The Real Value of $100 in Each US State
taxfoundation.org
taxfoundation.org
It would be interesting to see an illustration of how regressive Federal tax brackets are when you consider the state-by-state cost of living differences. Some of the most populous states have the highest cost of living.
Do you have receipts for this claim?
I suspect the vast majority of cleaning ladies in SF don't make $70k either.
Almost nothing about the climate (I like winter) or culture appeals to me, yet I'm pulled towards there to succeed in a tech career. This is simply network effects in action, except that unfortunately this network has been built in one of the locales in the US with some of the most aggressively anti-growth policies possible. Things would be much better if tech was centered around somewhere like Chicago or even New York.
That is, would a guy like me (or you) be able to pull in multi-six-figures a year to telecommute to the Bay Area from out in the sticks if there weren't so many poor souls physically there keeping rates up for the rest of us?
What would things look like if the tech hub were in Ft. Worth TX instead (or Scott's Bluff, Nebraska), with hundreds of miles of flat empty cheap land in all directions to keep housing prices down near zero.
Even the tech hub was not on a peninsula, you'd still have an expensive center and poor people would have to suffer a long commute like East Bay people do in the Bay Area.
Just look at London or Paris: it's not cheap despite not having the same geographical problem. It's not as expensive as the Bay Area because there are many people with various jobs, not just highly paid tech workers.
Good governance matters. It makes a huge difference in cost-of-living. The way SF is run, it's almost as though people want the cost-of-living to be as high as possible.
Surely you're joking? Of course that's what they want. SF people, home owners, are voting on SF policy. Do you want to lose half the value of your house?
Its more complex than that, as SF people voting on policy also include renters, and even if rent control insulates them from directly paying for price increases, market price declines save them money (and both increases and declines affect local costs of other goods, so they affect CoL even if they don't directly affect existing renters rent payments.) But, renters are largely people who have decided the trade-off of quality for cost at the current price does make sense, so they are less likely than outsiders who might want to move to SF if it was more affordable to make trade-offs that impact the qualities that they prefer in SF for lower prices, even if it would reduce their cost of living.
For example, you can get to midtown manhattan in half an hour on NJTransit from East Orange, NJ, a very cheap place to live. The NYC metro area is chock full of affordable neighborhoods where the tradeoff is merely having a commute, not a LOOONG commute.
Ideally, you have your infrastructure scale as the city grows, to maintain constant commute times for workers even as they move further out.
In most other developed countries, developer salaries are about the same as physical engineering salaries and other highly skilled jobs.
Hasn't helped Austin
I can assure you that housing prices in that area are not near zero, even with all that land that is not necessarily available for development.
Salaries are a function of supply and demand. In that way, it wouldn't matter if the companies are in SV or in Kansas: they're still shooting themselves in the foot. Every company wants to hire the best, the top 10% of developers, when in actuality they probably only need to avoid the bottom 25% (assuming tech talent follows a bell curve). By setting up the ridiculous filters to hiring, they're artificially limiting the supply of developers on the market by 65%. In doing so, they keep the salaries of developers artificially high.
> As a west coaster, I can't stand Chicago or New York. The weather sucks, the topology is boring, the people are either boring Midwesterners, or crass north easterners. I'm happy the west coast gets more play, though I would probably not want to live in SF.
While the stereotypes exist for a reason (and anybody who's lived in NYC or Chi-town testify to these particular ones), have to disagree with you on the being able to put up with "those" people. It's the west coast that is the outlier here as a (stereotypical) bunch of pansies who can't (again stereotypically) deal with rawness of reality.
There is nothing wrong with the other areas of the US, and Americans are mostly the same, but I find the laid back style of the left west coast just to be the most suited. Well, Californians can take that a bit too far...
My problem is that a lot of people seem to be pretending that the only reason there's so much demand for housing in California is due to the favorable weather/people, when in reality a huge proportion of the people there wouldn't be there if it weren't economically beneficial.
It is nice that the economics and the nice weather coincide. It probably isn't a coincidence either, as tech is primarily limited by human resources.
I promise it is very possible to have a successful career in technology without being anywhere close to California.
That's neither pedantic, nor a correction. That's exactly what I've been saying all along. Career success isn't a 0/1 boolean, and no matter how successful someone currently is, there's always the potential for even greater career success. Optimizing for career success includes optimizing your chances for career progression.
Semantics aside, I think we're in agreement.
At least it keeps the area where I live free of that sort of toxic culture!
In particular, outside of SV it's substantially harder to:
1) Break into the top ranks of tech compensation. The companies and roles paying >200k/yr are heavily concentrated in SV.
2) Found a successful startup. The concentration of capital and connections in SV remains unparalleled elsewhere.
I don't think it's really that different from finance. You can have find finance jobs throughout the country and you can even build a successful career in most places. But if you want to succeed at the highest level, you'd be well-advised to move to NYC.
> 2) Found a successful startup. The concentration of capital and connections in SV remains unparalleled elsewhere.
From my perspective, your definition of a "successful software career" is rather narrow. Where else can you make 6-figures your whole life and be considered a failure?
Like I said, it's perfectly possible to have a nominally successful career in software elsewhere. It's just that if you want to reach even higher levels of success in software, you're encouraged to move to SV.
I'll take the 130k.
A flat annual fee, as suggested by Proudhon, would be much more fair. I do not mean a "flat tax", which actually scales linearly with income, but a flat dollar amount.
The federal government could replace all of its taxes, all of them (income, corporate, capital gain, etc) with a simple $500 a month per person payment.
This would also make a lot of people reconsider their voting priorities. Let's see how likely they'd be to support trillion dollar wars.
Also, things like property tax have the same effect -- can't get away from taxes even if you have no other expenses. Property tax can be jettisoned by selling your property, but then where are you going to live? You'd need to generate taxable income to rent someone else's property.
Or is a head tax meant to apply to "households" (in the census sense) rather than to individuals? Or, alternately, is the breadwinner of a household meant to pay the head-tax for all their dependents?
It requires no more bookkeeping or accounting beyond that which is already required by the census.
It would apportion federal taxes to the states in proportion to their populations, as required in the Constitution prior to the income tax amendment. This could potentially reduce the number of taxing authorities any given individual would be exposed to. Your state might pay the federal capitation, but might raise the funds for it via other methods of taxation rather than its own head tax.
It reinforces the idea of equality before the law.
It encourages pursuit of additional income. You are more likely to do additional work for an extra $500 if you then get to spend all $500 of it, rather than just 75% of that.
The government is encouraged to promote increased birth rates and immigration as a means of increasing its revenue.
But the number one argument both for and against against head taxes, depending on who you are, is that it creates an inherent de facto limit on government spending, based on what the lower class can afford to pay. If there are people who simply cannot pay more than $500 a month, you cannot raise more than $500 x population via the capitation. So you can't spend more than that without resorting to other sources of revenue.
* It requires no more bookkeeping or accounting beyond that which is already required by the census.
That bookkeeping while annoying is extremely profitable, every additional dollar added to the IRS budget results in 4 dollars of revenue[0]. Simply put from a governmental perspective it's highly cost effective. While a head tax might be cheaper directly to implement, it has other costs that aren't considered that I will get into below.
* It would apportion federal taxes to the states in proportion to their populations, as required in the Constitution prior to the income tax amendment. This could potentially reduce the number of taxing authorities any given individual would be exposed to. Your state might pay the federal capitation, but might raise the funds for it via other methods of taxation rather than its own head tax.
I concede this point, but this more of a solution looking for a problem than anything. Moving money into different accounts is pretty much a solved problem.
* It reinforces the idea of equality before the law.
A flat percentage after a single deduction related to the cost of living would be equality (a man should not be taxed before he feeds himself in my opinion), the myth that the CEO and board actually created the billions of dollars that his corporation captured (because he worked a few hundred times harder then the guy pulling 12 hour shifts on the factory floor) is old and tired. It was his employees that did so as well, and taxing them at a far greater percentage (79.58% on minimum wage to be exact) than him is not equality. It's theft.
* It encourages pursuit of additional income. You are more likely to do additional work for an extra $500 if you then get to spend all $500 of it, rather than just 75% of that.
Firstly, Where is this a problem? On the one side of the spectrum we have the poor working 3 jobs to pay rent (whom you propose to more than quadruple the tax burden on, thus all but stopping the velocity of capitol and probably destroying the economy[1]) whom need to earn as much as they possibly can just to get by. On the other side the wealthy/upper middle class is generally obsessed with status symbols. That won't change if you tax them at 4,40, or 91% (see 1953 - 1961). They will still want to buy the newest Tesla, send their kids to whatever expensive school and go on exotic vacations as long as their neighbors do. Hell, in bad times many of them finance it up until bankruptcy to keep up appearances (see 2008 - 2010). The data is clear, they will continue to work and spend as they always have.
Secondly, Not once has someone gone, "Yeah I'd take that 10 million, but I'd have to pay 2.5 in taxes, so burdensome, forget it" and even if they did, someone else will step up and fill the void if a market exists. On the other hand if you tax a minimum wage employee at 80% why the hell would you even bother going to work? You are homeless and hungry either way, what will the few dollars you earn for 8 hours of work get you? Might as well sit in the park and panhandle, it's more profitable.
* The government is encouraged to promote increased birth rates and immigration as a means of increasing its revenue.
They aren't now? I see plenty of tax benefits for having children. More people, more consumption, more incomes, more revenue. The only difference here is the government has no incentive to raise the average rate of pay of Americans. Why educate them so they can get better jobs? Why worry about the state of the economy? They pay $1000/month anyway. A percentage doesn't have this problem.
* But the number one argument both for and against against head taxes, depending on who you are, is that it creates an inherent de facto limit on government spending, based on what the lower class can afford to pay. If there are people who simply cannot pay more than $500 a month, you cannot raise more than $500 x population via the capitation. So you can't spend more than that without resorting to other sources of revenue.
Firstly, why can't the government just take out debt like it does currently. This plan does nothing to prevent that and a proposal to do so can be applied to any tax plan (IE, constitutionally prohibit the government from taking new debt).
Secondly, I'd argue that the working poor can't afford the current levels of taxation. Raising it to above 60% for the working poor and below 1% for the wealthy is not a solution to that problem. In fact, the entire reason for the 2nd amendment is to prevent something like that from happening. If anyone seriously purposed this change there would be riots in the streets. If it passed, many would die before it was repealed or the government overthrown entirely. This is the nation that started a war with the greatest military power on earth at the time over a 3% tax on a single non-essential good, you'd be wise to not forget that. The rural poor certainly haven't.
So in conclusion, the people advocating this wish to lower their taxes at the expense of others and use justifications that make little sense in order to attempt to do so.
[0]http://www.cbpp.org/research/federal-tax/irs-funding-cuts-co... [1]https://www.imf.org/external/pubs/cat/longres.aspx?sk=42986....
I would assume (and always question assumptions) that tax revenues would be nonzero if IRS funding were zero. Some people will just voluntarily pay their taxes out of a sense of civic duty. Then, for the first dollar spent on the IRS, that will return some multiple of that dollar. I assume there are diminishing returns:
Revenue = integral( f(IRS_budget), 0, IRS_budget ) + C
f(1) > 4
f(current_IRS_budget + 1) = 4
f(current_IRS_budget + 2) < 4
The head tax simply has a different function: Revenue = integral( g(IRS_budget), 0, IRS_budget ) + D
We don't know what the shape of that function might be, only that there is a hard upper limit on revenue equal to the capitation * population.
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You're confusing equality with fairness. A capitation would be equal. A fixed percentage after deduction would be fairer. I might argue that a different tax equation would be even fairer than that. But government is not, and never will be, fair. The minimum amount of fairness we should tolerate is equality.
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You are missing the point about incentives for extra work. An extra $10M is so far beyond the scenario I had in mind that you might as well be talking about trade routes in the Tau Ceti system.
In the real world, at the very bottom, payroll taxes are very significant, as they are a regressive tax. Means testing on subsidy programs also play a role. So some people face a choice such that if they work harder, they actually get less disposable income. If you get $200 (gross) a week from working 20-30 hours part time at the supermarket, and you get WIC and/or SNAP benefits, due to your poverty, you are still paying $12.40 plus unemployment tax, even with no income tax withholding, for $187.60 net. If you become full time, working 40 h/wk at $7.35/h, you lose your SNAP benefit. And you are now paying $18.20 in payroll taxes per week. You now have $275.45/wk to spend. If your SNAP benefit was more than $87.85, you are doing more work for less disposable income. The average SNAP benefit is $127/person.
Accounting wise, the loss of subsidy is roughly equivalent to an additional tax on the extra earned income. If the only tax/subsidy were a capitation, no one would ever refuse promotion from part time to full time and a raise from $7.25/hr to $7.35/hr out of fear that they would end up with less to spend. (Again, not necessarily a fair way to encourage additional work.)
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The government's ability to borrow and run the money-printing presses is orthogonal to discussion on forms of taxation.
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I am not advocating a head tax. I am simply stating possible arguments in its favor, playing the devil's advocate. It is pretty much the exact opposite of guaranteed basic income, which I think would be more favorable. But a capitation is not an unmitigated negative. It does have its good points, which have to be compared with other systems. You said you couldn't think of any positives about it, so I gave you some to consider. I am not extremely motivated to defend any of those points, but I hope you will concede that they do exist.
Even back in eras when slavery and serfdom weren't widely seen as immoral, attempts at universal head taxes tended to cause riots.
So this economics that balances out the part of life you mention, is reduced since people are less mobile due to medical insurance.
If medical insurance was provided by the state (like in most other countries), you would see more people moving where it would be more efficient for them (and the economy) to work.
In any case, I'm not sure the conclusion follows. We see exactly the same pattern in the UK, where healthcare is almost entirely public. What the calculation fails to take into account, IMO, are other factors – someone who has lived in a location for a long time may be skeptical of moving, simply because they have roots (homes, friends, family, social groups etc.) and disrupting that is hard.
Not only that, if you move in the states you will want a job already lined up. If you build up a bunch of savings and then move to find a new job you won't be covered and so it's more of a risk.
Most other countries, it's not even considered a factor.
And so what if it is on my list? Taking it off removes so little friction that it is effectively irrelevant.
It's pretty expensive though, I'm not sure a lot of people would leave a job that included healthcare as a benefit to move to another area and look for a job.
The absence of a table makes it hard to tell what the absolute order is, but Missouri, Iowa, Oklahoma, South Carolina, and Ohio also come out ahead of Nebraska, putting it at least at 11th.
Yes, this is still an example of economics explaining stuff.
That's true, but market forces modulate this, in particular because the barriers to entry are low. So a Nebraskan cleaning lady probably doesn't make 70K (lower demand and probably plenty of supply) while my cleaning lady lives in a nice neighborhood (college terrace) in Palo Alto (she rents, but owns two other houses in the bay area), has put three kids through the Palo Alto schools, and has a good health plan. So for her taxes she's getting a lot. My gardner lives in RWC -- I ran into him once at the OSH and discovered he lives around the corner also in a nice neighborhood. If their income didn't allow them to live in the area the income would have to rise, else the supply would dry up.
There's a large camp that claims dedicated performance of simple tasks, like cleaning, is no longer sufficient to make a decent living in post-industrial America, so anecdotal counterpoints to that are of interest.
This is in Palo Alto.
I've been astounded at the cost of certain things in the area. I regularly see people looking for child-care at $35+/hour, whereas it paid $20-25 at the very high end for multiple children and a highly qualified person in my area in southern california. Getting a good plumber or handyman to come by for less than a small fortune is seemingly impossible unless it's a personal referral.
I think that if your home base is taken care of (i.e. you have owned for a while or managed to rent from someone who doesn't raise the rent by 10% every year) it's possible to get by with dual non-degreed employment. Getting ahead on the other hand - saving up for a home and padding other savings AND paying escalating rent at the same time while not living frugally with extreme measures is very tough for people in the highest paying job sectors.
FWIW both are US citizens.
Prop 13 is great for her, since her gains are paper only and her property taxes have been predictable.
The average wage of a cleaning lady in California is $26,680 for full time work. It's $36,790 in San Francisco.
http://www.bls.gov/oes/current/oes372012.htm
The average wage in California for all occupations is $55,260. The median is significantly lower.
For example, to live in SF on $37k, she's probably in some rent controlled flat or public housing. So she may be paying $800/month for a $3000 flat which means she's getting subsidies worth 12 x $2200 = $26,400. Accounting for this her income is $63,190, and this is at a much lower tax bracket than a person earning $63,190 in market income.
Also, either $37k or $63k isn't poor. Lets remember that French GDP/capita is only $42k/year; is half of France and more than half of Spain (plus nearly all of Bulgaria) "poor"?
1) Comparing GDP/capita numbers to income numbers is a pretty useless exercise, because GDP/capita is total production divided by total population.
For France, let's posit that GDP is $42k/year per capita. What is the number of workers this corresponds to? (Note that using the "employment to population ratio" is not right here, because that's typically cited for a limited age range.) http://www.tradingeconomics.com/france/labor-force-total-wb-... quotes a labor force of about 30 million, and https://en.wikipedia.org/wiki/List_of_countries_by_labour_fo... agrees, but note that this includes the unemployed who are looking for work. The unemployment rate in France is about 10% (see http://www.tradingeconomics.com/france/unemployment-rate or https://en.wikipedia.org/wiki/List_of_countries_by_unemploym... for that), so figure 27 million workers. The population of France is about 64-67 million people (depending on whether all these numbers are including non-metropolitan France); let's be charitable and assume 64 million. That gives us a GDP/employee of $42k/year * 64/27 = $100k/year.
Of course this is an average number, not a median, but at least comparing it to _average_ incomes might not be completely unreasonable.
I haven't looked at the numbers for Bulgaria, but it's entirely possible that by current US standards nearly all of it _is_ poor, in terms of material standard of living...
(For comparison, the US labor force is about 160 million; it went up by 5 million in the last two years; see http://www.dlt.ri.gov/lmi/laus/us/usadj.htm . The unemployment rate is about 5%. US GDP is about $18 trillion this year. So we get GDP/employee of 18e9/(160e6 * 0.95) = $118k/year. Not that much more than France, unsurprisingly, and we haven't even gotten into the differences in hours worked.)
2) As noted above, the concept of "poor" is a relative concept, not an absolute one. Someone living today in the US who enjoys the median 1950 US standard of living because that's all they can afford would be considered poor. Someone who enjoys that standard of living in Somalia... not clear.
3) In addition to all of the above, looking at just income to determine "poor" or not is quite weird. A $30k/year salary for an adult who supports a partner and 2 children is not at all the same thing as a $30k/year salary for a single adult.
https://en.wikipedia.org/wiki/Land_value_tax
It's a tax on land itself not including improvements that's designed to tax landowners based on the value that being located where it is in the community and in relation to shared resources adds to the property. The idea is that this is relatively fair compared to other tax schemes in that it (ideally) maps closely to the value the landowners are deriving from the taxes they're paying, and encourages high levels of development on land with good infrastructure and in good locations. It's also easier to collect than many other forms of taxation, which is nice.
As covered in the Wikipedia article, the main problem with it is accurately assessing the value of the land. Which is kind of a big deal, obviously.
Cape Cod and Boston prices vs Springfield, New Bedford, Fall River and Worcester prices. South of Portland and east of I95 prices vs Bangor prices. There's a lot of interesting information lost by looking at state sized areas. Doing this on a county, or even town level would be far more interesting IMO. More contrast on the map would be nice too.
It's a no brainer that the bay area is maybe even worse than the average (?) for California.
Federal tax receipts in California, Illinois and New York subsidize Florida, Texas and much of the south.[0] The hypocrisy of fiscal conservatism is that it is enabled by giant high-tax Democratic states.
[0] https://wallethub.com/edu/states-most-least-dependent-on-the...
Having not actually researched it, I'd be interested to see the breakdown of cost-per-policy-per-party.
Based on your comment, do you find it ironic that those states seems to continuously vote "stop helping me"?
The US produces a ridiculous surplus of food with a tiny portion of the population because we're incredibly good at doing it cheaply. High volume and low cost == low prices == low tax revenue. It doesn't mean low real-world value or produced value.
You could "fix" it by trying to balance revenues by playing with tax rates, but all you'll accomplish is making food expensive in CA/NY, shifting dollars around, and making everything more complicated than it is now.
There are plenty of other reasons tax revenue registers in NY/CA; anyone -- from anywhere in the country -- with a retirement account is funneling it through some NY mutual fund, and entertainment is still mostly produced in CA. If NY didn't exist, it would be managed somewhere else; it's not that NY is producing magical value nobody else understands. It's just most convenient.
If Hollywood stopped producing movies... we'd all be a bit more bored temporarily, but it's again going to get bought from somewhere else.
Sugar is particularly regulated, with the government strict quotas and tariffs on imports, and domestic allotments to produces. If you produce more than your allotment, it is illegal to sell in the US. The whole scheme is to hold prices high to support famers (agribusiness really), not low.
And yes, I'm pretty much OK with my portion of California taxes going to Alabama, because society is not a zero-sum game.
Being a liberal and complaining about high tax rates, while blaming those against high taxes is kinda rich no?
Another point, those places also would be more amendable to pushing more responsibilities on the states away from federal govt reducing even more the imbalance of higher federal taxes paid by higher cost states.
The other thing I am not sure about is why OP highlights high tax Democratic States, no doubt that is what they are, but it is not applicable applied to Federal Income Taxes where everyone, regardless of State, is subject to the same progressive tax rates.
The poster above highlights not the tax rates, but ratio of receipts vs. expenditures of federal taxes in given states. Poorer states get well over one dollar in federal program spending for each dollar they contribute, while richer states have a net outflow, subsidizing the poorer states' programs.
What this study does to get the red/blue divide dividing federal revenues by state revenues. So low tax, low spending states look bad because the Federal inflow is a bigger percentage of total spending.
However, take the post argument, Blue States (CA, NY, IL) subsidize red States (FL). Revising my position from tax rate (which is equal across the board) to State expenditures (taxes the States pay to the Federal Government) CA is #1, NY is #3, IL is #4. Still FL is #5 (and another red state, TX is #2).
I think my point remains it is not hypocritical that Red States are getting more (receipts) back under the current system while simultaneously pushing for reforms.
Let me try rephrasing the hypocritical point from the pro progressive tax position. Warren Buffett is always pushing for tax reforms to raise taxes on the wealthy, and to highlight his issue he always points to the fact his secretary annually pays a higher tax rate than he ultimately does. However, nothing stops Warren Buffett from not taking advantage of the tax loop holes and personally paying more himself, but he doesn't. In my mind it doesn't make him a hypocrite for taking advantage of a system he wants to change.
The urban areas tend to have people who insist upon higher taxes, while the people in the rural areas commonly want the reverse. Meanwhile, because of those taxes being redistributed in the way they are, money that could go toward mass transit in cities is instead being funneled to road projects in rural areas. With all that money, the rural areas are able to secure funding (but not in any way, shape, or form afford) oversized infrastructure so they can turn their places into post-apocalyptic wastelands of Walmarts and car sewers.
Rural towns may develop in horrendously bad ways, but at least if they were less well-fed by federal and state programs they might come to meet the reality that their development patterns are completely unsustainable.
Meanwhile, I grew up in Florida, where it says $100 is pretty much $100. There are lots of major cities in Florida and cost of living is more distributed.
http://www.bea.gov/newsreleases/regional/rpp/rpp_newsrelease...
https://en.wikipedia.org/wiki/Red_states_and_blue_states#/me...
Correlation not found
My though is that dense urban cities (e.g. New York, LA, San Francisco) are going to have a lower value due to the high cost of real-estate and also rural areas where a lack of population density leads to distribution inefficiencies in material goods raising their cost. States like Ohio and Georgia with large suburban areas have a balance of cheaper real-estate and high enough population density lower the distribution costs of material goods.
(Yes, it's poorly written.)
Oregon is no longer the bargain it once was. Though I am sure I could move to a cheaper area.
Living internationally is where its at. Numbeo.com gets down to the details (thought their interface is due for an overhaul). http://www.numbeo.com/cost-of-living/compare_cities.jsp?coun...
Lodging, on the other hand, is one where the Bay Area seems to be happy to compete with DC's expense levels...
This is basically just a map of "how many dense cities does each state have?" and tells you nothing more interesting than that.
A per-county map would be much better.
Now Central Valley life can be a lot cheaper than coastal life - no doubt about that. I have a vacation home in he Central Valley and everything we do here and for the home is cheaper. Painting, repair work, labor, gas, auto and boat repairs, everything.
I'm not making further judgement.
I am highlighting SourceWatch (and similar resources) as useful and pointing out their existence.
[1] https://en.wikipedia.org/wiki/List_of_U.S._states_by_GDP
Its not even false.
I imagine it is much easier to earn $68k after taxes in DC than it is to earn $50k after taxes in Mississippi.