Monday, January 1, 2018

January, 2018, Part 1, Political Class Insanity: People Just Want To Be Free and The Horrible Priorities Of California Politicians

It is the beginning of another month which means it is again time to review the latest political class insanity from Washington and around the world. Political class insanity takes many forms including the wasting of taxpayer wealth, criminal fraud within government programs, inane and stupid political quotes and actions, the inability to create and implement effective and efficient government programs, stupid and ill performing economic policies and strategies, and other forms of insanity that continue to evolve and surprise and shock us.

Let's get started:

1) We have often discussed the reality that people just want to be free.They want to be free to operate their lives in the way they want to operate their lives with minimal interference from government bureaucrats and politicians. They want to keep as much of their wages and earnings as possible in order to provide the best possible lives for their family, friends, and themselves.

And that is something that politicians never seem to understand. Taking more and more of a person’s personal wealth for them for “government programs” never ends well. Consider what is happening in the most heavily taxed states in the country and the death spiral they have created for their states and their citizens:

  • According to an article on the Daily Caller website by Will Racke on December 26, 2017, almost half a million people migrated out of just three of those most heavily taxed states, California, New York, and New Jersey, in the past year.
  • New York lost the most amount of current state residents with 190,000 residents leaving the state between July, 2016 and July, 2017 according to the Census Bureau.
  • Since 2010, New York, a heavily taxed state, lost over 1 million residents, more than any other state on both and absolute and as a share of population.
  • Now, in total the overall population was not down too much since the birth rate exceeded the death rate and there were a lot of international immigration into the state.
  • However, recently born resident obviously do not pay taxes and new international arrivals are quite possibly lower income and lower tax generators than the established residents who left the state.
  • Illinois is another heavily taxed state that has long term state employee pension issues also lost a lot of tax paying residents.
  • 115,000 Illinois residents left the state in the past year, causing it to drop to the sixth most populated state behind Pennsylvania.
  • Illinois has lost 650,000 residents since 2010, equal to the population of the 2nd through 5th largest Illinois cities (excluding Chicago).
  • The loss of taxpayers at such a great rate has caused Illinois lawmakers to raise taxes to cover the smaller tax base revenue stream which is likely to cause even more residents to leave the state, says Orphe Divounguy of the Illinois Policy Institute: “As people leave the state, they take their pocketbooks with them. That means there are fewer Illinoisans to pay the bills. It’s worrying because if you have a declining population and a declining labor force, you will for sure have a further slowdown of economic activity going into 2018.”
  • And unlike New York, Illinois could not make up the difference with births and in-migration.
  • California also experienced high levels of out migration with 138,000 residents leaving the state last year, second only to New York, which is not surprising since the state’s highest marginal tax rate is over 13%, an income tax to be paid on top of the Federal income tax.
  • Like New York, California showed a small overall increase in population to offset the 138,000 with births outnumbering deaths and a high level of international immigration. 
  • But as with New York, newborns do not pay taxes and the international input, especially in California, is likely mostly lower earning and poorer Central and South American and Mexican immigrants.
  • And with Trump’s tax reform legislation about to become law, a law that caps the amount of state and local tax deductions one can take on Federal income tax returns, the out migration from these three states is likely to increase since their higher earning residents no longer get the advantage of higher tax deductions from the states’ high income and property taxes.
Can you say death spiral? HIgher taxes causes tax paying residents to leave the state for lower tax rates which reduces the tax base which reduces tax revenue which causes politicians to raise tax rates (because they seemingly never reduce government spending or inefficiencies) which causes more residents to leave, etc. People just want to be free, a reality that politicians seldom understand.

2) Jared Sichel, writing for the Daily Wire on December 29, 2017, showed that it is not only Washington politicians that pass stupid laws, as he reviewed six inane California state laws that will take effect January 1, 2017:

  • California politicians decided that the state government will ignore existing Federal immigration laws by forbidding state law enforcement officials from asking for someone’s immigration status or holding someone for ICE immigration agents and prohibits landlords from reporting renters who are illegal immigrants. So, the safety of American citizens (e.g. Kate Steinle) and the rule of law take a backseat to illegal immigrants in the state of California.
  • As if Californias were not taxed enough, see the previous point on how high taxation is forcing residents to leave the state, as of January 1 California motor vehicle registration fees are going up between $25 and $175.
  • It will be against the law for a potential employer to ask a potential employee what their salary history was or what salary they are getting at their present job. Why the government should have any say in a private conversation between a private employer and a private citizen is a mystery to me along with what possible good could come from this invasion of privacy is also a mystery.
  • A new California law will steadily increase the state’s minimum wage level to $15 in 2022. As we have shown so many times in this blog, this forced increase in the state’s minimum wage will reduce the demand for low skilled, poorer people and/or force businesses to move out of state to avoid the higher salary costs in their business, increased costs forced upon the businesses by economically ignorant politicians.
  • In California you no longer have to go through “clinically appropriate treatment for the purpose of gender transition.” In other words, anyone at any time can change their gender destination on their birth certificate of any state id documents. Which raises the question: the homeless rate in California is skyrocketing, the state’s infrastructure is falling apart, the state’s financial health is dire straits, the state’s public schools generally stink and the state politicians are worried about trivial gender change issues.
  • Local schools can no longer be allowed to whether or not they want their schools to be designated “gun free zones.” Which means that all schools will no longer be able to protect their students and staffs they way they want to protect them.
Again, so many pressing issues facing California residents, issues that dwarf any potential upside from these trivial and petty laws from the state’s politicians.

So let’s review what we learned today: people want to be free and are willing to physically move to a place that makes them freer and California politicians have what has to be the most inane priorities relative to what is really broken in their state. More insanity to follow.

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