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The WSJ looks at the contrasting approaches of Virginia and Maryland to tax and spending. The...
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Sunday, August 26, 2012, 6:15 AM ETThe WSJ looks at the contrasting approaches of Virginia and Maryland to tax and spending. The latter's governor, Martin O'Malley, touts his "investment" for its results in education, except that Maryland is losing jobs and rich residents, and often runs out of money. Virginia's unemployment is lower and Governor Bob McDonnell has turned a $6B deficit into a $1B surplus.
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New research by Alberto Alesina, Carlo Favero, and Francesco Giavazzi suggests an answer:
This paper studies whether fiscal corrections cause large output losses. We find that it matters crucially how the fiscal correction occurs. Adjustments based upon spending cuts are much less costly in terms of output losses than tax-based ones. Spending-based adjustments have been associated with mild and short-lived recessions, in many cases with no recession at all. Tax-based adjustments have been associated with prolonged and deep recessions.
http://fxn.ws/U3VOLI
The rich move, the poor get additional handouts and the middle class working stiff gets screwed paying the bill.
Just don't try explaining it a liberal.
Clearly you've never asked friends of or contributors to "tax and spend" politicians. They can regale you w/ such stories I'm sure.
From the State Budget for FY 13:
"The Virginia Department of Transportation's (VDOT) annual budget for Fiscal Year 2013 is $4.19 billion, representing a 12 percent decrease (emphasis added) from the previous year. The decrease is largely driven by the GARVEE bonds programmed in Fiscal Year 2012. Â - VDOT
They cut spending for transportation and issue bonds to replenish this cuts, Virginia total government debt is still increasing. Putting an end to the unicorns and fairy surplus meme.....
GARVEE bonds are backed by the promise of a future FEDERAL FUNDING stream.....
Hmmm....FEDERAL FUNDING, but I thought republicans were against bigger government, why do they cut state funds so they can fund this cuts with Federal subsidies??Â
Sort like hypocrisy.....
#1 in cost of living in continental US
#1 in overall tax burden
Ranks about #45 in most business friendly states.
In defense of California:
a) CA gets $0.78 from the federal government for every dollar it gets taxed. California has around $313 billion in gross federal tax.
b) The GDP of CA ($2 trillion) places it somewhere around the eighth largest in the world ranked with Italy and India.
c) The GDP of VA is around $435 billion. Which places it somewhere around Taiwan, Argentina and Austria. This GDP number of course is grossly inflated by the states largest industry, paper pushing, centered around Northern Virgina.
d) From the list of the world top 400 universities as ranked by USNews UVA is #126. VPI is #326. (By the way Hopkins and College Park are ranked above UVA)
e) From the same list as d) California has:
#11 Stanfurd
#12 CalTech
#21 University of California - Berkeley
#34 University of California - Los Angeles
#77 University of California - SanDiego
#101 University of California - Davis
#106 University of Southern California
#118 University of California - Santa Barbara
#148 University of California - Irvine
#287 University of California - Santa Cruz
#325 University of California - Riverside
Honorable mention: Harvey Mudd, one of the great engineering schools.
Not to mention all the Nobel prize winners.
Logical deductions based on the above data on CA vs VA:
a) VA is a red state federal welfare client whose primary industry is paper shuffling.
b) In the big world, VA would be a 2nd or 3rd tier country whose primary exports would be agricultural products. A place on the same level roughly as Argentina because even Taiwan and Austria have a larger technology and manufacturing base.
Frankly both MD and CA have larger a larger technology base than VA.
Cali does have some great assets, but is doing much, much worse than it could be. Doing more of that stuff that drags you down, doesn't lift you up.
Maybe numbers aren't your strong point, so lets spell it out with the data that we have:
a) 22% of $313 billion is $68 billion. If California didn't have to subsidize all those red state slackers there wouldn't be any budget issues anywhere in CA.
b) 50% of $62 billion (VA federal taxes) is $31 billion
So when you are running a surplus in connection with federal tax dollars, how hard is it for a small state to run a budget surplus?
Finally, yes CA is a high tax state, in return you have a world class technology power. Listing the universities is just a metric to show this.
VA has low taxes by the benefit of all the federal tax dollars flowing into a low cost of living state.
So California is competing in the world economy and making/designing stuff while VA is a sleepy, rural, low cost of life place for retirees which receives basically a federal subsidy.
If you can't decipher that, I'll make it easier....spending is the problem. Just like in DC. Cali is on that same sinking boat. Instead of bailing out the taxpayers by cutting spending, they're bailing in more debt.
a) In 2005 (the latest data) California received back $0.78 dollars for every $1 they paid in taxes.
b) In 2005 California had a population of 35.83 million.
c) In 2007 California paid $313 billion in federal taxes. So for the sake of the argument let's derate this number by 10% to get a 2005 data point of $282 billion.
So in 2005 Californians donated to the red states 22% x $282 billion/(35.83 million) per person. Or $1731 per person.
Looking at your same chart, CA in 2005-2006 spent $119.6 billion which turns out be $3338 per person.
So in 2005, on average Californians spent $3338 per person but they also donated to the red states $1751 per person.
So there it is in hard numbers. It is a highly ironical result given that conservatives while protesting against federal government largesse are a primary beneficiary of same.
So for Californians it looks like the issue appears to be less their government but more centered on red state fiscal responsibility.
To tie this back to VA. In 2005 VA received about $25 billion more from the federal government that it paid out in taxes. Well, part of that $25 billion came from the $62 billion donation that California made to the Federal Government.
You'll pardon me if I don't find the thesis of this WSJ note credible in any regard.
Virginia is far from the poster child for less government spending - it just isn't state government spending.
Fewer of those subsidy dollars leaving your blue states.
These people earned their money and perform government services which the nation values. Without the money from these jobs the economy of Virginia would tank.
On a WAG, bet there is more money spent that way than on welfare by a long shot.
Welcome to Virginia!
Maybe then we'll get less government!
Soldiers, sailors and airmen are government employees. Double their taxes as well? How 'bout taxing their pensions and removing their PX priveleges after they retire?
Lets not start with the military as Buddy points out but with the Federal police force. Where in the h*ll have all these cops come from? You look at a shooting and there has to be a hundred Federal agents in their blue coats, etc.
Lets cull back the so-called "Patriot Act", which allows the overwhelming number of police in this country. These guys are retiring on $100k to $200k per year!
How about the TSA? I came through EWR last week and there must have been 50 blue shirted agents just standing around. Lets cut back these Federal employees.
At first thought I agreed with you. But the more I think about it why not?
When I was growing up (I realize it was a different world then), many people worked in government for a period of time and then worked in the private sector. Public servants were truly that. Most men entered the military for a period of time and then went about their lives (some stayed and served 20 or 25 years).
Basically - public service WAS service.
Why shouldn't it be that way again? When was the last time you met someone that worked for the federal government for 4 years and left to start a business?
Government has become far too big - the bureaucracy overwhelming - and its consuming way to much of our country's resources.
So maybe I vote that military men and women fall in the 50% more taxes group. (and you can bet your bottom dollar the TSA union will be crying foul claiming they are protecting the country too and they want to be moved from 100% to 50%.... exactly illustrating the entire problem).
China's doing better? As a Communist dictatorship, I would assume that a large percentage of their educational spending is devoted to spreading Government-sponsored social propaganda as well, so how come their kids are doing so well? India's not Communist, but Socialist to the core, so I presume they're doing the same thing to their kids as well - yet without China and India, corporate America wouldn't have anyone to give an H-1b visa to and would have to hire engineers locally! Heaven forfend! So merely the spreading of Government-sponsored social propaganda can't be the whole story.