Just discovered this article today: http://www.illinoispolicy.org/news/a...cleSource=4362

 

I also saw that this morning on Drudge Report.

At least Illinois is #1 in something now

 

It's a good find, Frank, and the graph certainly seems compelling.

I'll just point out that the source is pretty obviously "conservative" (which is not a bad thing, of course), but they may bias the data to support their position that high taxes are the root cause of the job losses.

I can't help but wonder if there aren't other factors that might be contributing too, that are not being shown? Usually, sources of information that take a "left" or "right" stance tend to ignore any data that might tend to dilute the point they are trying to make. So, I'd be equally suspicious of a left-leaning source that put the "total" blame on some other cause.

- Jack

 

I agree with what you are saying, but I see the same post when it is the "other side". Whom do you believe these days? Used to, we accepted everything that was reported. Now, we trust nothing. How can you feel you have correct info any more?

 

That URL is not a model or formula, but historical tracking of what happens to tax revenue when the ETR is increased or decreased.

There is were conclusions made from the historical data

High marginal tax rates discourage work effort, saving, and investment, and promote tax avoidance and tax evasion, as shown by the 1st Clinton administration.

Reducing excessive tax rates stimulates growth, reduces tax avoidance, and can increase the amount and share of tax payments generated by the rich, as shown by the Reagan cuts, and the cuts from the 1960s and 1920s.

Just to be sure I did not miss it, tried a find on page for : model, formula, calculation and curve and none of these were found.

 

I knew those were real numbers. That was my point, I can trust those more than a model tha t was discussed earlier.

 

Sorry I missed that with the 'I much prefer looking at historical evidence, that is, if it's available.' part of the post.
That made me infer something that was not the case.

 

Yes, and I was not questioning the graph from Illinois at all. As I said, it certainly seems to show a direct correlation between a tax increase and a drop in employment.

But, is it possible there are other factors that are being ignored? For instance, could it be that for some other reason business started "fleeing" Indiana, resulting in reduced tax revenue which in turn prompted an increased tax rate to make up the difference?

Or were tax revenues down as a result of home foreclosures/devaluations which might mean workers are moving away (reducing the workforce) and, again, tax rates have been increased to cover the shortfall?

I only bring these points up, because here in Pima County, home values have fallen just like in the rest of the Country. People's homes are in foreclosure and many have been abandoned. (Some very nice homes in upscale, high income neighborhoods in this group, by the way. Janet and I looked at a few when we were looking for rental property to buy.) So, those homes that were abandoned mean out of work people. Pima County has had to raise the tax rate to make up the difference.

I think it's possible the graph doesn't pinpoint the actual cause, but more of a "symptom". It's probably something that could be checked, but since it's not "local" for me, I'd rather concentrate on what's going on here.

- Jack

 

You are correct. It could have been something such as some major employers going outsourcing and havin huge layoffs that just happen to coincide with the tax increase. Then again, the tax increase may be what triggered companies to change their business. Fact is, you have to have all the facts to know what a graph really means.

 

Exactly right! So, I tend then to look at the source of this "information" to see if they have a "vested interest" in how data is interpreted. It's really easy to use "statistics" to "prove" almost anything, isn't it?

It all comes back to the earlier point you made: "Whom do you believe these days?"

- Jack

 

For the northern states, they have many things working against them. Many of the southern states are right to work states and aren't beholden to the unions. This is a major reason why most of your foreign automakers build their plants in the south. Couple that with higher taxes and more regulations in the northern states and they just cannot compete for jobs.

I can't tell you how many companies have moved to Atlanta (Georgia is a right to work state) and the surrounding suburbs from the north in the past 25 years because of these reasons. Office parks all over the area are littered with them.

 

Arizona is a right to work state too. But we've lost employers recently (and in this Republican, conservative State, it wasn't due to high taxes).

One reason I've heard (somewhat secondhandedly) is that our population is rather poorly educated, and is getting more that way each year, due to the way the State legislature funds education. Employers are simply looking for places where the workers are more qualified.

As a former member of the faculty at the University, I can say without any hesitation that our home-grown students come to the University barely prepared, and it was a downward slide I saw the entire 20 years I was there. As to being a reason employers (like IBM and others) leave, I cannot say. But, it seems plausible.

- Jack

 

Actually Illinois has had an influx of company HQs relocate there. Boeing and Miller Brewing are the big ones as of late I can think of.
I am sure there is a certain amount that have exited to WI and similar.

The tax increase is a 66% state income tax increase for individuals, and 40% for companies.
A lot of the more poorly run counties already passed the "floor" rules, where the peak ( or 1 yr off the peak 3 yr average ) of the 3 year average for prop value was the lowest the property could ever drop to.
This means even though the price of the house on the 3 year average is still on the decline, the property taxes have not dropped.
Banks do not get a pass on the property taxes, if the house has been foreclosed on, the bank is now the record holder, and has to pay the prop taxes. I have no clue how AZ counties handle this for taxes, but in IL someone is paying the prop taxes, does not matter if it is the owner or the bank, it is going to happen.
This does not mean the counties can cover the expenses for education ( worst is CPS, only short $400M +, so far ), and the likes.

There is not necessarily a large deficit in tax revenues that caused the requirement for the increase, but for sure the state income tax increase did not go up at the same rate as expenses ( raises, expanding program costs, etc ).

Blago was convicted, the IL senate and house passed a law, that by IL constitution made it unconstitutional to touch the state union employee pay ( including contracted raises ), benefits and pension contribution by the employee, and they cannot touch the quality of the benefits or pension ( including the COLA increases ).
To cover this cost, other state services in IL were cut ( or canceled ), one of which was the "unneeded" items like heat assistance.

This does not exclude another external input causing the change.

EDIT : Just saw on the news, Cook County is working on a bill to increase property taxes, to fund the shortages that the prop taxes go to ( schools, streets and sanitation, teachers pension, etc ).
This would increase the rate ( again ) on a home value that is locked at the top of the market, even with todays lowered prices.
Does not matter if you bu the home for 25% of the assessed value on the tax bill, you get to pay the inflated rate.
This is crook, I mean cook county the county that Chicago is in, as well as a few western subs. Some of those cities and villages were trying to leave cook county, and start a new county. Lot of good that did.

 

Wow. That is the first time I had heard that. Talk about wasteful spending kept at the expense of the destitute.

 

Do company HQ's employ a lot of "local" workers? Maybe clerical staff, but...?

I don't know if the banks pay taxes on foreclosed property or not, but I suspect they do. I only know that when home values dropped, the corresponding tax revenues dropped too, since the tax levied was based on the assessed property value. To recoup the loss, Pima County has raised the percentage that is taxed on a home's value. I cannot speak to what other counties have done, but I suspect they had to do the same.

Here in Arizona, the Governor and Legislature seem in lock step regarding cutting of expenditures. Some are certainly appropriate, but cutting funding for education?

I'm certainly not as informed on these issues as perhaps I should be, but it does seem we are shooting ourselves in the foot to satisfy the desires of a select few.

- Jack