Democrats Seek to Increase Unemployment in Golden State
One things which makes it so much fun to be an “out” Republican at Gay Pride events is to see the expressions on Democratic officials’ faces when you challenge them on their policies. I mean, they basically expect gays to fawn all over them because they assume we’re all left-wingers and just googly-eyed to have them marching in the Pride Parade.
I caused my State Assemblyman, the tax-hike-favoring Mike Feuer, to do a double take on Sunday. As others cheered, I cried out, “Cut My Taxes.” He turned at me and asked, “Just your taxes?”
“No,” I replied, “Cut taxes across the board. We have the highest taxes* in the nation and the highest unemployment rate**. There’s a correlation.”
Instead of responding, with a tight smile, he looked away and waved at someone else, oblivious to what he and his fellow Democrats are doing to discourage economic growth in the Golden State.
No wonder he didn’t consider my observation, he and his fellow Sacramento Democrats are determined to raise our taxes. (Just the thing we need in an economic downturn.) I have a better idea: cut the salaries of public employees.
While I should have said that the state taxes are among the highest (as is our unemployment rate), it seems Feuer et al. are determined to make sure the Golden State has the highest tax burden among the fifty states. And should state Democrats get their way and hike taxes, well, then we will have the highest unemployment in the nation.
And with the Obama Administration refusing to bail out our profligate General Assembly, state Democrats have to make tough choices, either stand up to their political patrons or raise taxes on their fellow citizens.
—
*According to the Tax Foundation, California has the fourth highest tax burden after Connecticut, New Jersey and New York.
**Well, the Golden State has one of the highest unemployment rates, the rates in Rhode Island and South Carolina are curently slightly higher and in Michigan significantly higher.
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Wish I was there when it happened!
Comment by ILoveCapitalism — June 16, 2009 @ 7:36 pm - June 16, 2009
New York, and especially Michigan and California are hemorrhaging residents who are moving away to find work.
Just think how much higher the unemployment rate would be if those multitudes were still in their respective states.
Comment by JP — June 16, 2009 @ 8:05 pm - June 16, 2009
After adjusting for inflation and population growth, California spending has increased more than 40 percent since 1998. If spending were held to inflation and population growth, the budget would be about $100 billion (and the budget would be balanced).
Comment by SoCalRobert — June 16, 2009 @ 8:41 pm - June 16, 2009
#2 Ohio’s doing its damnedest to join them.
Comment by The_Livewire — June 16, 2009 @ 9:11 pm - June 16, 2009
Yeah, Livewire. . .I’ve seen where Cali and Michigan will be quite smaller in population in the next census (that was before Obama did his ACORN grab) and Texas may well pass Cali in population (Our rate is still 6.5 or so with all the new people and GM on layoff). Ohio isn’t quite to those levels. . . . . yet.
maybe soon though, eh?
Comment by JP — June 16, 2009 @ 9:20 pm - June 16, 2009
I have relatives in Michigan. All the U Hauls are rented….the liberals are fleeing the unionized capital for greener pastures. Wherever they end up, hold on to your wallets. So liberals in Calif and Michigan raise taxes, fees and regulations to the limit, then wonder what happened. Then they have to move because they’ve created a wasteland.
This video of Detroit is stunning….empty abandoned city blocks, abandoned skyscrapers. Those with transportation have fled. Those that can walk, have trudged south with their few belongings on their backs.
Years of Democrat control and administration. Obama wanted to “promote” their governor to his cabinet or the Supreme Court.
Watch the 4 minute video. Is this Obama’s America?
http://www.youtube.com/watch?v=0JbGxIR8JTk
Comment by Gene in Pennsylvania — June 16, 2009 @ 9:41 pm - June 16, 2009
#6
The liberals would look at DTW as a booming crack house market. And just look at all the artists they can subsidize.
Comment by ThatGayConservative — June 17, 2009 @ 12:22 am - June 17, 2009
I’d like to see the littleletterclowns blame Republicans for that mess.
Comment by ThatGayConservative — June 17, 2009 @ 12:22 am - June 17, 2009
TGC,
As Michigan was suffering it’s own one state Recession, and the nation as a whole was at record low unemployment, Nanny Gronny, now one of Obama’s Economic Advisors, was sure to blame BOOOSH for the states troubles.
Michigan is the most expensive place GM operates.
As companies were getting the hell out of Dodge, and workers were leaving in droves, Jenny’s solution was simple. . . raise taxes on them.
It Is Never Their Fault. Just like any other spoiled child.
Comment by JP — June 17, 2009 @ 4:37 am - June 17, 2009
I’ve seen where Cali and Michigan will be quite smaller in population in the next census (that was before Obama did his ACORN grab) and Texas may well pass Cali in population
JP, Michigan’s population is flat since the 2000 Census, and may well lose population by the 2010 Census. Calfornia is up by 2.9 million since 2000 (to about 36.8 million), so I doubt they will have less by 2010. The only thing is they may not gain any more seats in Congress. Texas has gained more since 2000 (3.5 million), but they’re at 24.3 million, so I doubt Texas will be overtaking California anytime soon.
Comment by Pat — June 17, 2009 @ 6:30 am - June 17, 2009
The economic retards (and I apologize to retards for comparing them to California legislators) in the California S.S.R. are now proposing a 10% per barrel tax on oil produced in California. Are they really so stupid to think oil companies are going to keep marginal wells in production just so they can keep the state’s tax revenues flowing? Say goodbye to those jobs. But, hey, it’s okay. Every liberal knows the key to prosperity isn’t encouraging private enterprise… it’s lavish benefits for public employees and illegal immigrants. Right, Arnold?
Comment by V the K — June 17, 2009 @ 7:40 am - June 17, 2009
Also, there’s this. Tell me this doesn’t suck. Because of a clerical error, kids in two California elementary schools have to make 34 days of school. Why? because 34 of their school days were 5 or 10 minutes short of the mandatory 180 minute school day. And because of a retarded state law, they can’t just make up the missed minutes, they have to make up every day that was short. How stupid is that?
Comment by V the K — June 17, 2009 @ 8:07 am - June 17, 2009
V the K these are the people that Obamateleprompter wants in charge of our health care and hospitals. “it was only a small error sir”…..
Comment by Gene in Pennsylvania — June 17, 2009 @ 3:22 pm - June 17, 2009
what, exactly, is the correlation between unemployment and tax rates? presumably you have some data to back up this claim…
Comment by Chad — June 17, 2009 @ 4:07 pm - June 17, 2009
Chad you must have graduated from the public school system eh?
For your information……there were three Presidents who avoided severe recessions or overcame severe recessions by lowering tax rates. J F Kennedy, Ronald Reagan, and Bush 43. All three found that letting regular people keep more of their own money, led to a resounding economic recovery and economic growth. Since 1984 the USA has typically had 3-6% growth per year while socialist nations in Europe have had 0-2% growth. Over the course of 20 years Americas economy has grown 30-60% while our European friends have grown only 5-10%. A massive difference. We in America take so much for granted. Allowiing the people to keep more of their hard earned money, has led to a society un matched in history. ( I teach my young employees, to put things in perspective that….4/5 of the worlds humans still don’t have potable water. They must trek somewhere to get drinkable water. Most humans still live on dirt floors. ) Most all medical breakthrus, miracles happen in America. Most new inventions happen in the westen world, mostly the USA. Because of the profit motive. While trying to become rich, amazing things have been invented. Free capitalism has been an amazing boon to mankind. Leftist liberals would disagree.
Comment by Gene in Pennsylvania — June 17, 2009 @ 4:25 pm - June 17, 2009
Furthermore, 50% of all the private sector job growth in the USA over the last decade has occurred in a single state; a state that has No Income Tax: Texas.
Why is it a state like Texas, with no income tax, is coming through the recession in much better fiscal shape than a state like California… which has obscene income tax rates?
Comment by V the K — June 17, 2009 @ 4:52 pm - June 17, 2009
#16 – It’s also because we have a state-run GOP that is very pro-business, pro-growth and effective at selling that message. That, and the fact that we have a weak executive and judiciary branch in comparison to other states (as part of the 1876 Texas Constitution).
FYI – it appears that Nevada and Florida are also doing well in the business market. Could it be because those states also don’t have a state income tax?
Regards,
Peter H.
Comment by Peter Hughes — June 17, 2009 @ 5:11 pm - June 17, 2009
I just may be moving to Nevada!!!
Comment by Dave_62 — June 17, 2009 @ 5:34 pm - June 17, 2009
But see liberals and Democrats think Texas is hicksville. Job creation, who needs it if you have a massive government mommy and daddy taking care of everyone. The postman becomes everyones hero and role model. Capitalism can be messy sometimes cruel. That’s why we in America have a safety net in place. But liberals prefer Chavez and Putin style “democracys”. For innovation, progress, invention, and a dynamic society, free people choose the USA. Not Sweden.
Comment by Gene in Pennsylvania — June 17, 2009 @ 5:43 pm - June 17, 2009
so no one can show me data supporting gpw’s assertion that the unemployment rate is correlated with state tax levels? gene gave me a rousing defense of american capitalism (thanks gene, i feel very patriotic right now) and a whole lot of snark (yes, i’m a proud public school grad), vk gave me info on job growth in texas (not unemployment rates), and peter gives me the guffaw-inducing claim that florida and nevada are doing well during this economic climate. for the record, pete, florida and nevada have unemployment rates of 9.6 and 10.6 percent, both above the national average, IN SPITE of having no state income taxes…doesn’t seem like they’re doing well, but maybe i just think that way because of my shoddy public schooling.
thanks guys.
Comment by Chad — June 17, 2009 @ 7:56 pm - June 17, 2009
chad, Michigan has high unemployment 13% AND high taxes! NICE
Comment by Gene in Pennsylvania — June 17, 2009 @ 9:33 pm - June 17, 2009
And I’m glad I made you feel patriotic, how does it feel? Odd?
I think V the K did address your unemployment:tax rate query…..
50% of all the private sector job growth in the USA over the last decade has occurred in a single state; a state that has No Income Tax: Texas.
Comment by Gene in Pennsylvania — June 17, 2009 @ 9:36 pm - June 17, 2009
Chad completely discards the proven ability of low-tax, pro-business environments to create new private sector jobs asirrelevant to the issue of employment. One could say this marks him as an idiot, but that would be uncivil.
Hell, the Soviet Union had “full employment.” Cuba has “full employment.” North Korea has “full employment.” But did they have prosperity? Not so much.
Comment by V the K — June 17, 2009 @ 9:42 pm - June 17, 2009
i’m ignoring data that is irrelevant to gpw’s assertion, which, for the third time, is that the UNEMPLOYMENT RATE is correlated with state tax rates. job growth in texas is irrelevant to this inquiry because job growth is not the same measurement as the unemployment rate. do i really need to explain this further?
look, unemployment rates and state tax rates are easy to find online. if gpw is correct, you shouldn’t have trouble verifying it.
Comment by Chad — June 17, 2009 @ 10:44 pm - June 17, 2009
ok for those that attended public schools…..
Low tax rates allow regular people to keep more of their own hard earned money. Those people usually spend some of those monies. When they spend, usually more jobs are created and saved. People who keep more of their earned money, sometimes start businesses and actually hire someone to help out. Called creating jobs. Low tax rates = more jobs. More jobs means more people are getting pay checks and paying into the tax system. Tax revenues actually increase. After the Reagan and Bush 43 tax rate reductions, govt revenue actually rose!
When you tax people too much. You cut jobs, businesses lay off workers or don’t hire them to start with. Productive earners who are taxed too much don’t have the wherewith all to start new businesses. Fewer small businesses are started, less jobs are created.
In Michigan, as their economy deteriorated, the budget went way out of whack. Tax revenues declined because fewer workers were working and paying into the tax system. The governor did exactly the wrong thing. She raised taxes and fees to try to balance the budget, she didnt’ try to cut spending or services. Unemployent soared. Going from 7% to 13% unemployment with no end in sight. The situation is now so bad it is unsolvable but she is leaving office. With a 20% approval rate. those 20% no doubt appreciate that fact that she hasn’t cut postal deliveries so the govt checks still come on time.
Taxes, jobs, revenues, unemployment. Liberalism. It isn’t that hard to understand.
Comment by Gene in Pennsylvania — June 17, 2009 @ 11:48 pm - June 17, 2009
i’m ignoring data that is irrelevant to gpw’s assertion, which, for the third time, is that the UNEMPLOYMENT RATE is correlated with state tax rates.
Actually, you’re just ignoring everything that doesn’t fit your Obama Party theory that high taxes equal economic growth.
Comment by North Dallas Thirty — June 18, 2009 @ 2:55 am - June 18, 2009
wailing and gnashing of teeth aside, none of you can show a correlation between unemployment and state taxes.
Comment by Chad — June 19, 2009 @ 2:51 am - June 19, 2009
Of course chad,
If you remove all the data that crushes your arguement, then you won’t see it.
Comment by The_Livewire — June 20, 2009 @ 5:38 pm - June 20, 2009
livewire, look up the word “data” in a dictionary and try again. while you’re at it, look up “correlation.” until you understand those concepts, you stay at the kids’ table.
Comment by Chad — June 21, 2009 @ 4:31 am - June 21, 2009
Okay, Chad, I will.
This is what I did. I made two comparisons:
A) A correlation between the state unemployment rate for May 2009 and the effective tax rate on a single person earning $50,000.
B) A correlation between the state unemployment rate for May 2009 and the top marginal tax rate.
The top marginal tax rate kicks in anywhere between $0 and $1,000,000 (California), so I thought A) might have been a better comparison. Also, I did my best to really get the typical tax burden, by including the exemptions, tax credits, as well as county or local taxes that residents have to pay in addition to their state income taxes. In about three cases, you would need to be either a tax attorney and/or CPA to figure it out, but I did my best. I did not include sales taxes, however. In many cases, a state not having income taxes may have a higher sales tax rate. I did not include sales taxes, or even compare sales taxes to unemployment rates, because sales taxes can be very confusing. In many cases, states tax different things. In NJ, we’re famous for not taxing clothes and I think we still don’t tax toilet paper. In other states, like NC, the sales tax rate is very confusing and there are different rates for different items.
Anyway, for those who are not familiar with the correlation coefficient r, it quantifies how a data of paired items are related to each other. It can range from -1 (perfect negative correlation) to 1 (perfect positive correlation). In the middle, 0, represents no correlation.
With respect to A), r = 0.128 and for B), r = 0.118.
So both indicate some positive correlation between tax rates and unemployment. However, using 95% confidence, one cannot conclude that there is correlation between the two. The best we can do is get about 63% and 61% confidence, respectively, which is pretty low in the statistics world. In order to achieve 95% confidence for 51 paired date, we would need r = 0.277.
A couple of other points. Does this “prove” that there is no correlation between tax rates and unemployment? No, not at all. It just means we can’t prove that there is correlation between tax rates and unemployment. Big difference. Kind of like saying that a jury coming back with a verdict of not guilty (using the reasonable doubt threshold) does not mean the jury concluded the defendant is innocent.
Further, this also shows that you can’t use one example and try to come up with a conclusion. Michigan has the highest unemployment rate, but it’s tax burden is on the middle or low side. Nevada has no state income taxes, but has a relatively high unemployment rate. California has the highest marginal rate (10.3%), which kicks in at $1 million, and even it’s second highest marginal rate (9.3%) kicks in at $47,000. Despite that, it’s tax burden falls in the low to middle range for a single person earning $50,000. New Jersey, like California, has a high maximum rate (8.97% for over $500,000) and a fairly low burden for the $50,000 earner. It’s unemployment rate is slightly lower than the national average.
Also, to put this in terms of what we see often during campaign times. When you see polling information, you usually see a margin of error (like +/- 3.5%). This means that the polling company is either 90% or 95% sure that the poll represents the actual percentages within the margin of error. If the poll has one candidate leading another, but within the margin of error, it is usually referred to as a statistical dead heat. So that is one way to characterize the correlation between tax rates and unemployment rates.
Comment by Pat — June 21, 2009 @ 1:23 pm - June 21, 2009
pat!! welcome to the game…i wish you would have joined earlier. unfortunately, i think your contribution will be lost as this post disappears from the main page.
i ran a similar regression analysis, so your results weren’t surprising. i kept pushing other people to give me data re: unemployment rates and state taxes, partially because i knew the outcome and also as a demonstration of good faith interest in debate. instead, i got a lot of supply-side rhetoric, and nothing data-driven. since correlation is a statistical measurement, data is essential, much to the chagrin of previous commenters.
i used similar data–may 09 state unemployment rates (wsj, 5/22/09), and 2009 state income tax rates. to simplify the model, i used only the highest marginal tax rate, though generally i found that the highest tax rates kicked in a relatively low levels of income. for the record, i recognize the limitations of this model, which you noted–this is not an accurate reflection of the total tax burden, which would also include sales taxes, estate taxes, property taxes, luxury taxes, etc. but absent a way to accurately model these tax burdens, i think state tax rates are an acceptable proxy.
my r-value was similar to yours, but for argument’s sake, i’ll accept your figures, i.e. r=0.128. i disagree with your conclusions, because i think this figure is pretty strong evidence of non-correlation, or alternatively, a level of correlation so negligible that it should not drive tax policy.
as you note, r-values fall with a range between -1 and 1. since, presumably, gpw assumes that state tax rates and unemployment rates are positively correlated, an r-value approaching 1 would prove his assertion. an r-value approaching 0 will indicate a lack of correlation between these two variables. at 0.128, the r-value is a whole lot closer to 0 than 1. such a low r-value is strong evidence of non-correlation.
a rule of thumb used to interpret r-values is a follows: an r-value of .8 or above indicates strong correlation; an r-value above .5 indicates moderate correlation; an r-value above .2 indicates low correlation. your r-value, at 0.128, doesn’t even cross the threshold for low correlation. again, i interpret this as an indication of the lack of correlation between state taxes and unemployment.
besides the correlation coefficient, another way to determine how accurately your line of regression “fits” the data is to look at the coefficient of determination, or r-squared-value. the r-squared-value determines the percent of variation between unemployment and state taxes that is explained by the regression model. note that 0<r-squared<1. if r-squared is 1, then 100% of the variation is explained by the regression model. if r-squared is .75, then 75% of the variation is explained by the regression model.
to get the r-squared value, all you do is square r. in your case, since r=0.128, then r-squared=0.016 (i rounded). this means, in percentage terms, that 1.6% of the variation in unemployment is caused by state taxes. only 1.6%!!!!! the remaining 98.4% of variation in unemployment rates is not explained by state tax rates. these figures fail to make even a minimal case supporting a conclusion that state taxes and unemployment are correlated.
more interesting, for me anyway, is the policy-bias that this data indicates. in spite of this data, people like gpw and other commenters will continue to bang the drum in favor of tax cuts. this reaffirms the perception that conservatives have one idea when it comes to economic policy–tax cuts, consequences or efficacy be damned.
also pat, a favor, if you don’t mind and feel so inclined–explain more your use of confidence intervals in your analysis. i’m not sure i understand how you’re using them, since we’re not engaging in a random sampling (i.e., our universe of data is finite–only 50 states, plus d.c.). in other words, we aren’t trying to predict how accurately our regression represents the entire population, since all 51 data points are included in our model.
Comment by Chad — June 21, 2009 @ 4:33 pm - June 21, 2009
Chad, I didn’t have time to do an analysis before yesterday, but yeah, it’s a shame it’s off the main page now.
i’m not sure i understand how you’re using them, since we’re not engaging in a random sampling (i.e., our universe of data is finite–only 50 states, plus d.c.). in other words, we aren’t trying to predict how accurately our regression represents the entire population, since all 51 data points are included in our model.
You’re right, this is not a sample, but rather an analysis of the whole population in consideration here for this recession. So my understanding is that the r = 0.128 does indicate that there is some positive correlation then. Granted, it is quite minimal, and that only 1.6% of the variation in unemployment can be explained by the tax rates.
The other thing is that this is only an analysis of the current recession. This is not necessarily a predictor of what happens during recessions in general, or during any period for that matter, because this data was limited to now. If I had more time, I would have done an analysis of some of the previous recessions and see if there is similar (non-)correlation.
I have a colleague who is an economist who normally believes that during a recession, the worst thing to do is to increase spending. However, he sees that this recession is different than what we’ve seen in the past, and thinks that the stimulus might be the right thing to do this time. Now, he didn’t address tax rates, but I’m wondering if he is right that this recession is “different,” maybe correlations we’ve expected in the past do not apply for this recession. But again, that’s a big maybe.
Comment by Pat — June 22, 2009 @ 7:09 am - June 22, 2009
i think we’re on the same page, pat. in statistics, crunching the numbers is relatively easy; the science involves interpreting the results, especially when evaluating the merits of policy proposals.
i don’t want to overstate my statistics credentials. but i caution against drawing any conclusions there exists even a slight correlation between unemployment and state tax rates based on this data. a correlation coefficient of 0.128 is really really low. a positive r-value doesn’t, in and of itself, mean a positive correlation. from what i understand, the magnitude of the r-value is what’s important. hence the rule of thumb i mentioned in my previous post. if the r-value was above .2, we would have data supporting an inference that unemployment and state taxes were slightly correlated. but our r-values don’t even support an inference of low correlation. then again, this is just a rule of thumb.
you make a good point that i had not considered–the lack of correlation between unemployment rates and state tax rates is limited to the current recession. fair enough. in the past, these variables might have been correlated, so tax cuts made sense. but from a policy perspective, i think our data is adequate. the current recession, and its underlying data, is what is important. if data on the current recession does not indicate correlation between taxes and unemployment, then a policy of tax cuts just doesn’t make sense to me. it’s a policy proposal driven by ideology and not by data.
thanks for answering my questions, pat.
Comment by Chad — June 22, 2009 @ 7:31 pm - June 22, 2009
This post is right on. The politicians are making it too difficult for people to do business in the Golden State because of the impossibly high taxes which lead to higher unemployment and a high cost of living. (Even the gasoline in CA costs us more than our neighboring states).
In the midst of all this economic strife, the need for state and local governments to cut waste and spending is urgent. Why, then, is the LA County Board of Supervisors fighting to renew a contract with an underperforming and overpriced firm?
Last year, the Los Angeles County Department of Public Social Services (DPSS) procured for vendor services to operate the county’s GAIN case management services – a program that helps welfare recipients find work. Two bids came in from the incumbent company (MAXIMUS, Inc.) and Policy Studies Inc. (PSI). The two companies were scored by a neutral third party, and PSI beat Maximus solidly in several categories, including performance and price. Maximus protested the scoring, but the findings were upheld on 3 levels and PSI was recommended by DPSS to receive the contract.
The Board of Supervisors disagreed. They rejected the recommendation with 3 votes. They claimed the process of consensus scoring somehow concealed bias from the DPSS, though no specific evidence of this bias was ever presented. Furthermore, this scoring process was documented as a valid process which had been used for years prior to 2008, and the same process whereby the incumbent Maximus had been recommended and awarded. The BOS then directed the DPSS to extend Maximus’ contract for 6 months while they reissue the RFP and devise a new scoring method.
The BOS also expressed some superficial concern that the cost of the contract may exceed county requirements (see County Prop A). Although language could’ve easily been built into the contract to ensure cost neutrality/savings, the BOS rejected that argument and asked DPSS to review their contract monitoring costs for possible reductions and eliminate or reduce pay for performance provisions that could drive up the overall contract cost should the vendor outperform expectations.
The reissue of this RFP makes no fiscal sense whatsoever, particularly given the dire state of California’s economy. What’s more, the state faces federal penalties to the tune of approximately $185 million if they do not meet a preexisting federal threshold. Why is the BOS insisting on spending MORE of our tax dollars in an effort to maintain their business relationship with Maximus – a company whose performance was scored lower and whose contract was priced higher than PSI? (The county has estimated the cost to reissue the RFP to be $250,000). PSI’s contract would save the county over one million dollars annually. What’s going on here?
An LA Times article from last year exposed just how entangled Maximus is with the BOS. In the first half of 2008, Maximus spent over $124,000 on two lobbying firms, more than doubling what they spent on marketing in year before. Perhaps even more troubling, Maximus donated $1,000 (the maximum allowed) to the campaigns to re-elect supervisors Don Knabe and Michael D. Antonovich. They even gave $1,000 to two members whose terms had 2 years left to run.
In these lean times, something else must be motivating the board’s decisions, because it’s certainly not the bottom line.
Comment by Lauren — October 23, 2009 @ 6:42 pm - October 23, 2009