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One other consequence of this is that a cleaning lady in San Francisco may make $70K per year and be near the poverty line, yet be in the same tax bracket as a

One other consequence of this is that a cleaning lady in San Francisco may make $70K per year and be near the poverty line, yet be in the same tax bracket as a professional living in Nebraska who is living well above the poverty line. It would be interesting to see an illustration of how regressive Federal tax brackets are when you consider the state-by-state cost of living differences. Some of the most populous states have the highest cost of living.

DougN7 10y ago
My first thought was "why doesn't the cleaning lady move?" And that lead to a thought experiment: what if everyone moved to Nebraska for a more comfortable life. Prices would go up. The people would experience a Nebraska winter and be willing to have less 'real' money and move back to California. And that's right where we are in the real world. You can't balance just part of life (taxes) when there are other imbalances (benefits of place) that can't be balanced. If costs/life style were comparable in cost between CA and NE, there would be a massive influx into CA. Economics is awesome - it explains so much!
- pmiller2 10y ago
  The other side to that is the cleaning lady barely makes enough to survive in SF, much less fund a cross-country move.
  - duaneb 10y ago
    ...much less start a business on the other side.
    - thesimpsons1022 10y ago
      ...much less abandon her family and friends
- netghost 10y ago
  If you're curious, "Nickel and Dimed" is a great book that explores some of this.
- henrikschroder 10y ago
  Because she can make $70k as a cleaning lady by living in a city where a lot of households make $500k+ and can afford to pay more than the average for cleaning services. I suspect cleaning ladies in Nebraska don't make $70k...
  - dkersten 10y ago
    But isn't that the whole point of this discussion? That the money made in Nebraska, while less in absolute terms, still buys more due to lower cost of living and/or taxes?
    - seanmcdirmid 10y ago
      If your only higher costs are housing and maybe a bit more expensive food, you'll still come out way ahead since everything else stays the same in price. You might have to live in a closest, but you'll have way more money for retirement, or to send back home (as cleaning ladies are often immigrants).
      - spraak 10y ago
        > as cleaning ladies are often immigrants Do you have receipts for this claim?
        seanmcdirmid 10y ago
        You mean citations? When I worked in the states, many of the cleaning staff were immigrants. It's not a bad job for them, the pay is good (relatively speaking, vs. training needed), it doesn't require much language skills. Of course, it really depends where you are, but we were talking about SF, I think.
  - koolba 10y ago
    > Because she can make $70k as a cleaning lady by living in a city where a lot of households make $500k+ and can afford to pay more than the average for cleaning services. I suspect cleaning ladies in Nebraska don't make $70k... I suspect the vast majority of cleaning ladies in SF don't make $70k either.
- kristopolous 10y ago
  That's an example of rational choice theory btw.
- morgante 10y ago
  The benefits of California are vastly overstated. Almost nothing about the climate (I like winter) or culture appeals to me, yet I'm pulled towards there to succeed in a tech career. This is simply network effects in action, except that unfortunately this network has been built in one of the locales in the US with some of the most aggressively anti-growth policies possible. Things would be much better if tech was centered around somewhere like Chicago or even New York.
  - chaostheory 10y ago
    There are other large metros that support a lot of tech companies outside of California.
    - jonlarson 10y ago
      But few of them have such a high concentration of true tech companies where the tech is the product and not a cost center.
      - chaostheory 10y ago
        There are at least 2-3 other metros that meet this criteria and the cost of living is cheaper than the SF Bay Area (or LA)
        muzz 10y ago
        Are you referring to Seattle and NYC? They are cheaper but not by much.
        chaostheory 10y ago
        There's also Austin. Portland is up and coming.
  - jasonkester 10y ago
    Thought experiment: Would developer salaries in general be as high as they are today if we hadn't happened to choose an area with such high cost of living area as our nexus, with the consequential requirement to pay so much to attract talent? That is, would a guy like me (or you) be able to pull in multi-six-figures a year to telecommute to the Bay Area from out in the sticks if there weren't so many poor souls physically there keeping rates up for the rest of us? What would things look like if the tech hub were in Ft. Worth TX instead (or Scott's Bluff, Nebraska), with hundreds of miles of flat empty cheap land in all directions to keep housing prices down near zero.
- murbard2 10y ago
  Income can also be chosen to a large extent. You can work more, work less, do a harder job, do an easier job. Basing taxes on income suffers from the problem you describe. A flat annual fee, as suggested by Proudhon, would be much more fair. I do not mean a "flat tax", which actually scales linearly with income, but a flat dollar amount. The federal government could replace all of its taxes, all of them (income, corporate, capital gain, etc) with a simple $500 a month per person payment. This would also make a lot of people reconsider their voting priorities. Let's see how likely they'd be to support trillion dollar wars.
  - conanbatt 10y ago
    Subscription Taxes! Interesting idea and had never heard something like that.
    - dredmorbius 10y ago
      ???
  - jfoutz 10y ago
    maybe i dropped a zero or something, but i think you're needing about double that to cover the $4T. $4T/350M workers /12 months =~ $1000, per person. if you just count 160M workers, it's more like $2000
    - vacri 10y ago
      That's only 125% of a full-time $10/hour min-wage-ish job!
    - murbard2 10y ago
      You're right, I used $2T for the federal budget incorrectly, it's $4T
  - evjim 10y ago
    $500 per month sounds like the ultimate wage slavery. I prefer being exceptionally underemployed. Reducing almost all my expenses. Forced income tax seems immoral.
- mobilefriendly 10y ago
  Actually the cleaning lady is comparing California with Central America-- international immigration is why CA's population continues to grow. U.S. citizens have been fleeing California by the millions for the last two decades. https://www.manhattan-institute.org/html/great-california-exodus-closer-look-5853.html https://www.manhattan-institute.org/html/great-california-ex...
- dalore 10y ago
  In America your job is tied to your medical benefits. Lots of people would like to just move but can't because their job provides medical insurance. And they might have a preexisting condition preventing them from getting medical insurance elsewhere easily. So this economics that balances out the part of life you mention, is reduced since people are less mobile due to medical insurance. If medical insurance was provided by the state (like in most other countries), you would see more people moving where it would be more efficient for them (and the economy) to work.
  - matthewmacleod 10y ago
    I'm not so familiar with the US healthcare system, but I was under the impression that the ACA meant that pre-existing conditions were much less of an issue? In any case, I'm not sure the conclusion follows. We see exactly the same pattern in the UK, where healthcare is almost entirely public. What the calculation fails to take into account, IMO, are other factors – someone who has lived in a location for a long time may be skeptical of moving, simply because they have roots (homes, friends, family, social groups etc.) and disrupting that is hard.
    - dalore 10y ago
      Yes disrupting social inertia is hard. But it's compounded in the states with medical insurance tied to their job. It's yet one more thing preventing people from moving, even if they want to. Not only that, if you move in the states you will want a job already lined up. If you build up a bunch of savings and then move to find a new job you won't be covered and so it's more of a risk.
      - vonmoltke 10y ago
        I can tell you that medical insurance is about #5 on my list of reasons I am not moving without a job lined up. I think you are overstating the importance of medical coverage and understating the other factors that come with an out-of-area move.
        10y ago
- deleted 10y ago
  [deleted]
- Amezarak 10y ago
  Just idle curiosity, but why did you choose Nebraska? The top five states in which a hundred goes farthest, are, according to the article, Mississippi, Arkansas, Alabama, South Dakota, and West Virginia. It doesn't really change your point (I don't suppose Californians would enjoy our summers any more than they would enjoy Nebraskan winters), but I wondered. The absence of a table makes it hard to tell what the absolute order is, but Missouri, Iowa, Oklahoma, South Carolina, and Ohio also come out ahead of Nebraska, putting it at least at 11th.
- galdosdi 10y ago
  There's also probably a lot fewer jobs for cleaning ladies (or any job) in Nebraska. Unless you're independently wealthy you don't get to choose a place; you just get to choose a (place, job) tuple. Yes, this is still an example of economics explaining stuff.
gumby 10y ago
> One other consequence of this is that a cleaning lady in San Francisco may make $70K per year and be near the poverty line, yet be in the same tax bracket as a professional living in Nebraska who is living well above the poverty line. That's true, but market forces modulate this, in particular because the barriers to entry are low. So a Nebraskan cleaning lady probably doesn't make 70K (lower demand and probably plenty of supply) while my cleaning lady lives in a nice neighborhood (college terrace) in Palo Alto (she rents, but owns two other houses in the bay area), has put three kids through the Palo Alto schools, and has a good health plan. So for her taxes she's getting a lot. My gardner lives in RWC -- I ran into him once at the OSH and discovered he lives around the corner also in a nice neighborhood. If their income didn't allow them to live in the area the income would have to rise, else the supply would dry up.
- cookiecaper 10y ago
  What's a "cleaning lady" or a "gardner" in this context? Someone who runs a cleaning or landscaping business and maintains private homes may be quite well off, but someone who is a hotel maid or a janitor probably isn't. There's a large camp that claims dedicated performance of simple tasks, like cleaning, is no longer sufficient to make a decent living in post-industrial America, so anecdotal counterpoints to that are of interest.
  - Steeeve 10y ago
    The lady who cleans the offices at my work drives a nicer car than I do (software engineer). Dedicated worker, always friendly. This is in Palo Alto. I've been astounded at the cost of certain things in the area. I regularly see people looking for child-care at $35+/hour, whereas it paid $20-25 at the very high end for multiple children and a highly qualified person in my area in southern california. Getting a good plumber or handyman to come by for less than a small fortune is seemingly impossible unless it's a personal referral. I think that if your home base is taken care of (i.e. you have owned for a while or managed to rent from someone who doesn't raise the rent by 10% every year) it's possible to get by with dual non-degreed employment. Getting ahead on the other hand - saving up for a home and padding other savings AND paying escalating rent at the same time while not living frugally with extreme measures is very tough for people in the highest paying job sectors.
fauigerzigerk 10y ago
Not to take away from your very valid point, but here's a dose of reality when it comes to the actual numbers. The average wage of a cleaning lady in California is $26,680 for full time work. It's $36,790 in San Francisco. http://www.bls.gov/oes/current/oes372012.htm http://www.bls.gov/oes/current/oes372012.htm The average wage in California for all occupations is $55,260. The median is significantly lower. http://www.bls.gov/oes/current/oes_ca.htm http://www.bls.gov/oes/current/oes_ca.htm
- yummyfajitas 10y ago
  Most likely the cleaning lady has economic income a lot higher than that, it's just that much of the income is non-taxable and not tracked by anything other than consumption statistics (sometimes). For example, to live in SF on $37k, she's probably in some rent controlled flat or public housing. So she may be paying $800/month for a $3000 flat which means she's getting subsidies worth 12 x $2200 = $26,400. Accounting for this her income is $63,190, and this is at a much lower tax bracket than a person earning $63,190 in market income.
  - mechagodzilla 10y ago
    She might also just be, you know, poor. She might live far away and spend a lot of time on a bus, sharing a studio apt with other family members that also work low wage jobs.
    - yummyfajitas 10y ago
      That's also possible, but in that case she isn't paying an SF cost of living. Also, either $37k or $63k isn't poor. Lets remember that French GDP/capita is only $42k/year; is half of France and more than half of Spain (plus nearly all of Bulgaria) "poor"?
      - talmand 10y ago
        Depends on cost of living.
branchless 10y ago
Scrap income tax. Start land value tax.
- matwood 10y ago
  Start? I already pay yearly property tax on my real estate and vehicles.
  - ashark 10y ago
    Land value tax is a similar-ish but different, specific thing. https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax It's a tax on land itself not including improvements that's designed to tax landowners based on the value that being located where it is in the community and in relation to shared resources adds to the property. The idea is that this is relatively fair compared to other tax schemes in that it (ideally) maps closely to the value the landowners are deriving from the taxes they're paying, and encourages high levels of development on land with good infrastructure and in good locations. It's also easier to collect than many other forms of taxation, which is nice. As covered in the Wikipedia article, the main problem with it is accurately assessing the value of the land. Which is kind of a big deal, obviously.
    - matwood 10y ago
      So it would be a double tax since the current property tax already accounts for value of location. The appraised value used is not just the improvements but the overall value which would include things like location.
      - ashark 10y ago
        How does taxing one fewer aspects of something make it a "double tax"? It's not a "half-tax" either, but at least that would make more sense, unless I'm missing something.
  - branchless 10y ago
    Land value tax would replace income tax. Do you want to pay more when you add more value or more when you try to take value from others?

DougN7 10y ago

My first thought was "why doesn't the cleaning lady move?" And that lead to a thought experiment: what if everyone moved to Nebraska for a more comfortable life. Prices would go up. The people would experience a Nebraska winter and be willing to have less 'real' money and move back to California. And that's right where we are in the real world. You can't balance just part of life (taxes) when there are other imbalances (benefits of place) that can't be balanced. If costs/life style were comparable in cost between CA and NE, there would be a massive influx into CA. Economics is awesome - it explains so much!

pmiller2 10y ago
The other side to that is the cleaning lady barely makes enough to survive in SF, much less fund a cross-country move.
- duaneb 10y ago
  ...much less start a business on the other side.
  - thesimpsons1022 10y ago
    ...much less abandon her family and friends
netghost 10y ago
If you're curious, "Nickel and Dimed" is a great book that explores some of this.
henrikschroder 10y ago
Because she can make $70k as a cleaning lady by living in a city where a lot of households make $500k+ and can afford to pay more than the average for cleaning services. I suspect cleaning ladies in Nebraska don't make $70k...
- dkersten 10y ago
  But isn't that the whole point of this discussion? That the money made in Nebraska, while less in absolute terms, still buys more due to lower cost of living and/or taxes?
  - seanmcdirmid 10y ago
    If your only higher costs are housing and maybe a bit more expensive food, you'll still come out way ahead since everything else stays the same in price. You might have to live in a closest, but you'll have way more money for retirement, or to send back home (as cleaning ladies are often immigrants).
    - spraak 10y ago
      > as cleaning ladies are often immigrants Do you have receipts for this claim?
      - seanmcdirmid 10y ago
        You mean citations? When I worked in the states, many of the cleaning staff were immigrants. It's not a bad job for them, the pay is good (relatively speaking, vs. training needed), it doesn't require much language skills. Of course, it really depends where you are, but we were talking about SF, I think.
- koolba 10y ago
  > Because she can make $70k as a cleaning lady by living in a city where a lot of households make $500k+ and can afford to pay more than the average for cleaning services. I suspect cleaning ladies in Nebraska don't make $70k... I suspect the vast majority of cleaning ladies in SF don't make $70k either.
kristopolous 10y ago
That's an example of rational choice theory btw.
morgante 10y ago
The benefits of California are vastly overstated. Almost nothing about the climate (I like winter) or culture appeals to me, yet I'm pulled towards there to succeed in a tech career. This is simply network effects in action, except that unfortunately this network has been built in one of the locales in the US with some of the most aggressively anti-growth policies possible. Things would be much better if tech was centered around somewhere like Chicago or even New York.
- chaostheory 10y ago
  There are other large metros that support a lot of tech companies outside of California.
  - jonlarson 10y ago
    But few of them have such a high concentration of true tech companies where the tech is the product and not a cost center.
    - chaostheory 10y ago
      There are at least 2-3 other metros that meet this criteria and the cost of living is cheaper than the SF Bay Area (or LA)
      - muzz 10y ago
        Are you referring to Seattle and NYC? They are cheaper but not by much.
        chaostheory 10y ago
        There's also Austin. Portland is up and coming.
- jasonkester 10y ago
  Thought experiment: Would developer salaries in general be as high as they are today if we hadn't happened to choose an area with such high cost of living area as our nexus, with the consequential requirement to pay so much to attract talent? That is, would a guy like me (or you) be able to pull in multi-six-figures a year to telecommute to the Bay Area from out in the sticks if there weren't so many poor souls physically there keeping rates up for the rest of us? What would things look like if the tech hub were in Ft. Worth TX instead (or Scott's Bluff, Nebraska), with hundreds of miles of flat empty cheap land in all directions to keep housing prices down near zero.
murbard2 10y ago
Income can also be chosen to a large extent. You can work more, work less, do a harder job, do an easier job. Basing taxes on income suffers from the problem you describe. A flat annual fee, as suggested by Proudhon, would be much more fair. I do not mean a "flat tax", which actually scales linearly with income, but a flat dollar amount. The federal government could replace all of its taxes, all of them (income, corporate, capital gain, etc) with a simple $500 a month per person payment. This would also make a lot of people reconsider their voting priorities. Let's see how likely they'd be to support trillion dollar wars.
- conanbatt 10y ago
  Subscription Taxes! Interesting idea and had never heard something like that.
  - dredmorbius 10y ago
    ???
- jfoutz 10y ago
  maybe i dropped a zero or something, but i think you're needing about double that to cover the $4T. $4T/350M workers /12 months =~ $1000, per person. if you just count 160M workers, it's more like $2000
  - vacri 10y ago
    That's only 125% of a full-time $10/hour min-wage-ish job!
  - murbard2 10y ago
    You're right, I used $2T for the federal budget incorrectly, it's $4T
- evjim 10y ago
  $500 per month sounds like the ultimate wage slavery. I prefer being exceptionally underemployed. Reducing almost all my expenses. Forced income tax seems immoral.
mobilefriendly 10y ago
Actually the cleaning lady is comparing California with Central America-- international immigration is why CA's population continues to grow. U.S. citizens have been fleeing California by the millions for the last two decades. https://www.manhattan-institute.org/html/great-california-exodus-closer-look-5853.html https://www.manhattan-institute.org/html/great-california-ex...
dalore 10y ago
In America your job is tied to your medical benefits. Lots of people would like to just move but can't because their job provides medical insurance. And they might have a preexisting condition preventing them from getting medical insurance elsewhere easily. So this economics that balances out the part of life you mention, is reduced since people are less mobile due to medical insurance. If medical insurance was provided by the state (like in most other countries), you would see more people moving where it would be more efficient for them (and the economy) to work.
- matthewmacleod 10y ago
  I'm not so familiar with the US healthcare system, but I was under the impression that the ACA meant that pre-existing conditions were much less of an issue? In any case, I'm not sure the conclusion follows. We see exactly the same pattern in the UK, where healthcare is almost entirely public. What the calculation fails to take into account, IMO, are other factors – someone who has lived in a location for a long time may be skeptical of moving, simply because they have roots (homes, friends, family, social groups etc.) and disrupting that is hard.
  - dalore 10y ago
    Yes disrupting social inertia is hard. But it's compounded in the states with medical insurance tied to their job. It's yet one more thing preventing people from moving, even if they want to. Not only that, if you move in the states you will want a job already lined up. If you build up a bunch of savings and then move to find a new job you won't be covered and so it's more of a risk.
    - vonmoltke 10y ago
      I can tell you that medical insurance is about #5 on my list of reasons I am not moving without a job lined up. I think you are overstating the importance of medical coverage and understating the other factors that come with an out-of-area move.
      - 10y ago
deleted 10y ago
[deleted]
Amezarak 10y ago
Just idle curiosity, but why did you choose Nebraska? The top five states in which a hundred goes farthest, are, according to the article, Mississippi, Arkansas, Alabama, South Dakota, and West Virginia. It doesn't really change your point (I don't suppose Californians would enjoy our summers any more than they would enjoy Nebraskan winters), but I wondered. The absence of a table makes it hard to tell what the absolute order is, but Missouri, Iowa, Oklahoma, South Carolina, and Ohio also come out ahead of Nebraska, putting it at least at 11th.
galdosdi 10y ago
There's also probably a lot fewer jobs for cleaning ladies (or any job) in Nebraska. Unless you're independently wealthy you don't get to choose a place; you just get to choose a (place, job) tuple. Yes, this is still an example of economics explaining stuff.

gumby 10y ago

> One other consequence of this is that a cleaning lady in San Francisco may make $70K per year and be near the poverty line, yet be in the same tax bracket as a professional living in Nebraska who is living well above the poverty line. That's true, but market forces modulate this, in particular because the barriers to entry are low. So a Nebraskan cleaning lady probably doesn't make 70K (lower demand and probably plenty of supply) while my cleaning lady lives in a nice neighborhood (college terrace) in Palo Alto (she rents, but owns two other houses in the bay area), has put three kids through the Palo Alto schools, and has a good health plan. So for her taxes she's getting a lot. My gardner lives in RWC -- I ran into him once at the OSH and discovered he lives around the corner also in a nice neighborhood. If their income didn't allow them to live in the area the income would have to rise, else the supply would dry up.

cookiecaper 10y ago
What's a "cleaning lady" or a "gardner" in this context? Someone who runs a cleaning or landscaping business and maintains private homes may be quite well off, but someone who is a hotel maid or a janitor probably isn't. There's a large camp that claims dedicated performance of simple tasks, like cleaning, is no longer sufficient to make a decent living in post-industrial America, so anecdotal counterpoints to that are of interest.
- Steeeve 10y ago
  The lady who cleans the offices at my work drives a nicer car than I do (software engineer). Dedicated worker, always friendly. This is in Palo Alto. I've been astounded at the cost of certain things in the area. I regularly see people looking for child-care at $35+/hour, whereas it paid $20-25 at the very high end for multiple children and a highly qualified person in my area in southern california. Getting a good plumber or handyman to come by for less than a small fortune is seemingly impossible unless it's a personal referral. I think that if your home base is taken care of (i.e. you have owned for a while or managed to rent from someone who doesn't raise the rent by 10% every year) it's possible to get by with dual non-degreed employment. Getting ahead on the other hand - saving up for a home and padding other savings AND paying escalating rent at the same time while not living frugally with extreme measures is very tough for people in the highest paying job sectors.

fauigerzigerk 10y ago

Not to take away from your very valid point, but here's a dose of reality when it comes to the actual numbers. The average wage of a cleaning lady in California is $26,680 for full time work. It's $36,790 in San Francisco. http://www.bls.gov/oes/current/oes372012.htm http://www.bls.gov/oes/current/oes372012.htm The average wage in California for all occupations is $55,260. The median is significantly lower. http://www.bls.gov/oes/current/oes_ca.htm http://www.bls.gov/oes/current/oes_ca.htm

yummyfajitas 10y ago
Most likely the cleaning lady has economic income a lot higher than that, it's just that much of the income is non-taxable and not tracked by anything other than consumption statistics (sometimes). For example, to live in SF on $37k, she's probably in some rent controlled flat or public housing. So she may be paying $800/month for a $3000 flat which means she's getting subsidies worth 12 x $2200 = $26,400. Accounting for this her income is $63,190, and this is at a much lower tax bracket than a person earning $63,190 in market income.
- mechagodzilla 10y ago
  She might also just be, you know, poor. She might live far away and spend a lot of time on a bus, sharing a studio apt with other family members that also work low wage jobs.
  - yummyfajitas 10y ago
    That's also possible, but in that case she isn't paying an SF cost of living. Also, either $37k or $63k isn't poor. Lets remember that French GDP/capita is only $42k/year; is half of France and more than half of Spain (plus nearly all of Bulgaria) "poor"?
    - talmand 10y ago
      Depends on cost of living.

branchless 10y ago

Scrap income tax. Start land value tax.

matwood 10y ago
Start? I already pay yearly property tax on my real estate and vehicles.
- ashark 10y ago
  Land value tax is a similar-ish but different, specific thing. https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax It's a tax on land itself not including improvements that's designed to tax landowners based on the value that being located where it is in the community and in relation to shared resources adds to the property. The idea is that this is relatively fair compared to other tax schemes in that it (ideally) maps closely to the value the landowners are deriving from the taxes they're paying, and encourages high levels of development on land with good infrastructure and in good locations. It's also easier to collect than many other forms of taxation, which is nice. As covered in the Wikipedia article, the main problem with it is accurately assessing the value of the land. Which is kind of a big deal, obviously.
  - matwood 10y ago
    So it would be a double tax since the current property tax already accounts for value of location. The appraised value used is not just the improvements but the overall value which would include things like location.
    - ashark 10y ago
      How does taxing one fewer aspects of something make it a "double tax"? It's not a "half-tax" either, but at least that would make more sense, unless I'm missing something.
- branchless 10y ago
  Land value tax would replace income tax. Do you want to pay more when you add more value or more when you try to take value from others?