Should-Read: Paul Krugman: On Twitter: “The CA/KS comparison—Brown and Brownback took office same time—never gets old, because the derp keeps coming…” https://twitter.com/paulkrugman/status/ ... 5239326720
Paul Krugman on Twitter The CA KS comp Brown and Brownback took office same time never gets old because the derp keeps coming https t co JVMQZ8msUB https t co 2JQPUz7rVr
Middle Class Political Economist: How wrong is IBD on California? Let us count the ways http://www.middleclasspoliticaleconomis ... et-us.html: “Investor’s Business Daily has a hit piece out on California…
…Amazingly, the editorial does not mention regulations once, though it did get around to the “job-killing $15-an-hour minimum wage” recently passed…. The article calls California “the highest-tax state in the union.” If that’s so, it’s just another example of the false claim (popular also with Arthur Laffer and the conservative American Legislative Exchange Council) that high taxes always mean bad policy outcomes. (FWIW, according to Forbes, California only has the sixth-highest state and local tax burden.) So what have been the consequences of all of California’s tax increases? According to IBD, “Since 2004, California has lost more than 1 million people, representing a $26 billion net income loss.”
Of course… California’s population grew by almost exactly 4 million between 2004 and 2016, from 35.25 million to 39.25 million…. Interstate immigration is only one element of population change, and IBD conveniently omits the rest. And the $26 billion alleged income loss due to interstate out-migration over that time period? A rounding error in an economy which grew from $1.8 trillion (2004) to $2.2 trillion (2015) annually in real 2009 dollars…. The article further claims that because of taxes, over 10,000 firms, including Toyota, “have either fled the state or reduced their investments.” Of course, Toyota has been replaced in its Fremont factory by Tesla, the most valuable auto company in the United States by market capitalization…. California hit its pre-recession peak employment in January 2008 at 16,949,800 (6.1% unemployment rate), went below 16 million employed and over 12% unemployment in the worst of the Great Recession, but in December 2016 reached 18,376,600 employed with just a 5.2% unemployment rate. So something more than offset all the companies that “fled,” I guess.
Of course… California has persistent problems… a shortage of affordable housing…. But that means, contrary to the tax-doomsayers, that it is low-income people moving out and higher income people moving in…. All in all, the editorial is Exhibit 538 in pressuring states to cut taxes, pretending you can provide infrastructure, education, and training without tax revenue, and that you can create prosperity by creating low-wage jobs.
Who reads Investors Business Daily and expects anything other than a highly spun and distorted view of reality?
yrs,
rubato