Posted by Tina
Recently I have asserted that private sector incomes have fallen behind and the reason is because of the excesses of government. Tonight I found some proof that my theory is accurate. J.Scott Moody, CEO of the Maine Heritage Policy Center, is my new hero. He chose two states, Maine and New Hampshire, and compared them in terms of tax policy and public and private employment wages. The record between 1929 and 2012 is pretty amazing. I will let Mr. Moody tell the story:
Since 1950, Maine has increased taxes and spending dramatically with the introduction of the sales tax in 1951 and the income tax in 1969. New Hampshire, on the other hand, did not.
Increasing taxes on the private sector has two consequences. First, higher taxes will mean less money in the pockets of individuals and businesses which will reduce their ability to invest for the future. Second, greater public spending will crowd-out the private sector in competition for scarce labor and capital.Overall, between 1929 and 2012, Maine’s private sector as a percent of personal income has shrunk by 31 percent to 64.2 percent in 2012 from 92.4 percent in 1929-Maine now has the 10th smallest private sector in the country.
New Hampshire’s private sector has only shrunk by 16.3 percent to 76.1 percent in 2012 from 90.8 percent in 1929-New Hampshire now has the 2nd largest private sector in the country.
As a consequence, Maine residents have paid a steep price with not only higher tax bills but also lower incomes. The dashed lines shows the disparity in real, per household personal income growth between Maine and New Hampshire.
Over this time-period, Maine’s income grew by 247 percent while New Hampshire’s income grew by 293 percent. Due to these growth difference, the average household in New Hampshire enjoys income that is 27 percent higher than the average household in Maine ($117,761 versus $92,870, respectively).
Additionally, a significant part of New Hampshire’s private sector is actually derived from Mainers who cross-border shop at New Hampshire stores. According to my analysis of data from the U.S. Department of Commerce’s Census Bureau, Mainers are spending up to $2.2 billion per year in New Hampshire. This is entirely driven by higher sales and excise taxes in Maine.
Read the entire piece and see the graph that tells this story in red, white and blue!
The most important factor in any economy is the people. It is the one factor that our progressive buds don’t ever seem to consider. People respond to tax increases and to tax cuts. How they respond is the key to smart tax policy. Once that is figured out, see painful lesson for California here and scroll down to watch video, the only remaining problem is getting our public servants to stay on budget, manage wisely, and knock off the useless pork, the waste, the fraud and the abuse!
Does a rising tide lift all boats…YES!
Here is another study with the same results. Obama won with only 1% of the population vote. Wonder how the electoral college votes will change in the future with the population shift?
Americans Are Migrating To More Free Republican States:
By JOHN MERLINE, INVESTOR’S BUSINESS DAILY
Posted 03/28/2013
Americans are migrating from less-free liberal states to more-free conservative states, where they are doing better economically, according to a new study published Thursday by George Mason University’s Mercatus Center.
The “Freedom in the 50 States” study measured economic and personal freedom using a wide range of criteria, including tax rates, government spending and debt, regulatory burdens, and state laws covering land use, union organizing, gun control, education choice and more.
It found that the freest states tended to be conservative “red” states, while the least free were liberal “blue” states.
The freest state overall, the researchers concluded, was North Dakota, followed by South Dakota, Tennessee, New Hampshire and Oklahoma. The least free state by far was New York, followed by California, New Jersey, Hawaii and Rhode Island.
The study also compared its measures of economic and personal freedom to population shifts and income growth, and found that freer states tend to do better on both scores than those less free.
For example, it found a strong correlation between a state’s freedom ranking and migration, which means that Americans are gravitating toward states that have less-intrusive governments.
Escape From New York, L.A.
New York, for example, saw a net migration of -9.2% between 2000 and 2011, and California’s was -4.2%. In contrast, Tennessee gained 4.4%, and Oklahoma gained 1.3%.
An IBD analysis of the data found that “red” states — those voting for Republican presidential candidates in the past two elections — saw an overall net migration of 2.2%, while “blue” states saw an overall average net migration of -0.3%.
“People are voting for places with greater freedom,” said William Ruger, a political scientist at Texas State University and one of the co-authors of the study. That was true, he said, even after controlling for things like weather and amenities that might attract people to states independent of these freedom measures.
The study also found that states with more freedom tended to see stronger income growth. This was particularly true in states with more regulatory freedom.
“Adam Smith was right,” Ruger said. “If you have economic freedom, you will have economic growth.”
IBD has previously reported that red states saw stronger job growth, lower unemployment and bigger gains in per capita income than blue states during the economic recovery. For example, IBD found that in the first three years of the recovery, red states saw 1.9% job growth compared with 1.2% for blue states.
http://news.investors.com/032813-649561-americans-are-migrating-to-more-free-republican-states.aspx
Yes, but the Mainers are not moving to New Hampshire. When that starts happening, you let me know.
What I want to see is a similar study run on California and Texas.