New Yorkers Trying to Flee High State Taxes Find Moving Isn’t So Easy
bloomberg.com
bloomberg.com
This kind of stuff will likely be litigated for years, especially as people with means are being harassed in this way. It will be interesting to see which of these tactics ultimately pass muster. I wonder if you could bring a RICO suite.
Whether we are talking tens... or tens of hundreds... it's still nice to know about a minefield as you work to escape from it.
Which pushes, can you cite a few or a trend where the distribution of tax load is shifting? Isn't NYS trying like crazy to lower higher income bracket taxes because the Federal deduction for property taxes was decreased?
Why would I move to a state and have a career there if I know at the end of my career I'll be at peak earnings and at that time want to move elsewhere for retirement or pre-retirement? Many people in my state move at that time to other states for tax reasons or cost of living reasons. They know they won't be able to afford to live in the high priced state when their earnings drop.
I know of at least one person who's in the process of moving to FL, and they received legal advice to save all receipts and other evidence. The only reason they received this advice is due to the widespread abuse by the state.
Not a NYer, but I
That has much more to due with how the people and the government believe government should act than it does with the taxes themselves. ME and VT are fairly high tax but politicians would be hanging from bridges (edit: it should be obvious that this is an exaggeration) if the ME or VT government tried to behave like the NY or MA government because the people simply don't see that sort of government style as how things should be and the government is a large organization made up of people.
At that point I no longer had much documented proof I had really (legitimately) moved - since I had moved back to original state by then. Sworn statements from employers/colleagues/etc. weren't enough, and to fight it would have cost more than the amount "due".
In the end I paid it, with the state tax representative even outright stating "I might even believe you, but it's going to cost you more to fight us in court over it than just paying". And right he was.
I learned some lessons about record keeping - but the fact I needed to "prove my innocence" vs. the other way around was absurd.
What is evidence of change of residency is change of voter registration and acquiring a driver's license in your new state of residence. Coupled with proof of a non-New York address, it shifts the burden to NY to prove that you are no longer one of their residents.
> since I had moved back to original state by then
In NY if you leave the state and come back, legally your domicile never changed. Change of voter registration and driver's license are explicitly called out as not being relevant to the question of domicile.
If your domicile is in NY, you have to follow a much stricter test to avoid residency status in those years you were gone. Its a complicated set of rules, but at minimum you have to prove you spent fewer than 90 days in a 1.5 year period or 30 days in a 1 year period in NY state. This is when the proof of where you physically were each day is relevant.
My situation was I moved out of my home state for about 3 years, and moved back. About a year (or two? been a bit) after I was back the past-due bill came.
I will also say that due to those actions I made it a life plan to leave this state permanently as soon as my kid is in college. I will not give another dime to them willingly if I can help it.
Edit: And just in case this is helpful to someone. I was "double taxed" by both states, but since these states had an agreement between them I was able to deduct the state taxes of the first state, and simply pay the difference. The difference wasn't extremely substantial, but 3 years of taxes plus 5 years of penalties/interest gets rather absurd quickly - where those fees end up being well over half of the total bill due.
I'm talking about leaving NY permanently (excepting vacation trips) then change in voter registration and driver's license was sufficient to establish change of residency, and I say this based on actual experience with the NY tax dept for a client.
The original title is accurate, it appears hard whether you do it legitimately or not.
I'm kind of curious how much data they're mining though, obviously they need fine-grained details to figure out someone is spending too much time in the state to have "renounced" their citizenship so they must have at least individual credit card transactions and (possibly) cell phone location data.
“Taxes are generally subject to a three-year statute of limitations from when a return is filed, but taxpayers who start spending more time in New York even years after they’ve made a move -- like around the birth of a grandchild -- may come to auditors’ attention and be forced to provide evidence of a move that happened a decade or more in the past.”
"Spending a day or two a month in a Florida vacation home" is not "uprooting your lives".
What the heyzeus are you Americans spending all that tax money on?
More on topic: the same issue exists between US and Canada, and it needs to be sorted. Some ports of entry on the US/Mexico border are not properly set up to process TN visas etc..
The Military.
https://en.m.wikipedia.org/wiki/Black_budget
WaPo estimated it was $52.8 billion in 2012.
Was rushed to the ER after a seizure. They did give me a craniotomy, but only after a misdiagnosis... Which made things worse. A dye-injected MRI wasn't an option, being uninsured.
The cost for the "free" care people get that can not pay for Emergency room Care is paid for by the people that can pay
This is why a Halls Cough Drop is $15 ea and other common things are 100x more expensive in a Hospital when billed to a insurance company.
the City, the government, does not pay for this care nor is it paid for by the tax payers
Example in NYC:
https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-...
New York? Mostly on healthcare (~22%) and education (~31%). [1]
[0] https://upload.wikimedia.org/wikipedia/commons/thumb/e/e1/CB... [1] https://openbudget.ny.gov/overview.html
Even with fully contributions, the maximum you can receive in Canada is $1,100 per month. In the US, it's $2,800 per month. The US program is much larger than in Canada.
Technically speaking the US could wipe out all private healthcare spending, reduce public spending on healthcare and still have enough over to cover everyone with 'adequate' care. Granted, it wouldn't be up to par for what many Americans expect.
Americans pay about 2x for services rendered, though often they are better, they are not 2x better. That said, someone who only has to wait 6 weeks for a hip replacement may consider wanting to pay 2x as opposed to waiting 15 months, as they might have to here in Canada.
ETA: Maybe not, given less tax revenue and all. The US healthcare system has a lot of waste and bureaucracy after all.
For example in the EU Ward style rooms are common with 5+ beds per room many have 10+, in the US 4 people in the room is bottom level of care where most get 2 people per room
They also have heavy price controls on Drugs, if the US one of the few remaining countries with out them goes down that path Research will suffer as the US funds a huge amount of Drug Related research that the rest of the world gets for far far less investment
There are 100's of other differences in how te US system works different in the US, and US Consumers have come to expect those things.
This is with out getting into the all the problem associated with 3rd party payer systems like the US has where we have "insurance" that is not really insurance but prepaid healthcare.
You forgot: massively more economically efficient.
Despite that I agree quality is a little lower - it's not that much lower. Health outcomes are similar.
In hospital in Montreal, the halls were lined with patients, not enough room, but ... they were doing a big round of a specific surgery (for some common things they line people up and do it factory style one after the next). This might seem uncomfortable, but you get similar outcome at fraction of the cost.
Also - it covers everyone - which is a huge advantage.
One of the most misunderstood issues of how socialized care works is the 'risk' element is removed. If you are messed up - you just go to the hospital. You're not going to go home with a $20K bill for a broken arm. It's an 'existentially' powerful aspect of daily life that is different.
But yes, fully socialized as in Canada is unfair, there needs to be a private outlet.
I would tend to agree that a Socialized system would be better than the current US system, I however do not agree that a Socialize system is better than a Truly private free market system of care
I gave up trying to fight it after about 5 years (!!) and just paid the $15K to the Commonwealth of Kentucky and moved on with my life.
I now live in Florida -- legally and physically -- and don't have to deal with the headache of this crazy state income tax drama.
I was honestly just happy to pay it and get it over with.
[0]https://www.maine.gov/revenue/faq/income_faq.html#faq1040_4
This 'audit' has been happening in states with lots of mobile high earners (CA and NYS) for awhile. Other states are catching on, and now doing the same.
On a recent trip back up there you can tell when you hit NYS roads - rusted bridges and crumbling asphalt pock marked with pot holes that can damage your car.
Maybe they should focus on things to make people want to stay?
It would be like a SaaS business changing the contracts so people can't leave (e.g. can't take data) instead of building features that people want.
Genuine question: where else in the US are roads better? I've been to several states and some Canadian provinces, and compared to the developed Gulf nations, all of the roads I saw there were like what described.
Driving up from the south you do notice a "line" sort of where you enter areas that more commonly get snow and the highway degrades a bit but then entering NY seemed like even worse.
I’ve lived in 5 US states with state income taxes ranging from zero percent to merely substantially lower—nevermind a “city tax” that’s in addition and higher that most state taxes—and uniformally the roads and bridges are significantly better than NYS. And then there’s the billions NYC collects annually in fines [0].
Does anyone know the root cause of this? Where does all of the revenue go?
[0] www.dnainfo.com/new-york/20160324/civic-center/new-york-city-collects-record-19-billion-fines-fees.amp
I found a few websites that seem to have repackaged this professor's lecture notes and then found the original.[1] The most unexpected insight was that slow traffic is a big factor. NY and LA definitely have slow traffic compared to most other cities in the US.
[1]: Mathew, Tom V. "Factors affecting pavement design." 3 August 2009. https://www.civil.iitb.ac.in/tvm/1100_LnTse/402_lnTse/plain/... "
I also found this Virginia Tech paper that lists a number of citations that may provide additional insight, https://vtechworks.lib.vt.edu/handle/10919/56449
https://www.citylab.com/transportation/2018/06/dominos-pizza...
The best roads are probably those in the desert.
It's also generating jobs faster than almost anywhere else, with virtually every neighborhood getting better. That's more due to Latin American immigration than taxes though.
https://www.miamiherald.com/news/local/community/miami-dade/...
Well also due to the flow of rich people (specifically flow of new ones, not just their presence) adding money. Rich people overpay a developer for a house some of which trickles down to the plumbers who go out to dinner and tip the waitstaff. It's like a tourist town with no off-season. Trickle down economics works quite well on a local level (e.g. every boom town ever for the duration of the boom) so long as you don't do something crazy like prevent new housing from being built.
Interesting place, weathered the recession well and maybe the next.
Rich, sophisticated people with good lawyers can and do have a big hassle convincing New York tax collectors that they are no longer residents.
If it was just as easy is disappearing, these people would do it. They spend tens of thousands of dollars (if not more) convincing New York that they aren't residents. If they could do it more cheaply, they would.
And if the facts on the ground don't match your theory, then your theory is wrong.
Because they still want to live there, they just don't want to pay for it.
Edit: I have a love/hate relationship with NY and NYC in particular.
The New York Times made an interesting video about it: https://www.youtube.com/watch?v=COLMODzYX7U
There is a certain irony, seeing that bar outright dictatorships (China), the US state is and has been the strongest one for over half a century...
That system has been attacked from the beginning and the US is rapidly becoming a nation where government replaces the family as social structure. What is now will not always be - the trend is of far greater importance than momentary status.
Individuals are not able to do any of that when they're stuck working 3 jobs just to get by, or when they go bankrupt due to a simple medical procedure.
Multiple jobs just to get by sounds a lot like today yet plenty of people still grow, learn and create.
2. Several developed countries have "overwhelming taxation", yet quite high economic growth and are among the world's top 10 regarding human development.
3. Developing countries will have to increase their taxation. That's how development works: you get a bigger and more effective state that can offer advanced services reliably.
4. Almost all underdeveloped countries, on the contrary, have weak states that can barely collect taxes.
2. Name some countries - are they growing more than 10%?
3. Increasing taxation is how the strangulation of a population works, so in that sense you are correct. The state always fails. If it didn't, and taxation "worked", we would be living in a utopia.
4. Weak States that cannot enforce taxation are the ones where the population has freedom to grow without onerous tax burdens and corporate protectionism.
A static view of the world assumes taxation is necessary. A nonlinear view recognizes the destruction it causes.
2. Sustained growth at more than 10% is not realistic, especially for developed countries. I'm from a developing country and turning dirt farmers to office workers consistently will grow your economy by 10%. At some point you're going to run out of dirt farmers. This point is moot.
Regarding high, realistic growth (2-3%) for developed countries: Singapore, Sweden.
3. States tend to fail far more often due to external factors. In the modern era that's becoming rarer and rarer as the cost of destabilizing a foreign state generally outweighs the benefits.
4. I'd be very happy if you could show me some examples. Which "weak states" are developed states? I wouldn't call any state in a developed country a "weak state".
3. Yes, most states are not part of the core; peripheral nations fail long before the foundation does. Thankfully the cost of such failure has become much less likely to result in loss of life.
4. Not weak states that are developed states - ones that are considered developing, yet experience growth largely due to lack of excessive taxation and regulation thanks to weak government. They are thus progressing toward becoming developed. Two examples are Georgia and Puerto Rico - the amount of growth and development in those locations are proportionally far greater than other nations in similar locations and situations. This is directly affected by investment capital, much of which has left high-tax jurisdictions.
Which country are you from?
3. I'm an optimist, I don't see any signs of the foundation falling. The counterargument is that the fall is rarely seen ahead of time. Still, I think we can just file this as a difference in perspective and call it a day :)
4. Georgia, the state, I assume? Assuming it's the state, ok. But how come the vast majority of high-flyers still don't move to these states? How come those "oppressive" taxation regimes keep producing heavy hitters? Same thing is happening in Europe. Sweden, Norway, Germany, France, the UK, etc. have high productivity and high taxation. You'd expect everything to leak over to the low taxation countries. Yet these countries to lose a percentage of the high productivity members but come up with new ones. There must be something at work here (such as high taxation, coupled with half-decent administration, creating a good overall environment for productivity).
Romania. Not sure it's relevant :)
3. The larger the trend, the easier to forecast. Historically, empires fail slowly and then enter a rapid final decline. Martin Armstrong may be of interest, as he has built an extensive database and system that has analyzed the set.
4. Georgia the country, although the US state is one that is doing better than others[1] in the nation. Residence is sticky since it's expensive to relocate, so the incentive to move must be particularly high. There are certainly perceptions that persist with a lag since a practical perspective depends heavily upon direct experience, e.g. NYC is not the same place depicted in movies from the 1980s. The magnitude of resources available to be redistributed within a highly dynamic system can be significant. It is almost impossible to pinpoint the exact breaking point but the trend can be much more easily observed.
Turkey is an interesting place - domestic production includes almost everything except higher technology, yet the economy is precarious due capital fearing the government.
Romania is on my travel list :)
[1] https://www.businessinsider.com/san-francisco-bay-area-resid...
What I'd personally favor is super high income tax brackets for the very rich (income > $1 billion puts you in a 95% tax bracket for everything above 1 billion) and the state getting a percentage of a corporation automatically after it goes above a certain scale (say 5% at 1 billion, 20% at 20 billion), with the restriction on the state's share usage. This should take care indirectly of the "robot production", via the owners. Once you'd do this universal basic income would be interesting.
This should only be implemented if there's some sort of global tax agreement, otherwise the state that does this will have its tax revenue slither away to other countries.
But this needs an attitude of "fixing the state", not "starving the beast". Treat the state as an unavoidable single point of failure and harden it. Checks and balances, more transparency, more direct democracy, etc.
3 & 4. This is already getting super philosophical. I need to follow this phenomenon more, can't really say anything super relevant. Intuitively I'm not sure I agree.
> Romania is on my travel list :)
Go to Bucharest for the night life (preferably with a somewhat reliable local guide). Go to Brașov, Sighișoara, Sibiu for the medieval monuments and buildings. Go to Bucovina for the great landscapes and the beautiful monasteries. Go to Maramureș for the same reasons, but with a different twist. Go to the Apuseni for the rural life, unchanged since centuries.
Avoid the Black Sea (Constanța, Mamaia), except for the Danube Delta, which is a nature reserve.
Thanks for the recommendations!
You value work too much, if anything.
One's economy tends to do well when one has intact factories & workforce while the rest of the civilised world has been levelled and much of its workforce slain. We'll never see something like the post-war boom again unless we see something as utterly, senselessly destructive as the war itself (note that the economy would ultimately have been better in the long term had there never been a war).
Much like signing up for Netflix, except more expensive and a slightly different collection mechanism.
And if you think that's weird, look at the British "Chancel repair liability"
It was particularly bad until recently, as the obligations were often hidden. They no longer are - if there's an obligation it's right there on the land register, just like covenants, and show up in the standard searches during the conveyancing process. It's effectively a land tax to support a local amenity -- churches are part of the cultural background of British villages. I'd rather a formal land tax system to support all local amenities.
A larger concern to me are faith schools.
Of course, as mentioned, you can not have that and just pretend you're not in any of the recognized religious organisations.
The "this problem" that we are talking about here is the problem of the national government handling state taxes in addition to national taxes. For this problem the national government is dealing with states, not individuals, and so it is the number of states that it has to deal with that is the main factor affecting complexity and scaling.
Hence, each state collects levies, fines, rates, stamp duties, privatise public services and various other money grubbing exercises in order to raise capital for themselves so that they can waste/embezzle it according to their whims.
Then there's the problem of disproportionate tax distribution, which most states, particularly WA, seem to raise constantly.
[0] https://en.wikipedia.org/wiki/Constitutional_basis_of_taxati... [1] https://en.wikipedia.org/wiki/Section_90_of_the_Constitution...
The states gave up on the practicalities, but they still have the theoretical power to collect income tax.
Why? Because when the GST was introduced WA'S resource income was counted... During an unprecedented resources boom that has since collapsed. You know what doesn't get counted? Poker machine income, which is substantial in the three Eastern states.
Can it be changed? Technically, yes. Practically is incredibly difficult because no one wants to give up revenue and politicians are worried it'll be electoral suicide, which it may well be.
The fact that the government has proposed anything at all, however anemic, is kinda amazing.
This happens across the US political specturm, whether about their tax system, banking system, gun reform, electoral reform, and many other issues; it's a frequent refrain that the US is so different it can't learn from others.
As a US citizen who is resident elsewhere it is infuriating to watch.
Alternatively, it's a frequent refrain that the U.S. _should_ learn from others, which is e.g. why we should preserve our federal system, electoral system and rights.
I think it's a _good_ thing that the several states are separate sovereigns from the United States, and I think it's a good thing that the states are entirely reliant on the United States for their budgets (and in fact, those places where they are reliant, e.g. the highway budget, have led to anti-federal things like a uniform drinking age, something which is 100% not the business of the United States government).
If the United States looks only inwards, however, there's nobody left to learn from in terms of how to run a Union, since there is only one United States, and its powers and responsibilities are (because of federalism) quite different from those of the states.
It shifts the blame from the current politics which is something people can engage with to "reasons out of anyone's control", which just helps maintain status quo.
Most of the times it comes down to constitutional issues in which case they are technically not possible.
Case in hand; the federal government has no constitutional right to prevent the states from collecting taxes -- which would be required for there to be one official Collector of Taxes for all the states.
"Because the world is political, and any change will be bitterly fought by those who are impacted to the point of inventing whole national mythologies."
Really now, centralized collection of taxes, even in the face of different local rates, is a standard feature of the civilized world. It works in countries with gun rights, it works in socialist countries, in advanced and poor countries, it's not a cultural aspect.
A more useful response would be to give reasons why the "why can't we just" solution wouldn't work. (The GP indeed gave reasons)
What is the purpose of a forum if not discussion and getting (positive or negative) feedback on your views so you can improve them?
The problem I see is the following. The person who wrote the "why can't we just" has done next to no thinking of his own as to why the situation might be more complicated than his first thought suggests, but it goes beyond that. Someone who writes "why don't we just" is sending the signal that they're emotionally committed to the position that the solution _should_ be simple. If I take a deep breath and write a long, careful reply in response to the short, lazy "why don't we just" post, I'm not only taking on all the burden of thinking about the topic at hand, but there's every risk this will just be thrown back in my face by the poster who wants a shortcut to a simple answer. A "why don't we just" post has a poor chance of leading to a good discussion, and I think there will be overall more beneficial discussion on a forum if they are discouraged.
Some people are intellectually lazy. I think this is because it's easier to feel smarter when you think less. If there's a solution that seems obvious to Mr. A and he assumes everyone who missed it is a bozo, then Mr. A feels like a smart guy. If someone else comes along and starts telling Mr. A that actually it's not so simple, and there are reasons why the "obvious" solution isn't actually a full applicable solution, then Mr. A has to think harder, only to feel less smart as a result. A lot of people resist that. I don't know the full solution of how to inspire such people to start thinking more, but I think some push-back some of the time is part of the answer. A bit like when people come to stack overflow and ask for their homework to be done for them: it's good if they're prodded to try _something_ for themselves. Being "nice" and just doing their homework for them wouldn't be optimal.
Yes, "the world is complex" might not be ideal phrasing if you think it implies someone needs to grasp the entirety of that complexity. But I'm sure the poster who wrote that only meant to encourage Mr "why don't we just" to _start_ considering the complexity of the world.
> The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration
The power of taxation has rested with the federal government since the early 20th century.
> The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people
This makes filing taxes a nightmare on top of being horribly inefficient for local governments. The federal government could handle tax collection and refunds for everyone, and come up with a standard set of rules that apply across the US. It makes life easier and more efficient for everyone involved.
All sales tax revenue is 100% distributed back to the states - but it's done under a principle of "horizontal fiscal equalisation" (https://www.cgc.gov.au/index.php?option=com_content&view=art...) which means that richer states subsidise poorer states. Income tax is used to cover federal expenditure but also pays for a lot of federal grant money which is paid to the states.
In general, the Australian approach to federalism is a lot more federal-heavy than in the US, and some part of that is driven by how the feds have completely taken over most forms of taxation and thus control all the purse strings.
The municipalities can also levy taxes but usually only on common goods like sewage, water and on home ownership or equivalent for people who rent. The provinces do the same but it is far less than the central government does.
The EU should collect taxes for all the member states and then give it back to them in some equitable fashion. It would certainly stop all the bickering over tax havens and countries not collecting their "fair share".
I'm not sure of the specifics of how the tax money is doled out, but all my income tax and sales tax goes to the federal government, which then divvies it out to the states.
There are additional taxes in some states though, which are collected by the states, such as payroll tax, but I don't see that on my payslip.
The formula used to calculate the level of revenue support changes, some would say that the changes are politically based.
My feeling is that, given the robust politics that appears to exist in the US, coupled with what again appears to be frequent recourse to litigation between levels of government, you don't want to go down that route.
Or at least the states should have a double taxation treaty (but of course that would make sense so it's not going to be implemented)
That would give far too much power to a federal government that already far exceeds its constitutional mandate. I suggest the inverse: The federal government should get its funding only from the states. Each state can decide how much to contribute and how to raise the money. That would decentralize power significantly.
No, a stronger federal government was a solution that was proposed (and adopted) for it's manifest failure. It wasn't the idea that a strong federal government was good that led to the belief the Articles had failed, but exactly the reverse.
What happens if you spend 73 days in each of 5 states? (OK the 183 day rule in NY specific).
Do you have to pick a state to live in for tax purposes?
What I find interesting is that, in following the California real estate market for the last two years in preparation to moving there, there is a drop in demand for high-end housing since the tax law took effect. The combination of higher taxes and lower mortgage deductions has kept a lot of people from buying bigger houses. I've also seen a lot of empty-nesters downsizing.
Interestingly enough, the higher priced homes are the only ones somewhat holding up. "Sales below $500,000 dropped 21 percent on a year-over-year basis, while deals of $500,000 or more fell about 3 percent, marking the first annual decline for that price category in nearly two years,” said LePage. “Home sales of $1 million or more last month rose just a tad – less than 1 percent – from a year earlier following annual gains of between 5 percent and 21 percent over the prior year.”
https://www.wsj.com/articles/chinese-real-estate-investors-r...
Places with low investment (and taxes) in the U.S. and around the world generally have a lower quality of life and don't produce much beyond rent-seeking industries such as fossil fuels. Is the goal to model the U.S. economy on the great successes of places like Alabama,[0] or would it be better to model it on California or New York? Almost all leading industries, as well as education, arts and other things, are in high-investment places like California, New York, Michigan (automobile industry), etc. Successful people from low-investment areas move to high-investment areas to pursue their dreams, for straightforward economic reasons: that is where resources are. Tim Cook, from Mobile Alabama, comes to mind as well as the many entrepreneurs in SV from India. Almost nobody born in SV moves to Mobile to start their business. Smart kids from California go to Berkley, not U of Alabama, because the state has invested in higher education. The smartest kids from Mobile go to Berkley too (or to other leading universities in high-investment places).
Poor countries are a simple example: They invest little out of necessity and their citizens are poorly educated and live harder and shorter lives. Under U.S. tax and investment policy, uniquely among wealthy countries life expectancy for Americans is now decreasing.
[0] My apologies to Alabamans for using their state as a simplistic example of low-investment government. Of course there is much more to Alabama than that, and it's much more complicated than a simple number or stereotype.
EDIT: some clarifications and enhancements
And taxes aren’t an investment, and neither is most government spending. Most government spending is actually diverted to connected insiders.
Do you know of any data? I looked quickly online but with no luck.
> New York on the other hand has been the largest US city since the colonial era.
How is that related to tax rates?
This was well before Silicon Valley was anything, well before the "traitorous eight". California's economy was growing like topsy from before the early Hollywood days in the 1920s. San Francisco was an immensely wealthy city before then, because of the gold rush.
Even today California's economy is so huge that Silicon Valley is only a small slice of it.
Yes, taxes are an investment. In the same way that putting money in your savings account is also an investment. But I wouldn't recommend that anyone keep all their money in a savings account.
Every dollar that the state takes away from people, in order to invest in itself, that is one less dollar that each person has to decide how THEY would want that dollar to be invested.
So higher taxes is not higher investment. It is a reduction in private investment, in exchange for a increase in public investment. Whether the world needs more private or more public investment is a matter of debate.
> For example, nobody would suggest you minimize investment in your home unless you were leaving soon
Well, that depends. If my choice is between paying off my credit cards, or investing in my house, I certainly believe that paying off my credit cards would be a better investment. Every dollar that I personally invest in my home is one less dollar that I am able to invest elsewhere. And those other investments may be a more pressing concern. Or they might not.
Also, even IF it is "proved" that a public investment has better returns than a private one, you also need to take into account that you are taking money from someone else, and there are moral questions about how much money we should be taking from other people.
I believe that it is OK to take some money from people, but certainly not all of it, regardless of how much better the public investment is. What that level should be is matter of debate.
To take it to the extreme, even IF the government had some amazing investment that was better than all private investments, I would STILL oppose it if the government decided to take a full 100% of money from everyone.
This is because I believe in private property, and that people are entitled to at least SOME of the profits of their efforts.
Indeed - because it's not necessarily an investment for one's own maximum gain - it's an investment in communal infrastructure where, yes, others might profit more from than you. However, in return, you might also profit from the contributions of others.
> Also, even IF it is "proved" that a public investment has better returns than a private one, you also need to take into account that you are taking money from someone else, and there are moral questions about how much money we should be taking from other people.
If we're starting with moral questions we should also discuss how morally justifiable it is to raise the price on products which buyers absolutely need but where they don't have an alternative. (E.g., recent pharmaceutical price hikes). This seems just as well "taking money from other people", except that it's done without any justification at all and, unlike taxes, you don't even in theory have any say about how high the prices should go or how the money is spent.
> I believe that it is OK to take some money from people, but certainly not all of it
Who was even proposing that?
The OP phrased taxes as an investment, similar to how one would "invest in their home".
And the comparison is not exactly valid. When I think of "investing", I think of taking my own money and putting it somewhere, not taking other people's money.
> Indeed - because it's not necessarily an investment for one's own maximum gain
Or maybe it doesn't maximize anything. Maybe other people are able to invest it better. Just because something is an investment, doesn't mean it is the BEST investment for society. And you always have to take into account that this "investment" is taking away money from other people, who might very well be doing something better for the world with it.
I think you make good points, but I disagree here: Almost all investing involves pooling money with others, including all banking, most business, and almost all financial instruments. When you buy your own house, unless you pay cash you borrow from the bank, which involves money from the bank's other customers being invested in your house.
You're assuming that tax money centrally invested will yield more returns to the community as a whole than it would were it invested by each individual. We've got decades of research to demonstrate that's not true.
We probably need to fund some services communally, despite some of the enthusiastic & interesting proposals of anarchists like David Friedman. We may also need to investigate some form of universal basic income so that everyone has enough money to spend & invest as he desires. We probably also need to have some sort of information safety net to prevent parasitic 'investment' opportunities.
But in general, a single centralised entity just doesn't have the information to make wise decisions about the utility of all investments across all citizens.
I'd be very surprised if any research supported such a blanket statement. Can you cite it?
Non-tax money is not all invested. In fact, Americans have a low savings rate and tend to spend most of their money on consumption.
That's their choice, of course, and doesn't by itself justify government investment. It does create more demand and need for government investment.
Nothing in my post said it was.
> government does not exactly have a stellar track record when it comes to choosing investments so as to maximize ROI
Who does?
Vietnam is currently scoring 22nd in the world on math, and 7th in the world on science. The US is 41st on Math, 24th on science. And we spend more to anywhere in the world, excepting 3 nations, on education. You'll find Vietnam is not alone in this peculiar aspect. The correlation between government spending on education and educational performance is not particularly good. And people still think we need to substantially increase educational spending. This is really one of the fundamental problems with government. Everything is seen through the lens of money. Is something not performing well? You can solve it by just throwing more money at it! Of course this is not true. The spending tends to be wasteful at best, and completely ineffective at worst.
The point I'm getting at here is that as you see these sort of results of spending across the range of government fields, being asked to give them large sums of your money to continue spending is one reason people can grow discouraged when being forced to give this government so much of their money. Or consider our completely pointless wars. The total cost for the Iraq war alone is going to end up in the trillions of dollars. And on top of all of this it seems that no matter how much the government increases their gross receipts, they still manage to dive ever deeper into debt. Again, that's not particularly encouraging.
[1] - http://www.businessinsider.com/pisa-worldwide-ranking-of-mat...
[2] - https://en.wikipedia.org/wiki/List_of_countries_by_spending_...
According to J.Simons (Fields medalist turned hedge Fond billionaire) especially in STEM fields Schools compete with tech companies for talent and can only offer much worse compensation.
The other thing is that in the 50-70ties the number of people that studied in preparation for and went to college was somewhere between 8-15% (continuously rising) it is much easier to teach smart students with few good teachers than to prepare basically everyone for college.
In Germany my parents almost exclusively had PhDs as their teachers, now 60% of all students prepare for university and we have a shortfall of ~20000 teachers with half of the STEM education majors going to industry.
This is why Vietnam is such an interesting case study. Like many things, our spending is driven more by intuition than data. And Vietnam shows that our intuition on successful educational outcomes is pretty much useless.
[1] - http://english.vietnamnet.vn/fms/education/25476/50-percent-...
> This is really one of the fundamental problems with government. Everything is seen through the lens of money.
That is the problem with government? I'd say this is the problem with a culture that sees everything outside the most personal through an economic lens. Government is not the exception here.
To elaborate on what I mean by seeing things through an economic lens, imagine you see a problem that you need to fix. As this problem directly affects you, you're going to make sure that what you're doing is extremely likely to lead to a solution. And since you're also personally paying for it, you're going to keep costs as low as you possibly can. Your focus is on the solution and on minimizing costs. When government, high level or federal government in particular, solves problems they're taking on issues that frequently do not directly affect them. And they're spending other peoples' money. This leads to a rather broken system of motivations. Whether the prices involved are reasonable, or whether it's likely to lead to productive outcomes are not as important. Instead only the spending of money is seen as their action and role.
I think an interesting 'parable' for government spending is Alaska. Like you may know Alaska is the only state with something like a basic income. They have their permanent fund [2] which each year pays out a substantial dividend to every single man, woman, and child living in the state. It reached as high as $2,700 in 2018 'kind of', but where did it come from? Massive oil reserves were confirmed in Alaska in the late 60s and the state immediately set to leasing access to these fields. It resulted in a great windfall of money like nothing before or since. And what happened to the state as a result of the newly enriched government? Well... not much. Somehow the government managed to waste all their new revenue without much of anything to show for it.
Outrage within the state is what led then to the creation of the Alaska Permanent Fund. It is a privately managed fund which receives and invests a certain amount of money from all oil revenue and then distributes those profits back to society. The euphemism for its purpose is to 'ensure future generations will have access to the wealth long after the oil reserves are gone.' In reality, it's about letting society actually have access to the wealth created from the natural resources of their state instead of letting the government waste it all.
That alone is perhaps an interesting tale, but I think the most recent years are what really make the point. In recent years Alaska's government has been running their state into a dangerous deficit. Rather than adjusting their spending or trying to trim down waste or excess, they've turned to plundering dividends. I mentioned that $2,700 in 2018 as 'kind of'. The reason is that the state instead decided to make it $1,600 - effectively and legally stealing $1,100 from each man, woman, and child because they can't responsibly manage their own spending. Perhaps the dangers of having such a program in government control to start with.
I have absolutely 0 problems with some fair portion of my money being used as a means to help better society as a whole. But government does not really seem to be a body capable of achieving this end. And the problem, as I see it, is that government is more interested in throwing money at problems rather than ensuring that those problems are solved. I think the physically closer we get to problems (federal < state < county < city < distict < community < family < individual) the more likely problems are to be solved effectively, efficiently, and rapidly.
It was the California gold rush of 1848-1855. 49ers was a slang term for the miners. This gold rush created San Francisco. In 1846 California was a backwoods settlement of 200 people. In 1842, its population was 36,000 and it was booming as the primary port on the way to the gold rushes. California was the only state that was granted statehood (which happened in 1850) without first being a territory as the US raced to lay claim to its riches and successes. The Comstock Lode (silver's not quite as exciting as gold I guess) discovered in Nevada would further grow the city.
Even getting down to Berkeley. The university was founded in 1869. You know all those Phoebe Hearst references around the campus? She was a huge early donor that helped really develop the college. And the money? She was the wife of George Hearst, who struck it rich during the gold/silver rushes. The cities (and state for that matter) were built from the ground up by the people, for the people. "High-investment" government only came much later.
> The cities (and state for that matter) were built from the ground up by the people, for the people. "High-investment" government only came much later.
Democratic government is "by the people, for the people";. That was Abraham Lincoln's original quote: "government of the people, by the people, for the people". It's the people making decisions and investing in their community, fairly and democratically, instead of an aristocracy / oligarchy of a few wealthy people making the decisions.
This is certainly true, with an off-shore debit card linked to a crypto wallet one can evade most local taxes, while being exceptionally hard to trace down, unless engaging in conspicuous consumption.
This is willful tax evasion. It is a crime for which you go to jail.