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[Oblivion]

The state of California made some headlines last week when the latest economic data found that the Golden State’s economy is now the sixth largest on the planet, passing France and Brazil. It was a striking milestone just in terms of California’s sheer economic might.

But there was something else about the news with some political salience: when California raised taxes on the wealthy in 2012, creating one of the highest marginal tax rates in the country, conservatives were certain the state’s economy would take a severe hit. How’d that work out? The Washington Post reported the other day:

California grew just fine in the year the tax hikes took effect… California’s economy grew by 4.1 percent in 2015, according to new numbers from the Bureau of Economic Analysis, tying it with Oregon for the fastest state growth of the year. That was up from 3.1 percent growth for the Golden State in 2014, which was near the top of the national pack.

At the same time, Kansas Gov. Sam Brownback (R) slashed taxes, leading conservatives to predict great things for the state’s economy. And yet, here we are.

The Kansas economy, on the other hand, grew 0.2 percent in 2015. That’s down from 1.2 percent in 2014, and below neighboring states such as Nebraska (2.1 percent) and Missouri (1.2 percent). Kansas ended the year with two consecutive quarters of negative growth – a shrinking economy. By a common definition of the term, the state entered 2016 in recession. […]

Kansas’s gross domestic product is still less than it was at the end of 2011, said Menzie Chinn, an economist at the University of Wisconsin-Madison, who has been following Kansas’s economy. Meanwhile, the economy in the rest of the country continues to expand.

http://www.msnbc.com/rachel-maddow-...r-california-raised-taxes-and-kansas-cut-them

Looks like we have a few more data points to add to nearly a hundred years of history showing that just because the job creators have more money doesn't mean they'll spend said money to job create.

 

[smokeandmirrors]

The wealth in Kansas will trickle down in 10 years.

 

[DrGonzo615]

Like Daniel Tosh says...its because we have shit to look at.

 

[Wilsongt]

Don't worry. Any day now Kansas is going to have explosive growth as all of those poor, abused rich people leave California in droves and moves to the safer haven of Kansas.

Honestly, I don't even have anything substantially snarky to say.

 

[Parmadillo Marshmallow]

So is this a causation or a correllation?

 

[Basileus777]

So is this a causation or a correllation?

You could argue about California if you want, but the evidence for causation in terms of Kansas is very strong.

 

[Head of Vengarl]

So is this a causation or a correllation?

How many more decades of proof do we need to convince people that trickle down economics is bullshit?

 

[TyrantII]

http://www.msnbc.com/rachel-maddow-...r-california-raised-taxes-and-kansas-cut-them

Looks like we have a few more data points to add to nearly a hundred years of history showing that just because the job creators have more money doesn't mean they'll spend said money to job create.

There's no such thing as a job creator. Jobs aren't created out of the kindness of some rich assholes heart.

Jobs are created from demand for goods and services. The more demand, the more people with money spending money, the more jobs.

 

[Oblivion]

So is this a causation or a correllation?

For Cali, I don't think the tax hikes caused its growth necessarily.

For Kansas, however, its tax cuts definitely led to its declining economy.

 

[Vanillalite]

For Cali, I don't think the tax hikes caused its growth necessarily.

For Kansas, however, its tax cuts definitely led to its declining economy.

Basically this.

 

[Azuran]

It amazes me how some people love to kiss rich people's ass despite the fact that they don't give a shit about anyone but themselves.

I'll never understand why someone working minimum wage would be against taxing the rich.

 

[Cat Party]

It amazes me how some people love to kiss rich people's ass despite the fact that they don't give a shit about anyone but themselves.

I'll never understand why someone working minimum wage would be against taxing the rich.

We have a weird cultural belief that if we are nice to rich people, and if we protect and defend them and their wealth, they will shower us with favor. Someone smarter than me will need to explain why that is.

 

[tokkun]

So is this a causation or a correllation?

It's clear there's not a simple causal relationship, because you have Texas which has had a very successful economic boom and greatly diversified away from its dependence on oil through very low taxes.

As is usually the case, the answer is probably that economic forces are just way too complex to boil down to a simple factor. It may be that low taxes worked for Texas because it had something else that Kansas didn't have. It also may be that there is a first-mover's advantage with low taxes that let Texas pull in the tax-sensitive businesses in the region and there's no incentive for them to relocate to Kansas.

 

[Oblivion]

The wealth in Kansas will trickle down in 10 years.

You joke, but this is literally what the father of trickle-down economics said.

 

[Phoenix]

So is this a causation or a correllation?

Louisiana did the same thing and is waaaaay in the shutter right now. Its so worse off that the jackass that did it (Jindall) should be in imprisoned as an enemy of the state. So I think we're looking at a very very strong correlation and the only outstanding variance is massive decreases in the tax rate.

 

[rokkerkory]

so let's raise taxes even higher!

 

[Mr.Mike]

For Cali, I don't think the tax hikes caused its growth necessarily.

For Kansas, however, its tax cuts definitely led to its declining economy.

Well, tax hikes definitely don't directly cause economic growth, spending that money well does. At the same time tax cuts don't directly hurt the economy either, rather cutting funding to infrastructure, education and whatever else does. In truth the direct effects of taxes are probably mostly bad for the economy ( although even then pricing in externatilites might be beneficial on it's own ), but the indirect effects are really important.

 

[GiantEnemyGoomba]

It amazes me how some people love to kiss rich people's ass despite the fact that they don't give a shit about anyone but themselves.

I'll never understand why someone working minimum wage would be against taxing the rich.

Because when you're sure you're gonna be a millionaire one day, you don't want there to be high taxes on the upper class when you get there.

 

[Parmadillo Marshmallow]

For Cali, I don't think the tax hikes caused its growth necessarily.

For Kansas, however, its tax cuts definitely led to its declining economy.

If true, then the comparison is disingenuous.

 

[ThreePiMatt]

If you think about it, with all the money you save on low taxes in Kansas, you could use that to move out of Kansas and to a state people actually want to live in!

 

[adamsappel]

I'll never understand why someone working minimum wage would be against taxing the rich.

"I never got a job from a poor man" and/or "That'll be me some day."

 

[therealist]

It amazes me how some people love to kiss rich people's ass despite the fact that they don't give a shit about anyone but themselves.

I'll never understand why someone working minimum wage would be against taxing the rich.

When you don't have access to education or in general do not place emphasis on critical thinking, you are highly manipulable.

 

[cpp_is_king]

It's fucking Kansas. You could offer free hookers and blow to every resident in Kansas and it would still not grow. Like who actually wants to live there? California has great weather, great jobs, great culture, great beaches. Correlation != causation.

 

[Erevador]

For Cali, I don't think the tax hikes caused its growth necessarily.

For Kansas, however, its tax cuts definitely led to its declining economy.

Yes. The California economy is obviously much more complex and dynamic than that of Kansas.

 

[Furyous]

Kasich fucked Ohio with tax cuts well.

But a closer review of his record shows the reality is more complicated. Other states recovered from the recession more quickly than Ohio did. He closed the budget shortfall in part by cutting aid to local governments, forcing some of them to raise their own taxes or cut services. And increasing sales taxes helped make the income tax cuts possible. “Ohio was in intensive care, and Governor Kasich came in and really stabilized the patient,” said Rea S. Hederman Jr., the executive vice president of the Buckeye Institute for Public Policy Solutions, a right-leaning group. “But we’re still a sick state, economically speaking.”

Cutting taxes is poor logic because local governments need that revenue to function. Other services have to get cut to make up for lost resources. Louisiana is another poor example of tax cuts working against the people but someone else can post that example.

 

[Oblivion]

We have a weird cultural belief that if we are nice to rich people, and if we protect and defend them and their wealth, they will shower us with favor. Someone smarter than me will need to explain why that is.

Well, that and conservatives have scared people into thinking that if you raise taxes on businesses, then they'll start laying off people to compensate. Even though shit doesn't work that way.

Louisiana did the same thing and is waaaaay in the shutter right now. Its so worse off that the jackass that did it (Jindall) should be in imprisoned as an enemy of the state. So I think we're looking at a very very strong correlation and the only outstanding variance is massive decreases in the tax rate.

It's not just Louisiana, it's Wisconsin, Maine, New Jersey, Oklahoma, South Carolina, Alabama, and a whole host of other red states. Seriously, I cannot think of one example, minus PROBABLY Texas, where cutting taxes led to more revenue and job growth.

Hell, even the mighty Ronald Reagan, who as we all know had the greatest economic boom in the history of civilization, lost revenues after he enacted his tax cuts. If the man who singlehandedly defeated communism couldn't accomplish that, what makes any of these lesser Republicans think they could?

edit: oh yes, Ohio too! and Florida.

 

[kirblar]

It's clear there's not a simple causal relationship, because you have Texas which has had a very successful economic boom and greatly diversified away from its dependence on oil through very low taxes.

As is usually the case, the answer is probably that economic forces are just way too complex to boil down to a simple factor. It may be that low taxes worked for Texas because it had something else that Kansas didn't have. It also may be that there is a first-mover's advantage with low taxes that let Texas pull in the tax-sensitive businesses in the region and there's no incentive for them to relocate to Kansas.

Kansas actively made itself someplace with terrible quality of life for families.

One thing I recently learned: the GOP hatred of public school funding is rooted in segregation: when schools were forced to integrate, the white people in the south all sent their kids to private schools.

 

[Oblivion]

If true, then the comparison is disingenuous.

Not really. The point is that people on the right argue that tax hikes always lead to job/revenue loss, and always argue that tax cuts do the opposite. This has been proven time and time and time again to not be the case.

 

[JavyOO7]

I don't think the people in Kansas really believe in government right now. They'll probably vote for a Republican in the next cycle just to save money... when that money could go towards infrastructure, schools, etc.

It feels that way here in Florida too as he (Rick Scott) won twice already. I don't see a governor who insists on taxes will be elected next time around over here either. Instead, there will be tolls to replace the lack of tax funding (like the tolls on the 874)...

 

[Iorv3th]

I really wonder how much of this is not necessarily due to either, California is growing in technology sector. Look at the price of living in certain areas.

Kansas on the other hand doesn't have a big booming industry or anything to pull people into the state. The fact that they stayed positive growth wise with the crash of oil is surprising.

Not as surprising that it declined as oil prices decreased though.

It amazes me how some people love to kiss rich people's ass despite the fact that they don't give a shit about anyone but themselves.

I'll never understand why someone working minimum wage would be against taxing the rich.

It's not as simple as saying rich people are all selfish and only minimum wage employees are the ones against higher taxes. Usually tax increases effect the middle class the most as higher income earners usually have ways to write stuff off and get around paying many of their taxes anyways.

 

[smokeandmirrors]

You joke, but this is literally what the father of trickle-down economics said.

That's why I posted it (I'm glad it was the correct amount of years)

 

[Fuchsdh]

Well, tax hikes definitely don't directly cause economic growth, spending that money well does. At the same time tax cuts don't directly hurt the economy either, rather cutting funding to infrastructure, education and whatever else does. In truth the direct effects of taxes are probably mostly bad for the economy ( although even then pricing in externatilites might be beneficial on it's own ), but the indirect effects are really important.

Tax hikes can have a pretty big negative impact, in that if you convince big millionaires to leave in a state that's not full of them, you can see your tax receipts and hence your budget sink overnight: http://www.wsj.com/articles/SB124329282377252471

Of course, as people in this thread have said, California is California, and it's got a large enough population and enough pull for people to live there, along with plenty of obscenely wealthy people, that I think it probably has a much higher tolerance for this kind of flight, and as people have pointed out, aside from direct income taxes it's not likely these people are the mythical "job creators" championed in talking points. But there are still negative effects of tax increases.

 

[NekoFever]

We have a weird cultural belief that if we are nice to rich people, and if we protect and defend them and their wealth, they will shower us with favor. Someone smarter than me will need to explain why that is.

It's weird because it hasn't worked like that since feudal times, and arguably has never worked like that in the US.

 

[kirblar]

Cutting taxes increases revenue if you've raised them too high.

spoiler: Very few taxes have ever been at that point in the US.

 

[FelixOrion]

It's fucking Kansas. You could offer free hookers and blow to every resident in Kansas and it would still not grow. Like who actually wants to live there? California has great weather, great jobs, great culture, great beaches. Correlation != causation.

And yet we here in Nebraska are doing a lot better. Not amazing, mind you, but we're not in the same shitter and we're quite similar to Kansas (as much as that makes me vomit to say).

 

[ArkhamFantasy]

Oklahoma cut taxes for the wealthiest in the state and its been devastating, we are shutting down schools and shit.

 

[kiunchbb]

That made sense. If the restaurant only need 10 staffs, they are not going to hire more staffs just because the owner is getting richer from tax saving. It is better to increase the spending power of the poor and middle classes so they'll eat out more often. And you need tax money from the rich to do that.

 

[uncelestial]

To be fair, there are causation problems preventing us from drawing the conclusion I think the article wants us to draw. California was going to grow, the tech industry is still raging hot.

But a progressive tax structure is the right thing to do and the most sensible way to bring in revenue to help our infrastructure and social services. And in general, wealth distribution "lifts all boats."

 

[trembli0s]

California can tax until the sky turns red and not have any issues in large part because the tech industry is still frothing out of control.

It's also fucking California and people still want to live there, if they have the ability to.

 

[diehard]

Utah is at its lowest tax burden in 20 years and doing the economy is doing really well. A lot of it is thanks to the tech sector, just like California.

 

[Oblivion]

Utah is at its lowest tax burden in 20 years and doing the economy is doing really well. A lot of it is thanks to the tech sector, just like California.

What tech sector does Utah have?

 

[Douche McBaggins The 3rd]

What tech sector does Utah have?

Ebays good tech support is partially in Utah.

 

[Tallshortman]

Like many have said, Cali is still jury still out due to how diversified and large their economy is. On the other hand there's no doubt about Kansas since their massive budget issues can be directly traced back to the ill advised cuts.

 

[Skellig Gra]

Comparing anything to California is just ridiculous. It's such a massive and diverse place economically speaking. You could write books on the states economy.

 

[diehard]

What tech sector does Utah have?

http://www.usatoday.com/story/tech/2015/09/18/utahs-silicon-slopes-lure-tech-entrepreneurs/32539643/

 

[Azih]

So is this a causation or a correllation?

I think one of the most important points is that there is no strong correlation going the other way

 

[Oblivion]

http://www.usatoday.com/story/tech/2015/09/18/utahs-silicon-slopes-lure-tech-entrepreneurs/32539643/

Huh. Whaddya know. Looks like there's something worthwhile in Utah afterall.

 

[Jmanunknown]

Thanks to what happened in the UK yesterday the state of California now has the worlds fifth largest economy.