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Author Topic: California shows the way
G2
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I'm pulling the details from an article in my feed reader so deal with it...

California is a great place:
quote:

California has the most fertile soil and the climate most conducive to farming in the country. Tourists flock to see the beauty of Yosemite, Death Valley, and a 1,000-mile coastline. San Diego and San Francisco Bay are among the most naturally endowed harbors in the world. The state is rich in gas, oil, minerals, and timber. It has the largest population in the nation at 37 million residents.

At one time, California educators ensured that their tripartite system of higher education was the envy of the world. The Golden Gate and Oakland Bay bridges, along with the Los Angeles freeway system and the complex network of state dams and canals, were once considered engineering marvels far ahead of their time. Visionaries made Napa Valley the world’s premier wine-producing center. California’s farmers found a way to produce 400 crops and half the nation’s fruits, nuts, and vegetables, and created the richest food region in the nation. Silicon Valley and Hollywood are still the global leaders in computer innovation and entertainment, respectively.

Its teachers and public servants in many comparative surveys remain the highest-compensated and best-pensioned in the nation. Its welfare system is still the most generous in America. Seventy percent of its budget continues to go for education and social services.

To pay for that:
quote:
California has the highest gasoline tax in the nation, and its combined sales-tax and local and state income-tax rates are among the nation’s steepest.
So this is the liberal dream; a huge state with an abundance of natural resources taking from the rich to help the poor and filling out government jobs at record pay with huge benefits. Should be great, right? It's exactly what liberals want, utopia.

The results:
quote:

It [unemployment] currently runs at 12.6 percent in California, the second-highest in the nation.

A recent Forbes magazine survey listing the 20 most miserable cities in the nation ranked four California municipalities in the top five.

California public schools test near rock bottom in national math and science scores.

A recent survey conducted among CEOs ranked California dead last for jobs and business growth.

California incarcerates the highest number of prisoners in the nation. It costs nearly $50,000 per year to house each one, near the highest per capita cost in the country.

The state’s mineral and timber industries are nearly moribund. At a time of skyrocketing food prices, more than a quarter-million acres of some of the wealthiest agricultural land in California’s Central Valley lie idle due to court-driven irrigation cutoffs -- costing thousands of jobs and robbing the state of millions of dollars in revenue.

Home prices stay prohibitive along the upscale coastal corridor from San Francisco to San Diego, even as millions of acres of open spaces there remain off-limits for new housing construction.

Billions of dollars in remittances are sent from California to Mexico ...

California is in massive debt, $134 billion according to usgovernmentrevenue.com with $64 billion, in general obligation notes which are paid from revenues coming from the state's general fun meaning that debt payments reduce funds available for other services and has a $25 billion budget deficit this year. California's debt payments are now $5.5 billion in the current fiscal year ending June 30, 2011. Total revenues for 2009 (the last year I can find them) was $49.1 billion.

Do we really want the California model nationwide?

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TomDavidson
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quote:
So this is the liberal dream; a huge state with an abundance of natural resources taking from the rich to help the poor and filling out government jobs at record pay with huge benefits. Should be great, right? It's exactly what liberals want, utopia.
*laugh* Even as straw men go, that's pretty egregious. [Smile]
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JoshuaD
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What's wrong w/ his point Tom? Is it a little simplistic? Sure. But I don't think it's a bad summary of the ideals of the left. Except perhaps the government job thing.
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MattP
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There's not much more than the government job thing other than "take from the rich to help the poor" which is simplistic beyond usefulness. Even most conservatives support a progressive tax system.
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TomDavidson
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1) It is indeed a bad summary of the ideals of the Left.
2) It alleges that the enumerated downsides of California's current situation are a necessary consequence of the implementation of the "ideals" of the Left.

What is "the California model?" What negative consequences could a state avoid by not implementing "the California model?" G2's post amounts to saying, "California is full of liberals and it has a bunch of financial problems; therefore, we should avoid having liberals." It certainly offers no deeper analysis beyond that.

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edgmatt
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It does "amount" to that, but the deeper analysis is in the rest of the post, and there is probably more in the article or whatever that G2 did not post a link to.

I don't think it's a SUMMARY of the ideals of the Left, but the things that are listed certainly are things the left tends to like and support: Higher payed public officials including teachers with better benefits, higher taxes, and a high percent of the budget going towards education and social services.

Since these things are all paid for by the people, through way of the government, and the government is that badly in debt, AND California is one of the richest states as far as natural resources go, it is reasonable to say that the people who are in charge of the state are doing things in a less than efficient manner. Since the people in charge are doing things that most would consider "Left", it's reasonable to suggest that California should stop doing "Left" things.

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MattP
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quote:
public officials including teachers
I doubt many people, liberal or otherwise, put "teachers" in the same category as "public officials". They do, in general, support funding for public education. They get just as pissed off at overpaid administrative staff as anyone else.

Higher taxes are not "liked and supported" but are often a result of liberal policies that support services, but the conservative response to date has generally been expensive programs that are not paid for. The old "tax and spend" vs "tax cut and spend". The prisons aren't full because liberals are tough on crime, are they?

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TomDavidson
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quote:
Since the people in charge are doing things that most would consider "Left", it's reasonable to suggest that California should stop doing "Left" things.
Only if the "Left" things they are doing are responsible for causing the problems they are having.
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edgmatt
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Teachers ARE public officials though, that's all I was saying.

"The prisons aren't full because liberals are tough on crime, are they? "

I don't understand this question.

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edgmatt
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quote:
Only if the "Left" things they are doing are responsible for causing the problems they are having.
Right. This article and G2 suggest that they are.

(I explained that as best I could when I said:

"Since these things are all paid for by the people, through way of the government, and the government is that badly in debt, AND California is one of the richest states as far as natural resources go, it is reasonable to say that the people who are in charge of the state are doing things in a less than efficient manner. Since the people in charge are doing things that most would consider "Left", it's reasonable to suggest that California should stop doing "Left" things. )

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TomDavidson
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quote:
This article and G2 suggest that they are.
My entire point is that this is not what the article actually suggests. It's what the article insinuates.
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edgmatt
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I don't know the article is negative in anyway, as far as what I've seen from what G2 posted. G2's laid it out to suggest/indicate that Left ideas are what is responsible, but he hasn't done so in a sneaky way or subtle like. (I have yet to see G2 be subtle. [Razz] )
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Wayward Son
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Let's take a look at one claim:

quote:
Home prices stay prohibitive along the upscale coastal corridor from San Francisco to San Diego, even as millions of acres of open spaces there remain off-limits for new housing construction.
I'm not sure where they get "millions of acres." I'm in San Diego, went to college south of San Francisco, and grew up in the L.A. area, and I can assure you that a good 90 percent or so of the available acreage within 30 miles of each of those cities have been developed. There are no huge tracks of land near San Diego, Los Angles or San Francisco that have been put "off limits" to housing (except for Camp Pendelton between San Diego and Orange counties, and you can't blame Liberals for the military, can you? [Wink] ) They have been thoroughly developed. And you know what is the result of that?

Huge traffic problems. [Smile]

There are large areas between Santa Barbara and San Francisco along the coast that are undeveloped, but they have something else in common: no major cities nearby.

If you go inland, however, you find a lot of development. Not so much in San Diego, and I don't know about San Francisco, but near L.A. there is an area called "the Inland Empire." Basically San Bernadino and Riverside counties, that stretch from the boarders of Los Angeles and Orange counties to the boarders with Nevada and Arizona. Huge counties, that have had tremendous development over the last few decades. Lots of cheap housing there. And you know what effect that has had on prices in L.A.?

Practically nil, because of traffic problems.

What used to be somewhat heavy traffic on the edge of L.A. county is now as bad as traffic in L.A. proper. Which makes commute times unimaginable for those wishing to commute to the L.A. basin. Which means, if you want a home with a reasonable commute time to work, you have to stay within 30-50 miles of L.A., where there is no more room to build.

So the whole premise of that statement is bogus. Sure, there are huge tracks of undeveloped land. But they are too far away from the job centers to have any effect on the prices of homes in those areas.

This has nothing to do with Liberal ideals, or Liberal policies. It has to do with Geography.

And high housing prices lead to high rents, which means a higher cost of living, which leads to the need for above-average welfare costs for people in those areas, and above-average salaries to government workers in those areas, which requires above-average taxes to pay for those things. IOW, it's more expensive to do the normal things that every government does in every other state, because of the higher cost-of-living.

So laying it all on "liberal policies" ignores all the other reasons things are more expensive in California today, and is simply disingenuous.

[ February 10, 2011, 02:26 PM: Message edited by: Wayward Son ]

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Pyrtolin
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The simple problem is that it suggests that the shortfall is the result of those programs rather than the result of a sudden cascading collapse of highly profitable industries that used to provide the funding for those programs.

If we were seeing these problems in a boom time (and what part of these problems existed 5 years ago would certainly be interesting to examine) then there might be some credibility, but to try to draw this connection while pretending that there isn't a major economic downturn at play as the primary contributing factor is exceptionally short sighted.

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Daruma28
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Reading this thread gave me a moment of clarity.

The left wing/Demo-lib self described "progressive" contingent on Ornery has a standard M.O. whenever anyone criticizes leftist/collective ideology.

It's simply defaulting to the "no true scotsmen" fallacy.

California has been the proving ground for liberal policies in action for decades.

The results speak for themselves.

The simple problem is that it suggests that the shortfall is the result of those programs rather than the result of a sudden cascading collapse of highly profitable industries that used to provide the funding for those programs.

[LOL]

Pyrtolin can point this out, yet is completely clueless to the role in which increased taxes play in capital flight, and will argue for even higher taxes.

Don't you know G2, edgmatt...the problem is that NOT ENOUGH Lefty policies have been enacted! [Exploding]

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TomDavidson
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quote:

California has been the proving ground for liberal policies in action for decades.

The results speak for themselves.

This makes several false assumptions, Daruma.

The biggest:

1) That all of California's relevant policies represent "liberal policies in action."

2) That these policies are in fact relevant to California's current situation.

Neither of these things are true in ways sufficient to make your observation valid.

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Daruma28
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* Higher taxes on income, businesses and commerce
* Funding for Entitlement programs.
* Support for illegal immigration, under the guise of "not being racist."

These are certainly liberal policies in action. And to deny their effects on the current state of CA's economy as irrelevant is ludicrous.

But keep resorting to the no true scotsman fallacy. It's quite amusing.

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MattP
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As a percentage of budget, Texas' deficit is just about as bad and they just took 6.4B in federal money to patch it. Are liberal policies also to blame there?
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Daruma28
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Big Picture Matt....Texas has nowhere near the same tax structure and entitlement programs that CA has.

They have a tax structure that is certainly more attractive to businesses than CA has.

Here's an old article back in 2003 by columnist Alan Reynolds

quote:
The trouble with California taxes is not that property taxes are too low, but that income and sales taxes are way too high. The personal income tax rates are high enough to provoke an exodus of skilled people — a "brain drain." Corporate tax rates are high enough to provoke an exodus of business capital — "capital flight." Sales tax rates are high enough to provoke wholesale tax avoidance.

California's tax revenue per capita ranks as "only" the sixth-highest in the nation, but comparing tax revenues understates the damage. The state's uncompetitive tax rates ultimately yield more economic distress and less revenue because they erode the tax base. Profitable companies leave the state, while companies with chronic losses stay. People in top tax brackets leave the state, while nontaxpayers who expect to gather tax-financed benefits arrive in droves.

In 1991, as State Sen. Tom McClintock recently recalled, "An 18 percent increase in the sales tax and a 15 percent increase in upper brackets of the income tax were supposed to produce a net of $7 billion of new revenues. But they didn't. ... We didn't take in $7 billion more — we took in $1 billion less. We lost another $1 billion the next year."

Indeed, real per capita personal income fell 5.6 percent during the three years following the 1991 tax increase, even though the national economy was recovering. Californians now arguing for another tax increase — notably Lt. Gov. Cruz Bustamante — are conveniently forgetting what happened after that was tried in 1991.

There is obviously plenty of room for spending cuts, since California's budget grew by 44 percent in the past four years. The appearance of tiny spending cuts in the new July 29 budget was a fraud. The state's legislative analyst's office reports, "Most of this increase can be explained by four factors: the [vehicle licensing fee] rate increase ... new federal funds, borrowing to cover the state's 2003-2004 pension obligations and the MedicCal accounting shift from an accrual to cash basis."

There was predictable whining after fees at the California State University and University of California were finally raised a bit after remaining unchanged for eight years. California has long been overtaxing some residents so people like me could get a valuable college education almost for free. Once that education begins to raise our future income, however, many of us leave the state to avoid steep taxes.

The 9.3 percent income tax also applies to capital gains (though Bill Simon wants to cut it to 5 percent), which is one reason aging investors like me could never be enticed to bring our capital back to California. Sell stock, and the state will hit you with a big tax — don't sell, and they'll get you with an estate tax. But that only works if intended victims don't know how to vote with their feet.

California's personal income tax is 9.3 percent on income above $38,291 — a definition of "rich" that could only make sense to Hollywood liberals. That brutal tax rate makes it difficult for companies to recruit and retain skilled people without paying higher salaries. That, in turn, raises the cost of doing business for skill-intensive industries and makes them uncompetitive until they move jobs out of California.

California's corporate tax is above 8.8 percent — much higher than any nearby state. The corporate tax in Washington and Nevada is zero. Companies with chronic losses don't mind staying in California, but many profitable firms become much more profitable (after taxes) by relocating.

The sales tax varies locally from 7.25 to 8.5 percent, which is high enough to foster significant tax avoidance (e.g., shopping in Oregon, which has no sales tax, or ordering from another state). States with lower sales tax rates than California collect more money from this tax. They also collect more income taxes because a lower sales tax helps in the building of profitable retail businesses, who hire more people.

California never will be able to compete well for new businesses and the skilled people those firms require until its tax system becomes reasonably competitive. At a minimum, that means sales and income tax rates no higher than 6 percent.

A state with no sales tax like Oregon can get away with a higher income tax. A state with no income tax like Washington can get away with a higher sales tax. But Sacramento's politicians have been foolishly rapacious with both income and sales taxes. That is killing the state economy, and it has to stop.


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Pyrtolin
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quote:
Texas has nowhere near the same tax structure and entitlement programs that CA has
And yet has the same problems, suggesting that they're coming from somewhere else. Like, say, the financial collapse that affected people across the board.
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TomDavidson
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Or even a flood of immigrants.
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G2
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quote:
Originally posted by Pyrtolin:
quote:
Texas has nowhere near the same tax structure and entitlement programs that CA has
And yet has the same problems, suggesting that they're coming from somewhere else. Like, say, the financial collapse that affected people across the board.
Texas has the same problems as California? WTF?

For perspective:
Debt Per Capita in TX $520, Debt Per Capita in CA $1,805.
Moody's Rating TX: Aa1. Moody's Rating CA: Baa1.

CA is in a whole different league with their problems. This was nothing more than an attempt at the strawman fallacy.

[ February 10, 2011, 06:46 PM: Message edited by: G2 ]

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Wayward Son
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quote:
For perspective:
Debt Per Capita in TX $520, Debt Per Capita in CA $1,805.

So while Texas is not as badly off as California, they are badly off.

So we can estimate, from your numbers, that at best only half the problems that California is experiencing may be from its policies.

But we can all agree that all the problems are not entirely from any "liberal" policies.

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JWatts
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quote:
Originally posted by Wayward Son:
quote:
For perspective:
Debt Per Capita in TX $520, Debt Per Capita in CA $1,805.

So while Texas is not as badly off as California, they are badly off.

So we can estimate, from your numbers, that at best only half the problems that California is experiencing may be from its policies.

But we can all agree that all the problems are not entirely from any "liberal" policies.

Is that liberal math?
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Wayward Son
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It's called logic, something that some conservatives are not familiar with. [Razz]

[ February 11, 2011, 10:47 AM: Message edited by: Wayward Son ]

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Greg Davidson
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How about this for a competition: California vs. Texas? The position of the conservatives is that "liberal" California is in worse shape than conservative Texas. Furthermore, Texas has a Republican Governor and California has a Democrat.

I predict that by February 2013 California will be in better shape than Texas. Even with the windfall profit that Texas will share as oil prices rise. Anyone want to take that bet?

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edgmatt
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He's pointing out that "from the numbers" would give an estimate of about 28%, not one half.
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edgmatt
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YES I WILL TAKE THAT BET GREG.
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Wayward Son
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quote:
He's pointing out that "from the numbers" would give an estimate of about 28%, not one half.
Oops. My bad. [Embarrassed]

Thanks for correcting that, JWatts. I should have said 3/4, not half. [Embarrassed]

[ February 11, 2011, 11:16 AM: Message edited by: Wayward Son ]

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Pyrtolin
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quote:
Originally posted by G2:
Debt Per Capita in TX $520, Debt Per Capita in CA $1,805.
Moody's Rating TX: Aa1. Moody's Rating CA: Baa1.

Both states are facing 20% budget deficits, which is that is being used as the proof of economic troubles above; payment on their debts is part of that budget, so the specific size isn't so relevant. Their current shortfalls are similar, which suggests that they've both been about equally affected bey the current downturn.
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JWatts
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quote:
Originally posted by Greg Davidson:
How about this for a competition: California vs. Texas? The position of the conservatives is that "liberal" California is in worse shape than conservative Texas. Furthermore, Texas has a Republican Governor and California has a Democrat.

I predict that by February 2013 California will be in better shape than Texas. Even with the windfall profit that Texas will share as oil prices rise. Anyone want to take that bet?

By what measurements?

I'll bet $100 that by the (March 2013 for February 2013 Bureau of Labor Statistics) that California will have a higher unemployment rate than Texas. Hell, I'll even spot you half a percent.

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Daruma28
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Both states are facing 20% budget deficits, which is that is being used as the proof of economic troubles above

Deficits for what, though?

Economic Depression (which is what we are in - not recession, and certainly not a recovery, no matter what the media and politicians try to tell you otherwise,) leads to much lower tax revenues...so yes, deficits are bound to happen to even the most "conservative" states.

Texas doesn't even have half of the social service programs and State government bureaucracy that CA has.

But to say the situation in California versus the situation in Texas is comparable?

Wayward, if that is what you call "logic" I'd hate to see your "reasoning." [Eek!]

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Wayward Son
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Although my math skills may be lacking today, my point still stands. Much of California's troubles are from the general economic troubles affecting the entire nation. And things simply cost more in California.

Compare any major California city to any major Texas city with this calculator. The cost of living is more than 30 percent less in Texas than in California, primarily because of housing costs. And as I pointed out previously, housing costs in California are primarily driven by geography, not by politics.

So while the politics in California may be responsible for some the problems, it is at best only the top the iceberg. Most of it is still driven by the overall economy and higher cost-of-living and housing prices.

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LetterRip
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A point I think that is important to this discussion, is that if I recall correctly (which I might not) California pays way more into federal income taxes than it recieves back, whereas Texas is closer to break even.

Ah here we go - Texas gets 94 cents back on the dollar, California gets 78 cents back on the dollar.

http://www.taxfoundation.org/files/fedspend_per_taxesbystate-20071009.pdf

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JWatts
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quote:
Originally posted by LetterRip:
A point I think that is important to this discussion, is that if I recall correctly (which I might not) California pays way more into federal income taxes than it recieves back, whereas Texas is closer to break even.

Ah here we go - Texas gets 94 cents back on the dollar, California gets 78 cents back on the dollar.

http://www.taxfoundation.org/files/fedspend_per_taxesbystate-20071009.pdf

Virtually all of the difference can be attributed to the progressive nature of the Federal Income Tax. Texas is a poorer state. The Federal Income Tax acts to redistribute income from richer states to poorer states.

Income per capita 2009:
Texas - $36.5 K
California - $42.3 K

Link

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TCB
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Texas is in better fiscal shape than California now, but they don't have as much room to grow. Texas spent the last decade cutting taxes and government services - so where will a balanced budget come from come from? Tax increases are politically impossible there, and, with a relatively lean government, they don't have much more room to cut. For Texas, either their economy grows dramatically or they're sunk.

Contrast that with California, where there's tons more room for reducing government spending and a limited tolerance for tax increases. Not to mention a bigger tax base. A rapidly growing economy would save them as well, but they also at least have the (perhaps slim) hope of politically courageous legislators solving problems.

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MattP
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quote:
Virtually all of the difference can be attributed to the progressive nature of the Federal Income Tax. Texas is a poorer state. The Federal Income Tax acts to redistribute income from richer states to poorer states.
And ironically such a system has more support from the people that live in the states which produce a surplus of taxes (generally populous liberal states) than those who absorb it (generally more rural, conservative states). Go figure.
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seekingprometheus
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Yeah...our taxes and cost-of-living out here suck.

But the big pink elephant stomping all over employment doesn't seem to have so much to do with tax policy, but with the housing bust.

When you talk to people out here griping about unemployment, it always goes back to housing--the construction and real estate sectors blew up during the real estate bubble, and silly homeowners refinanced and plowed the hundreds of thousands of dollars in home equity that landed in their laps into industries that inflated and deflated with the RE market.

When Johnny Nuhomoner and his neighbors bought homes for $200K, and woke up two years later to find that appraisers were saying those homes were worth $600K, they all used some of the equity to pay Tom Attawurknaugh to build swimming pools. He started a company and a gave jobs to a bunch of people. Nobody has any equity in their homes anymore, and Attawurknaugh Pool Construction employees are all unemployed now, sure--but suggesting that the problem is liberal policies is...stupid.

Everywhere is hard-hit, but those truly miserable cities are mostly in the central valley, far enough away from the factors like the sustainable industry growth that ignited and drove some of the home-value growth, but close enough that they caught the real estate fever as bargain hunters started migrating over the hills to build bedroom communities whose growth was sustained largely as an epiphenomenon of what was happening in saturated metropolitan areas.

[ February 11, 2011, 08:02 PM: Message edited by: seekingprometheus ]

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Greg Davidson
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JWatts and Edgmatt,

JWatts, great comment about metrics. Let's use three metrics - one to roughly measure governing ability (budget deficits), and two to measure the key elements of the economy: how many people have a job (unemployment) and how much money do they get paid (average income).


California's projected 2012 deficit at $19.2 billion, or 18.7% of its general fund, and the Texas deficit at $7.4 billion, or 17% of its budget (this is from an article in the LA Times a few days ago). That's good, that's pretty close to the same starting point. There's a bit bigger gap in the two metrics for the health of the economy. Texas currently has 8.3% unemployment vs. 12.5% in California. Some could argue that's due to Democratic policy in California), but at the same time (as JWatts brought up) average income in Texas is $36.5 K vs $42.3 K in California (some could argue that's due to Republican policy in Texas).

Let's use all three of these as metrics, let's award 100 points per category, and let's measure how each state performs relative to the other.

Projected 2014 budget deficit: currently Texas is 1.7% lower than California, if that gap is cut in half to a 0.85% gap then California would win 50 points in this category, but if under Democratic policies the gap doubles to 2.4%, then Texas would win 100 points.

Average income: Currently California averages 5.8K more income than Texas - if the gap is cut to 2.9K, then Texas wins 50 points, etc. If the gap is cut to zero, then Texas gets 100 points.

Unemployment: Texas currently has 4.2% lower unemployment than California. Same math - if the gap is unchanged, no points are awarded. If the gap disappears, 100 points to California, if the gap increases, more points to Texas in proportion to that current gap.

There's a chance that the outcomes here will be influenced by factors unrelated to the political party of the Governors and the majorities in the State Legislature, but for purposes of this bet, let's assume that's what drives the outcomes.

And we decide the question based on the data available on February 11, 2013

So yes, I am willing to take a $ bet on this. I am not sure if there is an Ornery protocol for such betting - perhaps everyone who wanted a piece of the action could send a check for the money at stake to a neutral 3rd party here. Or we could just bet "verbally" -p whatever you prefer.

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edgmatt
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I'll just stick to your original proposal which was that California will be in better shape than Texas by February 2013. We can base this on those same metrics: Budget deficit, unemployment rate, and average income.

As of right now Cali is worse than Texas in each of those metrics.

California has to be better than Texas in each of those or you lose the bet.

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