California's job growth defies predictions after tax increases
sacbee.com
sacbee.com
Both Google and Apple has lots of HR people in Texas.
The Japanese auto manufacturers have since left SoCal, too:
http://www.reuters.com/article/2014/04/28/us-autos-toyota-mo...
http://www.forbes.com/sites/dalebuss/2014/04/27/it-makes-sen...
"254 companies left California in 2011":
http://www.ocregister.com/articles/moved-342887-companies-te...
The housing prices in the greater SF Bay Area are simply ridiculous (even in the South Bay, where there's lots of empty or unused land, and East Bay, where there are few high-paid job opportunities), the housing and land speculation is quite out of hand.
As a tech worker, I'm migrating out of Texas soon. The influx of West Coast companies (and their jobs) to Austin is spiking up prices of, well, everything. There's no chance to ever stop renting as all of the Austin property is owned by investors, meanwhile we're being payed Texas wages for California jobs at a skyrocketing cost of living in a city with no infrastructure, what-so-ever, to deal with its own population density. I'm sure companies will continue to move here, but the higher standards of living and worker-friendly political climates of the coasts seem far more attractive.
It's all just a cycle. Austin will get over-crowded and over-developed and some other neat hip cheap place to do business will spring up and companies will move again. Who knows, your hometown might be next.
I hear a lot of people talking about Nashville.
This obviously has nothing to do with the tax increase in the article (voted on in 2012).
California is definitely desirable in terms of climate, quality of life, and job opportunities (if in tech); whether you can afford to live there is another matter.
California is a wonderful state, but mostly for the rich or early arrivals.
http://bizbeatblog.dallasnews.com/2014/04/texas-enterprise-f...
I wish Texas good luck, but I'm happy to see them leave California. All of the analyses show that business incentives are a suckers game--companies that move from incentives keep on moving every time an incentive pops up.
> All of the analyses show that business incentives are a suckers game--companies that move from incentives keep on moving every time an incentive pops up.
Which analyses? All of these are one-time incentives, and they require substantial investment from the company of their own funds, so, if anything, they simply offset the cost of moving.
Where do you expect they'll move to next, after Texas?
If an area doesn't provide a better environment for business, no reasonably-available amount of taxpayer incentives would convince a business to move.
> The $197 million relocation incentive package Nissan received from Tennessee ...
http://www.autonews.com/article/20140503/OEM/140509936/toyot...
This article isn't information in the sense it doesn't tell us anything new about the world except that one event happened to be in line with the author's pre-existing opinion. Nobody seriously thinks that a tax increase, small relative to the entire economy, can stand in the face of all the various economic forces by itself.
feel free to also compare to austerity measures under brownback in kansas
Let's look at how California did in the late 1990s and the lead up to 2008, and how it performed when those fake asset bubbles exploded. Then let's add in some computation for the downside risk to the current situation.
The job numbers are the best case scenario, and only exist due to the largest stimulus program in world history. Someone should be asking: what happens when that doesn't exist?
I think even the median Tea Partier, if you put the irons to his feet, would admit that tax increases cannot by themselves blast away several percent worth of economic growth. There is certainly some small minority of people who think otherwise, out of whom the author of this article would happily build a large straw man.
EDIT: Come on, guys, you know it's true.
A good economist would try to hold more things constant to tease out whether the effect exists. Maybe break down the job growth numbers by area of the state (not all areas are in a tech boom, but all would face the same state tax policy). Or break it down by industry (have non-tech companies lost jobs?). Or break it down by size of company (since the opponents claimed that small businesses would be particularly hard hit).
Regardless, the conclusion of such a study would certainly be more complex than "taxes {good|bad}".
Um, no, science doesn't work that way.
Anti-tax folks made predictions. Those predictions did not come to pass. That's a negative result. The anti-tax predictions have been falsified with some level of confidence.
It is NOT required for pro-tax position to be proven true in order for the anti-tax position to be proven false.
Let's be clear. The anti-tax people did not make a prediction of "might be too small to measure"; they made a prediction of doomsday which has proven to be false.
And, if your position is, this is sufficiently small that it got swamped, then your anti-tax hypothesis is STILL false.
Consequently, raising taxes is useful because A) the downsides appear quite limited (too small to measure) and B) the upsides are quite significant.
I'm hard pressed to believe you can apply any sort of "science" to macroeconomics - its way to hard too isolate a single variable.
Well let's be clear about that - one piece of evidence shows a lack of doomsday. Next trial could show something big that appears for different reasons (different set of circumstances etc.)
I agree with you in any case - but let's be accurate in our claims!
So that is 3% that is not being spent on expanding production. (i.e. "Making the economic pie bigger.")
Yes, the government will spend the money somewhere else, but typically it will go almost entirely to consumption, instead. That is redistributing the pie, rather than growing it.
Note that growing the pie lowers the cost of things, so it inherently benefits everyone. There is no such thing as growing the pie and only benefiting the rich.
In fact, not growing the pie disproportionately hurts the less well off. While the rich forego investments, the poor forego things that actually make their lives better.
Calling every tax reduction for a higher bracket "trickle down" is simply name-calling. You can say that all the way up to 100%.
This whole thread is essentially absent of any information (to the extent there is any, it is far below the threshold for making any useful conclusion).
I was responding to the implication that a 3% tax reduction is "trickle down" and therefore "demonstrated to be false".
I do get and agree with your overall point, but let's not throw the baby out with the bath water. There is certainly hope for economics to eventually develop to a better point.
> There is evidence to support pretty much every school of thought, and evidence to contradict it.
If there were evidence to literally contradict a school of thought, that school of thought is proven wrong. That is not the same as evidence that seems to argue against a school of thought, yet does not do so conclusively.
(2) No credible disproof of Ayn Rand's theories has been offered. (Most serious attempt is Prof. Michael Heumer's and it is a poor attempt.) Why don't you write one?
Unfortunately, the evidence is to the contrary.
Companies have no useful place to put investment to use since they see no useful place to generate extra demand and consequently are sitting on some of the largest stockpiles of cash recorded in corporate history.
The evidence is increasingly clear that the anti-tax brigade are wrong. This does not automatically make raising taxes correct (although evidence suggest that small increases are probably called for), but it does mean that cutting taxes is clearly an incorrect path.
Isn't it the case that those large stockpiles of "cash" are actually invested, though? e.g. I have heard of Apple sitting on a ton of cash, but presumably it is not literally just sitting in the bank. Even if it is, the bank is investing it and thus is able to pay interest. Though it might be the case that the interest only really amounts to inflation, and the bank is really just preserving the value by putting the cash into more stable assets. I'd be intereted in any thoughts of yours on this.
Another thing, off the top of my head. I think that if your point were true for the economy overall, the economy would not be growing and it would not be possible to get greater-than-inflation returns from the stock market overall. Both of those things seem not to be the case, any thoughts?
It's literally sitting on their balance sheet, and, consequently, even a bank can't actually use it for investments. It's really bad.
> I think that if your point were true for the economy overall, the economy would not be growing and it would not be possible to get greater-than-inflation returns from the stock market overall.
Stock market returns are not particularly connected to the economy in any useful way anymore (stocks are more vehicles for speculation than real ownership of a company). I wouldn't use it as a proxy.
A better proxy would be auto traffic numbers. In California, CalTrans traffic engineers were forced to sign non-disclosure agreements about traffic numbers because they were so horrifically down during the bust.
The economy is growing some, but slowly. The fact that California managed to balance a budget and quit cutting helps. An extra million people with health insurance helps twofold--more people in healthcare professions and better productivity from people at the bottom of the ladder. Gradual minimum wage increases will help get people buried at the bottom of the ladder a little.
The very interesting question to me is whether the ACA will unleash small businesses. A LOT of people in their 40s and 50s stayed buried in jobs they hated simply because they were terrified that they couldn't get health insurance if they left. Those people are now free to move--I think this is going to be THE legacy of the ACA.
There's plenty of supply out there, but not enough demand.
If your economy is suffering from a shortage of aggregate demand, as ours is, then promoting consumption is a good thing.
> Note that growing the pie lowers the cost of things, so it inherently benefits everyone. There is no such thing as growing the pie and only benefiting the rich.
Lowering taxes on the wealthy, or otherwise favoring investment over consumption, benefits the rich much more than it benefits everyone else. The "rising tide" metaphor is misleading, because economic policy changes that favor the rich raise their boats much more than everyone else's.
Other policies, that favor investment less, may benefit the less-well-off more than any potential indirect gain they may have experienced from investment-favoring policies.
You clearly are espousing some kind of nonsensical demand-side economics that contradicts the above law.
> If your economy is suffering from a shortage of aggregate demand, as ours is, then promoting consumption is a good thing.
There is no such thing as a "shortage of demand." It's a nonsensical idea.
> Lowering taxes on the wealthy, or otherwise favoring investment over consumption, benefits the rich much more than it benefits everyone else.
That is obviously patently false for the reason I already stated. More concretely: A rich person going without an investment (not even tangible) is less of a hit than a poor person going without better food, clothing, shelter, education, entertainment, etc.
This is a trivially false statement. Just look at any recession in history and you can easily find people who become better off even though net production shrank.
Eppur si muove. The predictions of demand-side economic models have been largely correct since the 2008 crisis; the predictions of supply-side models have been outrageously wrong.
In that model, you would be right. However, that's not what we actually see. Foregone consumption is not automatically channelled to productive investment. If you own a company, you have no reason to invest in increased production capacity if no one will buy your increased output. And why is no one buying that increased output? It's partly an issue of distribution; the wealthy have a lower marginal propensity to consume.
A lot of people and companies actually are sitting on big piles of cash (or other short-term, low-risk investments that don't do much to increase productive capacity). This is part of the reason why interest rates are so low.
Also during times of economic hardships, companies are much less likely to invest (they still will, but be more conservative than if times were good) which in my opinion, it falls to the government to !make up this gap, and they need money to do that. So that means they need to tax more, but hopefully readjust taxes down (slightly, big tax drops in the past have caused more problems) but that usually doesn't happen.
TL;DR we need a happy sweet spot, we are below that currently.
Also marginal tax increase is not going to reduce job marginally but it will be a more drastic change down the line.