Anyone Notice: High Tax States = Reduced Value For Residents?

[TripleB]

Anyone notice that the states and cities with the highest tax rates have the lowest value for residents?

California
New York
New Jersey
Illinois

Toughest gun laws in the nation. Impossible or virtually impossible to get a CCW permit. More cops doing unconstitutional bullshit like downloading your entire cell phone's memory card on a traffic stop justified because you have tinted windows or aren't using a front license plate.

Conversely, the states with the lowest taxes have the most freedoms. (AZ, FL, TX, AK)

For f*cks sake, why do people want to live in states that charge them money to take away their civil rights? It's like an evil parallel universe where nothing makes sense.

It should be a state with strong civil rights and ease of CCW and good self-defense laws has a higher tax rate because in a "free market" people would be more willing to pay higher taxes in order to live with greater freedoms. But, the exact opposite is true.

The logical reason is that stripping citizens of their rights is an expensive process. However, since people should have the freedom to choose to live in a different state, people should choose to live cheaper in a free state. I'm perplexed.

[Indices]

A lot of people don't choose a state based on how many guns it allows them to own.

[Odysseusa]

You cannot judge a state on the basis of gun rights alone. For example, Texas and Florida have highest uninsured people at 26.3% and 24.9%, respectively.

[TripleB]

You cannot judge a state on the basis of gun rights alone. For example, Texas and Florida have highest uninsured people at 26.3% and 24.9%, respectively.

I assume you're referring to medical insurance. If you're referring to car insurance, then typically that is based on illegal immigrants because they cannot lawfully qualify for a license/insurance and TX/FL has a higher ratio of illegal immigrants than other states, so the correlation/causation link would fail there.

Is it the responsibility of the state government to provide insurance for residents? If so, what can the government do? Outside of raising taxes and extending Medicaid to a greater number of people? If that is the answer, then wouldn't it be more efficient to live in a state with no state income tax, and provide a 10% donation of your salary to a non-profit hospital in your area that will use it to provide indignant care?

To play devil advocate with myself, the federal government matches what a state spends on Medicaid, so theoretically it might be more efficient to give the state $1 so they can spend $2 on health spending (because the other $1 comes from Fed Gov).

However, substantially less than half of state income tax will go towards Medicaid, thus it would be more efficient for you to donate the money to a non-profit hospital than pay it to the state.

Additionally, the higher number of people on Medicaid, the greater cost-shifting occurs, since Medicaid pays less than fair market value for services. Thus, it raises the cost of medical care for insured people on a greater basis, if there's more medicaid patients. Theoretically, if you believe the cost-shifting argument (that hospitals overcharge private-pay patients in order to recoup losses from under-paying Medicaid patients in order to remain solvent), then the more Medicaid patients there are, the higher insurance costs go, and the less insured there will be.

There's also a target efficiency issue whereby expanding Medicaid coverage would cause people who are already insured, but now qualify for Medicaid, to drop their insurance, and accept Medicaid. Target efficiency is defined as hitting the "target" with the maneuver. Expanding Medicaid would be great if it expanded it only to uninsured people. However, there are lower-class people who are paying a lot of money for health insurance through their jobs, that would otherwise drop insurance, and save money, if Medicaid were expanded. The economic decision is what level of Medicaid expansion is economically creating the most utility for the cost to society.

One might argue that if we completely removed Medicaid, and put more money into taxpayers pockets (by reducing taxes both a state level and a federal level, since half of Medicaid is paid out by Fed Gov), then there would be no more cost-shifting, and private insurance would be cheaper, and with more money in their pockets, more people could afford to buy insurance.

If you believe hospitals are getting rich, keep in mind that the average hospital over the last few years has profit margins of -3% to +3%. Most hospitals have lost money over the last few years, simply because CMS has reduced payments for services, and hospitals simply cannot provide those services for that payment price. (CMS = Center for Medicare and Medicaid)

One might ask why hospitals would accept CMS payments at all if they are below market value. The answer is because 50% of patients they see are covered by CMS. At this point the infrastructure for the hospital has been built up such that on a marginal basis, it's cheaper to lose a little money on CMS patients, than to liquidate large portions of the hospital and refuse CMS patients altogether. There has been a lot of consolidation in hospitals over the last few years, and there may be a time where more hospitals simply refuse to see CMS patients.

I know many private practice physicians who refuse to see CMS patients.

[Odysseusa]

Yes, I am talking about health insurance. At least 1/4 Texans/Floridians do not have health insurance.

[TripleB]

Yes, I am talking about health insurance. At least 1/4 Texans/Floridians do not have health insurance.

What should the states of TX and FL do to fight this issue?

[Odysseusa]

Yes, I am talking about health insurance. At least 1/4 Texans/Floridians do not have health insurance.

What should the states of TX and FL do to fight this issue?

How about Texas/Florida do the right things and collect 1% sales tax in Texas/Florida and use that only to cover the basic health care needs of uninsured people (legals or illegals) in Texas/Florida?

[TripleB]

What should the states of TX and FL do to fight this issue?

How about Texas/Florida do the right things and collect 1% sales tax in Texas/Florida and use that only to cover the basic health care needs of uninsured people (legals or illegals) in Texas/Florida?

There already is significant sales tax in both TX and FL. I assume you are referring to state income tax, of which there is 0%.

If it were "the right thing" then why wouldn't the residents of those states simply take 1% of their income and donate it to non-profit hospitals to provide care to uninsured people?

The paradox of government is that it is made by people. If people think something is "right" to do, they will force their government to do it. However, if the people felt that redistributing their personal wealth to uninsured people was "right" then they would already be doing it, without the need for government intervention.

The problem with "only" raising taxes by 1% to give to government is that it won't solve the problem. Arizona recently passed a "temporary" 3-year 1% sales tax increase in order to avoid budget cuts to schools and fire departments. The government ran a marketing campaign about how important this is, and then held an election, because it would be illegal for the government to arbitrarily raise taxes in that state. The vote passed by a large margin, and sales taxes were raised 1%. What was the result?

Teachers and Firefighters still lost their jobs. The government couldn't use the additional revenue efficiency, and over-promised what they could do.

Giving just a little more money to government is like giving just a little more heroin to an addict. It will never be enough. If people decide that caring for uninsured is a big issue, they will either force government to raise taxes and do it, or donate the money to private non-profits themselves.

All systems are perfectly designed to get the results that they get. If the result is a large number of uninsured people, then that result is by design of the people who live there.

[Coffee]

I think it is mental illness.

I have a lot of family in California.  Most of them think guns are evil and believe that Big Government is the answer, not the problem. 

They also think that California is the only state that has good weather, and you will either melt or freeze if you move somewhere else.

[TripleB]

They also think that California is the only state that has good weather, and you will either melt or freeze if you move somewhere else.

They might be correct about that one. Although Florida is pretty nice, too, along with solid CCW laws, 0% state income tax, and 100% creditor protection for your home and annuities. The weather in Cali is probably a bit nicer than FL, but all else considered, it's much nicer overall.

[Jan Van]

They also think that California is the only state that has good weather, and you will either melt or freeze if you move somewhere else.

Living in TX I'd say they're correct on that one. Living in Houston I'd say I pay ~ 2% property taxes... But hey, all of that is just the price you pay for the entertainment provided by our governor (hint: revolution, 16th century)...

[smurff]

Anyone notice that the states and cities with the highest tax rates have the lowest value for residents?

California
New York
New Jersey
Illinois

I don't know what you mean by "lowest value."  Three of the states on your list have cities that accomplished people throughout the USA and around the world dream of living and working in, despite the tax rates and gun regulations.  (I don't know what to say about New Jersey. )

And they choose to work in these places despite the taxes and gun regulations.

Some of us are even grateful for gun regulations in a place like NYC, while simultaneously recognizing that what will work in NYC--crowded/densely populated, pedestrian and mass transit movement, few firing ranges, few wild animals to speak of--will not work in San Antonio--wide open spaces, movement primarily by personal car, lots of open fields for practice, wild animals in wilderness/forests nearby. 

People chose where they live for all kinds of reasons, including career and education prospects, proximity to extended family, and other things that make them happy.  Tax rates and gun laws rarely enter the decision tree unless the chosen career involves something like tax accounting or personal/corporate security.  Some of us make ourselves happy no matter where we live.

Some people love cold weather (skiers, for one), or at least the kind of seasonal weather changes that break the monotony.  Florida and Texas have warm weather during large chunks of the year, but the humidity (and tornadoes) can be a bummer. 

[TripleB]

Tax rates and gun laws rarely enter the decision tree unless the chosen career involves something like tax accounting or personal/corporate security.

That's interesting because those 2 issues are my primary drivers for where I will live because they directly impact me on a daily basis:

1) How much money I have in my pocket to spend
2) Whether I'm able to defend myself and my loved ones from a violent criminal

Weather and everything else is nice too, but without money and the means to defend myself, everything else seems less important.

[Indices]

Tax rates and gun laws rarely enter the decision tree unless the chosen career involves something like tax accounting or personal/corporate security.

That's interesting because those 2 issues are my primary drivers for where I will live because they directly impact me on a daily basis:

1) How much money I have in my pocket to spend
2) Whether I'm able to defend myself and my loved ones from a violent criminal

Weather and everything else is nice too, but without money and the means to defend myself, everything else seems less important.

Do you live in Afghanistan?

[Odysseusa]

How about we implement Mr. Cain's solution of 9-9-9 tax code and make it 8-8-8 instead? Keep it around 24% and less than 25%  ???


8% individual tax
8% corporate tax
8% sales tax

[TripleB]

How about we implement Mr. Cain's solution of 9-9-9 tax code and make it 8-8-8 instead? Keep it around 24% and less than 25%  ???
8% individual tax
8% corporate tax
8% sales tax

1) It opens the door to even more taxes in the future than we have now. When we hit a budget shortfall, it will go from 8-8-8 to 9-9-9. Then the next budget shortfall will be 10-10-10, and then 11-11-11.

Because, really, it's "only" raising taxes 1%, and everyone has to pay their fair share.

2) How about my Roth IRA where I already paid 25%+ taxes on it already with the promise that it would be tax-free when I take it out? Now I have to pay an additional 8% taxes on stuff that I buy, so I only have 92% of the purchasing power I had before.  People with Roths get cheated since they already paid huge amounts of taxes on the money going in and now will have to pay more coming out.

While I think VATs and X-X-X systems are bad, I believe they will eventually get implemented, and thus, I exclusively contribute to Traditional IRA/401ks now so I don't get VAT-f*cked in the future if income tax drops and VAT is instituted.

3) If we are in a recession, how does taxing what people spend by an additional 8% encourage people to spend more and stimulate the economy?

4) If corporate tax rates are reduced, will we really feel the effects as consumers? Will corporations reduce the market price of products because they are making more after-tax profit?

How well does that theory hold up to the real-world events of a few months ago when the 15% Airline tax was suspended. What happened? The day after, all airliners raised their rates such that fares were exactly the same price as they were the day before, but the airliners kept the extra 15% for themselves.

If people are willing to pay the price for something, why would corporations (or airliners) reduce the price just because their costs (via taxes) goes down?

5) When has any idea from a politician wound up saving you money, creating value for you, or making the world better? From everything I've seen in my few decades on Earth, everything politicians do simply serve to destroy value. Everytime the Bernanke goes on TV to talk, the stock market drops 3%. We wasted months on Health Care Reform legislation that will ultimately be found unconstitutional while my healthcare costs skyrocket because the producers within that field have to spend millions on lobbyists to bribe politicians for favorable terms. Who ultimately pays for the lobbyist bribes? We all do, because it raises the cost of doing business. Simply on the basis of an established politician offering 9-9-9, I am by default leery of the outcome.

Whatever the future tax system will be, smart people will figure out what others refer to as "loopholes." I for one, will simply become more of a producer, than a consumer, and make my own products to avoid VAT. This will be bad for the economy because I won't be producing for anyone else, but myself. And I'm not naturally gifted as a producer so the economic output of my time will experience a drag. It will create value for myself individually, but destroy value for society if everyone decides to make their own stuff instead of buying it. We leave modern day society of specialists and move back to earlier times where output per man is less efficient. That's fine with me. I'll respond to whatever incentives I have by the government, whether the result is good or bad for society.

[smurff]

After dealing with those Maslow hierarchy-type needs (air, water, food, shelter) the next things many people look for are intangibles like love (with respect to self and others) and contentment (with respect to daily life).  Other issues and artifices, while important, fall much lower on the scale for life decision-making and only tend to come up when there is some sort of challenge.

If civilized society is actively (and I don't mean metaphorically) dissolving in some ways, I can see how people with enough air, food, and water might move gun rights and tax issues higher in their planning hierarchies.  In a place like Afghanistan guns are higher up the scale because there has been an ongoing societal crisis.

Even after wars, people who fled death and destruction return to whatever place was the love of home, unless home is no longer there.

[Odysseusa]

I am willing to pay taxes. However, we can start with 8-8-8 and cap it less than 10-10-10; like how the 99-Cent Store works.

[MediumTex]

I am willing to pay taxes. However, we can start with 8-8-8 and cap it less than 10-10-10; like how the 99-Cent Store works.

That's not how the government works.

Once the infrastructure and bureaucracy are in place to collect a tax, the rate normally only goes up.

That's why I think it's so important never to take the first step down the road of a national sales tax or a state income tax in Texas.  

[moda0306]

MT,

You may be right in many instances, but look at the last 30 years of tax vs pre 1981.  15% capital gains rates, 35% maximum ordinary rate, very accelerated depreciation and amortization of costs...

Vs 1940's-1970's where we were at slow depreciation, no preferance for investment income, and 50%-90% top-end rates.

[MediumTex]

MT,

You may be right in many instances, but look at the last 30 years of tax vs pre 1981.  15% capital gains rates, 35% maximum ordinary rate, very accelerated depreciation and amortization of costs...

Vs 1940's-1970's where we were at slow depreciation, no preferance for investment income, and 50%-90% top-end rates.

Note, though, that the tax collection apparatus itself--i.e., the IRS and its regulatory regime--has gotten exponentially more complex.  Thus, in order to access these lower rates, one must spend more money to simply hire the right navigator to get them through the system.

For you and me, this means plenty of work for us to do, but from my perspective there is a certain "regulatory creep" that never really ends, even if tax rates appear to decline for some period of time.

What frightens me is the initial setup of this type of bureaucracy on a new front, because once it is set up it becomes much harder to keep it from becoming a leech on society.

[TripleB]

I am willing to pay taxes. However, we can start with 8-8-8 and cap it less than 10-10-10; like how the 99-Cent Store works.

That's not how the government works.
Once the infrastructure and bureaucracy are in place to collect a tax, the rate normally only goes up.

But what if we make the government promise really hard that they won't raise it past 10-10-10? Then they won't be able to. We can use phrases like "shall not be infringed" and "shall make no law" and "shall not be violated."

Sure that has worked for the 1st, 2nd, and 4th amendments. We can say whatever we want, as long as it's not illegal.

We can build a religious place of worship anyplace we want that we legally own, except where other people don't want it.

We can own any gun that we want, as long as it's not illegal.

We can be secure in our privacy on things such as our cell phone, unless we drive with tinted windows.

Surely we can use very strong language like that used in the Bill of Rights and the 10-10-10 cap will never be exceeded, right? Except MAYBE if they need to temporarily raise it by a little bit for a few years in an emergency like to raise money for a War on Vampires. Who wouldn't agree to that, unless you are a Vampire, whom by the way don't have constitutional rights because they aren't alive... unless they are a vampire fetus.

[Storm]

This is a pretty inflammatory thread, but I'll try to give you a reason why people live and work in those states:

• Jobs
• Quality of Life

Ok, you can joke all you want about California traffic, but where else in the world can a good software engineer pull down $150,000 a year or more and still be within 2 hours driving distance of both the beach and Lake Tahoe?

High income taxes?  Sure, they suck, but which would you rather have?

• Make $150,000 a year and pay 4% more in taxes
• Live in the middle of nowhere, make $60,000 a year

I'll take the higher taxes and higher income any day.  Save an extra 30-40% of your income and retire early to the house in the no income tax, low cost of living state.

Personally, 2x income beats an extra 3-4% tax any day.  You can even do what I do and live in Connecticut, which is a fairly low tax state, yet work near NYC and get NYC salaries.  Best of both worlds.

[moda0306]

I think minus some obvious problems California is one of the most appealing states to live in if you have a stable job and don't feel like running a regulation-heavy business.  The weather in San Diego is hands down better than Florida.  I'll take 80 degree dry heat every day of the year (barely exaggerating) over the heat & humidity (and hurricanes) of Florida hands down.

I could literally live in ramshackle apartment near Huntington Beach, work moderately (and, yes, pay taxes) and go to that beautiful paradise of a public beach 4 days a weak and probably be an extremely happy person.  Cali has its problems, but its southern coast is a paradise in my opinion if you can stay off the freeways and avoid the shallow people there (not all are, obviously).

[MediumTex]

I think minus some obvious problems California is one of the most appealing states to live in if you have a stable job and don't feel like running a regulation-heavy business.  The weather in San Diego is hands down better than Florida.  I'll take 80 degree dry heat every day of the year (barely exaggerating) over the heat & humidity (and hurricanes) of Florida hands down.

I could literally live in ramshackle apartment near Huntington Beach, work moderately (and, yes, pay taxes) and go to that beautiful paradise of a public beach 4 days a weak and probably be an extremely happy person.  Cali has its problems, but its southeast coast is a paradise in my opinion if you can stay off the freeways and avoid the shallow people there (not all are, obviously).

I think the key to being happy in California is to either be very rich or very poor.