A “Real World” referendum on high tax vs low tax states? CA and TX

The LATimes has a fascinating article comparing California to Texas. William Voegeli basically argues that the Texas model of low taxes / low-benefit works better than California’s high-benefit / high-tax model.

In America’s federal system, some states, such as California, offer residents a “package deal” that bundles numerous and ambitious public benefits with the high taxes needed to pay for them. Other states, such as Texas, offer packages combining modest benefits and low taxes. These alternatives, of course, define the basic argument between liberals and conservatives over what it means to get the size and scope of government right.

It’s not surprising, then, that there’s an intense debate over which model is more admirable and sustainable. What is surprising is the growing evidence that the low-benefit/low-tax package not only succeeds on its own terms but also according to the criteria used to defend its opposite. In other words, the superior public goods that supposedly justify the high taxes just aren’t being delivered.

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One way to assess how Americans feel about the different tax and benefit packages the states offer is by examining internal U.S. migration patterns. Between April 1, 2000, and June 30, 2007, an average of 3,247 more people moved out of California than into it every week, according to the Census Bureau. Over the same period, Texas had a net weekly population increase of 1,544 as a result of people moving in from other states. During these years, more generally, 16 of the 17 states with the lowest tax levels had positive “net internal migration,” in the Census Bureau’s language, while 14 of the 17 states with the highest taxes had negative net internal migration.

These folks pulling up stakes and driving U-Haul trucks across state lines understand a reality the defenders of the high-benefit/high-tax model must confront: All things being equal, everyone would rather pay low taxes than high ones. The high-benefit/high-tax model can work only if things are demonstrably not equal — if the public goods purchased by the high taxes far surpass the quality, quantity and impact of those available to people who live in states with low taxes.

Today’s public benefits fail that test, as urban scholar Joel Kotkin of NewGeography.com and Chapman University told the Los Angeles Times in March: “Twenty years ago, you could go to Texas, where they had very low taxes, and you would see the difference between there and California. Today, you go to Texas, the roads are no worse, the public schools are not great but are better than or equal to ours, and their universities are good. The bargain between California’s government and the middle class is constantly being renegotiated to the disadvantage of the middle class.”

These judgments are not based on drive-by sociology. According to a report issued earlier this year by the consulting firm McKinsey & Co., Texas students “are, on average, one to two years of learning ahead of California students of the same age,” even though per-pupil expenditures on public school students are 12% higher in California. The details of the Census Bureau data show that Texas not only spends its citizens’ dollars more effectively than California but emphasizes priorities that are more broadly beneficial. Per capita spending on transportation was 5.9% lower in California, and highway expenditures in particular were 9.5% lower, a discovery both plausible and infuriating to any Los Angeles commuter losing the will to live while sitting in yet another freeway traffic jam.

If this is correct, if we can see that many people actually prefer “a la cart” services rather than “all-in-one” from government, I’d think this has implications for Obamacare, Obamacorps, and anything else the federal government is thinking of nationalizing.

But that’s just a few people moving from CA to TX and doesn’t mean anything right? I’m not so sure. Tea partiers seem to me to make the same argument and those people can be found in all states.

Personally, I live in one of the highest taxed communities in my state. By all accounts, this is a great place to live, but many are fed up with zooming property taxes that saw property re-valuations go up 40% AFTER the economic plunge last year. Local incumbents are suffering during this election season. The general consensus among the dissatisfied is that local government spends too much and is unaccountable. Is this a nice place BECAUSE of local government or despite it? That’s a good question.

I think the LATimes makes an important point. And I think one paragraph, in particular, hits the anxiety of Americans concerned about what the Obama administration is moving toward.

. . . California’s interlocking directorate of government employee unions, issue activists, careerists and campaign contributors has become increasingly aggressive and adept at using rhetoric extolling public benefits for all to deliver targeted advantages to itself. As a result, the political reality of the high-benefit/high-tax model is that its public goods are, increasingly, neither public nor good. Instead, the beneficiaries are the providers of the public services, and certain favored or connected constituencies, rather than the general population.

This sounds a lot like Chicago as well. Did the poor in Chicago ever get the renovations they needed from those who got money to fix up the dilapidated apartment buildings? No. Given the many financial scandals of Wall Street, K Street, Obama administration officials and Congress, it would be madness to think higher taxes would ever get past the all the “bites” and actually reach its intended purpose.

And I think many people see Obamacare as trickle-down health care. Send all your money to the top and hope the care actually trickles down to you how, when and where you need it.

Thoughts?

Do go read the whole article. It’s well worth the time!