5 ms·

I don't know exactly how it's going to end for some of these states like California, Illinois, New York, Connecticut, and New Jersey. These places are the Venez

I don't know exactly how it's going to end for some of these states like California, Illinois, New York, Connecticut, and New Jersey. These places are the Venezuela's of the US. The amount of fiscal dysfunction is almost unfathomable, and at this point my only question is whether these places go broke in my lifetime or not. I assume they'll just get bailed out by a sympathetic federal government. It's just algebra.

Bluecobra 5y ago
Despite the lack of transparency California is projected to have a $31 billion budget surplus next year so they seem to be doing something right, at least for now.
- thehappypm 5y ago
  IMO a $31B surplus reeks of over-taxation! If I was a California resident I’d be demanding lower taxes now!
- jbkiv 5y ago
  California is not doing anything special. The tech sector provides high paying jobs fueling high housing costs in the San Francisco Bay and other places used as second homes (WFH): Wine country (Napa/Sonoma), the Coast (Santa Cruz, Stinson, Big Sur) or the Sierras (Lake Tahoe). High paying jobs + high housing prices ---> higher taxes Taxing tech corporations is more complex and most have stored IP in low tax havens. Note that this is not specific to tech, Wal Mart, Goldman Sachs and others do the same thing.
  - bink 5y ago
    OP stated: > at this point my only question is whether these places go broke in my lifetime or not I think that would be hard to do when running a $30+ billion budget surplus.
- rsj_hn 5y ago
  It's transparency that tells you whether that $31 Billion is an actual surplus, or whether there are huge off-balance sheet liabilities hiding in that state budget -- e.g. future pension obligations and the like, as well as mandated spending on other initiatives, or long term contracts signed by the state which require spending.
jdavis703 5y ago
At least in California the state isn’t allowed to borrow for operating expenses. And there are limits on capital bonds. We won’t go broke in the traditional sense. There are however unfunded pension liabilities. If that goes broke, we can hope that government workers finally get moved over to a 401(k) type system (I write this as an ex-government worker.)
throw0101a 5y ago
> I don't know exactly how it's going to end for some of these states like California, Illinois, New York, Connecticut, and New Jersey. […] I assume they'll just get bailed out by a sympathetic federal government. It's just algebra. All of the states that you list receive among the lower amounts of federal aide AFAICT: * https://www.moneygeek.com/living/states-most-reliant-federal-government/ https://www.moneygeek.com/living/states-most-reliant-federal... * https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700 https://wallethub.com/edu/states-most-least-dependent-on-the... * https://voxeu.org/article/which-50-states-practise-personal-responsibility https://voxeu.org/article/which-50-states-practise-personal-... It's the more-blue states that you seem to be criticizing that keep the rest of the more-red states afloat. Perhaps the more-red states should follow the policies of the more-blue states so they're in a 'more terrible' place and be less dependent of federal spending.
- bendbro 5y ago
  Balance of payments includes federal programs like snap, medicaid, and social security [1]. None of that has anything to do with the state's balance sheet. > It's the more-blue states that you seem to be criticizing that keep the rest of the more-red states afloat This is not true. Almost all spending is deficit, the government is not taxes in, taxes out. In fact, the surplus generated by every net-positive state is consumed many times over by a single state: Virginia [0]. Last I checked Virginia leans blue, but again, it is utterly irrelevant. [0]: https://rockinst.org/issue-areas/fiscal-analysis/balance-of-payments-portal/ https://rockinst.org/issue-areas/fiscal-analysis/balance-of-... [1]: https://thehill.com/opinion/finance/502321-no-blue-states-do-not-bailout-red-states https://thehill.com/opinion/finance/502321-no-blue-states-do...
  - throw0101a 5y ago
    From your article: > These are the exact same states with the lowest and highest balance of payment ratios, respectively. It is hypocritical to decry the tax code for taxing high-income states more than low income states while intentionally designing tax policies with that effect. The above is an example of a tax code that is progressive. Plenty of red-leaning folks, including Rand Paul or KY, want a flat tax. The very progressiveness that helps their states is what they attack: > As a lower-income state, Kentucky receives the full benefit of federal programs like Medicare, but pays relatively little in income or payroll taxes, so it gets much more than it pays in. And that is actually how the social safety net is supposed to work. We want individuals who for whatever reason are hurting financially to receive support from the more fortunate, which necessarily implies large transfers from rich states like New Jersey to lower-income states like Kentucky. > What’s not OK is when states that are huge net beneficiaries of progressive taxation and the social safety net preen and posture about self-reliance and the evils of big government. It’s even worse when they assert some kind of moral superiority over the metropolitan areas that pay their bills. * https://www.nytimes.com/2021/12/14/opinion/kentucky-tornado-federal-aid.html https://www.nytimes.com/2021/12/14/opinion/kentucky-tornado-... * https://archive.md/ExBqu https://archive.md/ExBqu The The Hill article linked to also references ALEC (American Legislative Exchange Council), which also is pushing for a non-progressive flat tax: * https://www.alec.org/model-policy/flat-tax-option-act/ https://www.alec.org/model-policy/flat-tax-option-act/ ALEC, while labeled as "non-partisan", certainly has clear leaning (as it's original under §History illustrate): > ALEC has produced model bills on a broad range of issues, such as reducing regulation and individual and corporate taxation, combating illegal immigration, loosening environmental regulations, tightening voter identification rules, weakening labor unions, and opposing gun control.[8][9][10][11] * https://en.wikipedia.org/wiki/American_Legislative_Exchange_Council https://en.wikipedia.org/wiki/American_Legislative_Exchange_...

Bluecobra 5y ago

Despite the lack of transparency California is projected to have a $31 billion budget surplus next year so they seem to be doing something right, at least for now.

thehappypm 5y ago
IMO a $31B surplus reeks of over-taxation! If I was a California resident I’d be demanding lower taxes now!
jbkiv 5y ago
California is not doing anything special. The tech sector provides high paying jobs fueling high housing costs in the San Francisco Bay and other places used as second homes (WFH): Wine country (Napa/Sonoma), the Coast (Santa Cruz, Stinson, Big Sur) or the Sierras (Lake Tahoe). High paying jobs + high housing prices ---> higher taxes Taxing tech corporations is more complex and most have stored IP in low tax havens. Note that this is not specific to tech, Wal Mart, Goldman Sachs and others do the same thing.
- bink 5y ago
  OP stated: > at this point my only question is whether these places go broke in my lifetime or not I think that would be hard to do when running a $30+ billion budget surplus.
rsj_hn 5y ago
It's transparency that tells you whether that $31 Billion is an actual surplus, or whether there are huge off-balance sheet liabilities hiding in that state budget -- e.g. future pension obligations and the like, as well as mandated spending on other initiatives, or long term contracts signed by the state which require spending.

jdavis703 5y ago

At least in California the state isn’t allowed to borrow for operating expenses. And there are limits on capital bonds. We won’t go broke in the traditional sense. There are however unfunded pension liabilities. If that goes broke, we can hope that government workers finally get moved over to a 401(k) type system (I write this as an ex-government worker.)

throw0101a 5y ago

> I don't know exactly how it's going to end for some of these states like California, Illinois, New York, Connecticut, and New Jersey. […] I assume they'll just get bailed out by a sympathetic federal government. It's just algebra. All of the states that you list receive among the lower amounts of federal aide AFAICT: * https://www.moneygeek.com/living/states-most-reliant-federal-government/ https://www.moneygeek.com/living/states-most-reliant-federal... * https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700 https://wallethub.com/edu/states-most-least-dependent-on-the... * https://voxeu.org/article/which-50-states-practise-personal-responsibility https://voxeu.org/article/which-50-states-practise-personal-... It's the more-blue states that you seem to be criticizing that keep the rest of the more-red states afloat. Perhaps the more-red states should follow the policies of the more-blue states so they're in a 'more terrible' place and be less dependent of federal spending.

bendbro 5y ago
Balance of payments includes federal programs like snap, medicaid, and social security [1]. None of that has anything to do with the state's balance sheet. > It's the more-blue states that you seem to be criticizing that keep the rest of the more-red states afloat This is not true. Almost all spending is deficit, the government is not taxes in, taxes out. In fact, the surplus generated by every net-positive state is consumed many times over by a single state: Virginia [0]. Last I checked Virginia leans blue, but again, it is utterly irrelevant. [0]: https://rockinst.org/issue-areas/fiscal-analysis/balance-of-payments-portal/ https://rockinst.org/issue-areas/fiscal-analysis/balance-of-... [1]: https://thehill.com/opinion/finance/502321-no-blue-states-do-not-bailout-red-states https://thehill.com/opinion/finance/502321-no-blue-states-do...
- throw0101a 5y ago
  From your article: > These are the exact same states with the lowest and highest balance of payment ratios, respectively. It is hypocritical to decry the tax code for taxing high-income states more than low income states while intentionally designing tax policies with that effect. The above is an example of a tax code that is progressive. Plenty of red-leaning folks, including Rand Paul or KY, want a flat tax. The very progressiveness that helps their states is what they attack: > As a lower-income state, Kentucky receives the full benefit of federal programs like Medicare, but pays relatively little in income or payroll taxes, so it gets much more than it pays in. And that is actually how the social safety net is supposed to work. We want individuals who for whatever reason are hurting financially to receive support from the more fortunate, which necessarily implies large transfers from rich states like New Jersey to lower-income states like Kentucky. > What’s not OK is when states that are huge net beneficiaries of progressive taxation and the social safety net preen and posture about self-reliance and the evils of big government. It’s even worse when they assert some kind of moral superiority over the metropolitan areas that pay their bills. * https://www.nytimes.com/2021/12/14/opinion/kentucky-tornado-federal-aid.html https://www.nytimes.com/2021/12/14/opinion/kentucky-tornado-... * https://archive.md/ExBqu https://archive.md/ExBqu The The Hill article linked to also references ALEC (American Legislative Exchange Council), which also is pushing for a non-progressive flat tax: * https://www.alec.org/model-policy/flat-tax-option-act/ https://www.alec.org/model-policy/flat-tax-option-act/ ALEC, while labeled as "non-partisan", certainly has clear leaning (as it's original under §History illustrate): > ALEC has produced model bills on a broad range of issues, such as reducing regulation and individual and corporate taxation, combating illegal immigration, loosening environmental regulations, tightening voter identification rules, weakening labor unions, and opposing gun control.[8][9][10][11] * https://en.wikipedia.org/wiki/American_Legislative_Exchange_Council https://en.wikipedia.org/wiki/American_Legislative_Exchange_...