California, there I go; enough of your dog-and-pony show

california traffic

Here’s a head-scratcher: California, beset by ridiculously high real estate prices, onerous taxation, draconian regulation and, in the metro areas, extreme congestion, is losing tens of thousands of residents to other states.

During the 12 months ending June 30, 2015, 61,000 more people left California than moved to the state from elsewhere in the US, according to information generated by California officials.

The so-called “net outward migration” was the largest since 2011, when 63,300 more people fled California than entered it. Over the past quarter century, the state has experienced negative outward migration in 22 of the past 25 years, according to the San Jose Mercury News.

It’s been 20 years since I bid adieu to the Golden State, where I was born and where my parents still reside. I’d lived in many different parts of the US and had seen a great deal of the country, so leaving for the last time in 1996 wasn’t difficult.

At that time, it was all but impossible to find a decent home for under $350,000, even two hours or more from the state’s large metro areas.

The final straw came when, tired of commuting 2-1/2 hours each way to San Francisco from near where my folks lived along the Monterey Bay, I looked for a home closer to the Bay Area. The best deal available was one half of a small, rundown duplex in the concrete jungle of a San Jose suburb that looked to have had its fair share of gang problems. The price was $267,500.

A couple of months later I changed jobs and moved to the Florida Panhandle, where housing costs were one-quarter of California’s.

When you add in the bureaucracy the state appears to revel in, the restrictions on everyday life – don’t dare ask for a plastic bag when checking out at a supermarket, for example – the rampant hyper-environmentalism, the steady drumbeat of property crime such as cars being broken into, burglaries and vandalism, and the swarms of people who seemingly inhabit every square inch of the state from the coast 25 miles inland from Marin County north of San Francisco all the way down to the border with Mexico, it’s no wonder that many are choosing to leave.

Yes, the job market in the tech sector is currently booming, but when it costs so much to buy or rent a place to live, and taxes eat up so much of what remains, it’s tough to get ahead. I could never understand how one could have peace of mind with a $3,000 mortgage payment looming each month. That’s a sword of Damocles I didn’t need hanging over my head.

The impact of California’s outward flow is felt throughout the west, as well.

Twenty years ago, people not only in neighboring states of Arizona, Nevada and Oregon complained that California “refugees” were driving up real estate prices, but also in Montana, Colorado, New Mexico, Utah and Idaho.

During a housing boom, a California resident can make a profit of $100,000 or more on their home in a relatively short time. The windfall can be applied to a princely palace in other areas. But that means real estate prices rise for everyone in those other areas.

Of course, during the housing bust that occurred last decade tens of thousands of Californians walked away from their homes, abandoning abodes rather than making payments on properties that had suddenly declined in value precipitously.

For now, California officials don’t seem all that concerned.

The state has never been shy about taxing its residents to make up for revenue shortfalls, and while there is a sizeable percentage of individuals who classify themselves as political conservatives, they are outnumbered by political liberals who, while perhaps well intentioned, have run the state aground through decades of social, fiscal and political experimentation based on theory but with little foundation in practicality.

But, as with any polity, the absence of legitimate two-party or multiple-party systems has enabled those who run California to treat it as their own private political Petri dish, passing laws, ordinances and regulations to fit their needs, rather than what works best for those they’re supposed to be serving. It’s no different from, say, a Southern state completely dominated by conservatives. Once the checks and balances are removed, it’s the citizens who pay the price.

California’s future is impossible to predict, of course. But until those that run the state decide to do something dramatically different, it’s almost a certainty that the ongoing mini-exodus will continue.

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Connecticut determined to pluck every feather from golden goose

Connecticut_State_Capitol,_Hartford

If one wanted to chart a course for steering a state onto the shoals, look no further than Connecticut.

Twenty-five years ago, the Nutmeg State had no state income tax and served as tax refuge for many New York City workers.

Those days are long gone; last week the Connecticut legislature again raised state income tax rates, with the top marginal rate set to rise to 6.99 percent.

Of course, Gov. Dannel P. Malloy promised during his re-election campaign last year that he wouldn’t raise taxes, but that’s the same thing he said in 2010, a year before he signed a $2.6 billion tax hike.

The thing is, it’s not like Connecticut is growing like gangbusters and can afford to bleed its citizens dry.

According to the Wall Street Journal:

…the state grew a scant 0.9% in 2013, the last year state data are available. That was tied for tenth worst in the U.S. The state’s average compounded annual growth for the last four years is 0.42%. Slow growth means less tax revenue but spending never slows down. Some “40% of the state budget goes to government employee compensation and benefits, including payroll, state pensions, teacher pensions and current and retiree health care,” says Carol Platt Liebau, president of the Hartford-based Yankee Institute. …The Tax Foundation ranks Connecticut as one of the 10 worst states to do business. The state finished last in Gallup’s Job Creation Index in 2014 and now ties with Rhode Island for the worst job creation in the index since 2008.

The Journal added that Connecticut was one of six states that lost population in fiscal 2013-2014, and a Gallup poll in the second half of 2013 found that about half of state residents would migrate if they could.

If all of the above weren’t bad enough, lawmakers also made permanent a 20 percent surtax on Connecticut-based companies’ annual tax liability – a tax on a tax – which would be figured on Connecticut companies’ world-wide income, rather than what they earn in the state, according to the Journal.

Consider some of the corporations headquartered in Connecticut: Aetna, Cigna, General Electric, Pratt & Whitney, Praxair and Xerox.

Why would any of the above stay in Connecticut when faced with this kind of competitive disadvantage?

No doubt economic development officials in low-tax states such as Texas and Florida are giddy with anticipation at getting a shot at landing the likes of a GE or Pratt & Whitney.

“The high marginal rates are bad enough, but it is an astonishing overreach to tax corporations headquartered in your state based on their worldwide income,” according to the Coyote Blog. “This leads to a huge double taxation problem for any company dumb enough to stay.”

(Top: Connecticut Statehouse, Hartford, Conn.)

Rare Revolution-era tract found in Texas

A rare Revolutionary War-era pamphlet that criticizes Great Britain for taxing its American colonies without their consent has been discovered in a Texas college library.

Austin College archivist Justin Banks found an original copy of an essay written by Cambridge History professor John Symonds titled “Remarks Upon an Essay Intituled The History of the Colonization of the Free States of Antiquity, Applied to the Present Contest Between Great Britain and her American Colonies.”

It was printed in London in 1778, three years after the beginning of the American Revolution.

The pamphlet was donated to the college more than 20 years ago and there are only 100 known copies, one of which was found in Thomas Jefferson’s personal library.

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Remembering the politician who taxed urinals

vespasian

Rome celebrated the 2,000th birthday of Emperor Vespasian over the weekend, kicking off 10 months of festivities to highlight the life of the man who help build the Colosseum.

Vespasian came to power amid great chaos in the Roman Empire, the last of four emperors who ruled Rome in a single year, 69 AD.

According to a story in The Independent about the anniversary of Vespasian’s birth, “he took drastic measures to restore sanity to the Roman Empire’s finances, which had been emptied by Nero’s extravagance.”

“He raised taxes steeply … and famously introduced a tax on public urinals, which is why in Italy they are associated with him to this day. When his son Titus remonstrated with him over this measure, the emperor held out a handful of coins for him to sniff. These come from the urinal tax, he said, “Pecunia non olet” (money has no smell).”

He taxed public urinals and did so without a shred of embarrassment. Sounds like someone who’d fit in just fine with our elected leaders today, doesn’t it?

Moonshine: As American as rebellion

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Craig Peters of the Spartanburg Herald-Journal has written an interesting piece looking at good ol’ white lightning.

The role of home-distilled alcohol in American history is long and colorful, and includes the Whiskey Rebellion of the 1790s, in which civil protests in Western Pennsylvania regarding a tax on distilled spirits became an armed revolt which was eventually put down by President George Washington and 13,000 troops.

The Whiskey Rebellion started after Alexander Hamilton, always willing to wield the heavy hand of the federal government, pushed through a 25 percent excise tax on whiskey, to help pay down the national debt.

The tax was to be levied at source, which in the case of the Pennsylvania farmers was a multitude of small stills in barns and outhouses throughout the back country.

Western farmers saw the tax as another instance of rich Eastern elites bleeding hard-working poor frontiersmen, who depended on the sale of whiskey to scrape by. They distilled the spirit from grain, since the long journey across the mountains to the major markets of the east was expensive, and whiskey was much easier to transport than grain.

Distance meant that the tax would be hard to pass on to the consumer across the mountains. Also, whiskey was used in what was still largely a barter economy, almost as a form of currency.

The Whiskey Rebellion, which culminated in 1794 with about 20 individuals being rounded up, marked the first time under the new United States Constitution that the federal government used military force to exert authority over the nation’s citizens.