’ll bite. What do you think was the reason for CA’s growth and Kansas’ stagnation/contraction?
What prevents Kansas from diversifying its economy?
As an economy, CA is one of the largest economies in the world. The state has done an excellent job of diversifying its economy to include agriculture, entertainment, tourism, and technology. Other states have tried - some have succeeded - others not so much.
My theory is that coastal states or states with ports have always been more open to trade and outside influences - and their economies reflect that openness and flexibility - despite the best efforts of Democrats to control the economy.
Bingo, unlike AL, LA, MS, and most Southern states, CA given much more to the Feds than it receives.
“Don’t worry they won’t make it through the next slow down.”
On the contrary, they will rebound faster than any other state. The CA economy is diverse and resilient.
Don’t get me wrong - I dislike the politics here and would rather live in the Rocky Mountain West - however, there’s no denying the success or the “powerhouse” nature of the CAs economy.
Umhhh - you’re asking if the folks who live in Beverly Hills, Malibu, and Hollywood are going to move to Topeka and Dodge City because Kansas has decided to get into the film and TV business? Or that the tech giants in Silicon Valley are going to be persuaded to put their operations in a location where they can attract Jayhawks and Wildcats instead of graduates of Stanford, Berkeley and Cal Tech?
Even if mass entertainment and computer applications would be a good match to the locale and human capital of Kansas in the future, the comparison the author of the article was making doesn’t involve a hypothetical future Kansas, it involves two states with two very different economies at this point in time - it’s a bogus comparison, and as such tells us very little if anything about the consequences of tax policy.
California’s GNP ranking as a nation would be #6 right after the UK and ahead of France.
https://en.wikipedia.org/wiki/Comparison_between_U.S._states_and_countries_by_GDP_(nominal)
Thanks GD.
Btw, for some reason, your link wasn’t going to the correct page. Here it is again - https://en.m.wikipedia.org/wiki/Comparison_between_U.S._states_and_countries_by_GDP_(nominal)
Thanks for posting that link. Some interesting numbers and information to digest there. I would have never guessed FL’s economy is the same size as Indonesia, a country that is so blessed with natural resources. Of course, they also have lots of Muslims there so that may explain a lot of that country’s underachievement.
The map in that wiki page reiterates what I’ve been telling colleagues and friends for the last 20 years - it’s a fool who underestimates the power of the U.S. economy.
Pax Americana baby!
Kansas taxes are nothing like California.
Kanasas has 2 income tax rates.
2.7% on the first $15,000 of taxable income.
4.6% on taxable income of $15,001 and more.
Here is California
1% on the first $7,850 of taxable income.
2% on taxable income between $7,851 and $18,610.
4% on taxable income between $18,611 and $29,372.
6% on taxable income between $29,373 and $40,773.
8% on taxable income between $40,774 and $51,530.
9.3% on taxable income between $51,531 and $263,222.
10.3% on taxable income between $263,223 and 315,866.
11.3% on taxable income between $315,867 and $526,443.
12.3% on taxable income of $526,444 and above.
Kansas does NOT have high income taxes compared with California. I can’t speak to sales taxes but since California has such high sales taxes, I’m sure Kansas CAN’T be worse.
Oh, and since minimum wage is $10 in california, that means workers are earning about $20,000 per year so they fall above 4% for their top dollars. And since the cost of living is so much higher in most of California vs most of Kansas, that $20,000 pre tax doesn’t go very far.
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