On a periodic basis we do some posts that fall under the theme of “by the numbers.” Rather than trust what the American political tells us about reality, we like to examine the real numbers and the real reality in the world to understand what is actually going on. Relying on politicians, and their cohorts in the media, to tell us what is reality is always a sucker bet. They have their own agendas and goals, usually centering around their needs and self-enrichment. So we need to look at the reality of the numbers to determine what is really going on.
Previous analyses of “by the numbers” can be accessed by entering the phrase in the search box above. This is the third and final post this month where we look at the numbers to truly find out how good, not likely, or bad, most likely, the American political class is doing in managing our tax dollars, protecting our freedoms, and resolving major issues that affect all of us.
1)We have often discussed the financial race to bankruptcy that many American cities and states seem to be in. Their governments and politicians continue to increasingly waste and spend taxpayer money, which requires more and more taxation which also reduces government services which causes more and more businesses and residents to move out which reduces the tax base and the financial death spiral is underway.
Our top candidates for this financial death have stayed pretty constant over the past few years. Our candidate cities include Chicago, New York City, San Francisco, Los Angeles, and dark horses Portland and Seattle. Our top state candidates include Illinois, New York, New Jersey, and California.
And recent data confirms that California, New York, and Illinois are still the front runners to go bankrupt. Their states are being drained of residents and businesses which results in lower and lower tax revenue. Rather than reduce government spending, these states’ politicians instead raise taxes which causes more out migration further reducing the tax base and thus, the dreaded financial death spiral:
IRS data shows that 105,000 taxpaying residents left Illinois in 2021 and they took with them $10.9 billion of AGI, with AGI being how much taxable revenue left the state.
That is on top of the $8.5 billion that left the state in 2020 and the $8 billion that left the state in 2019.
New York state lost even more, $24.5 billion in 2021, up from $19.5 billion in 2020 and $9 billion in 2019.
It gets worse for California, $29.1 in 2021, three times what it lost in 2019.
These are some of the higher taxation states in the country.
And these tens of billions of dollars of income are ending up in the lower taxation states in the country with Florida gaining a whopping $80 billion or so of AGI in the past three years with a lot of that additional income coming from New York, Illinois, New Jersey and California.
Texas, another low taxation state, also showed AGI gains of over $20 billion over the past three years with newly arrived, former California residents representing over half of the $20 billion.
And these numbers should not be a surprise since Florida’s net population grew 256,000 in 2020 and Texas had a net population gain of 175,000 people while California lost 332,000 residents in 2020, by far the biggest net population loss of any state.
The dilenma that states like Illinois face is that there are more people leaving their states than coming in and even more troublesome is that the folks leaving those states are higher earners on average than those coming into the state.
Those residents leaving Illinois on average had annual earnings of $118,000 while those moving into the state had average earnings of only $74,000.
Thus, a state like Illinois gets a double hit: fewer taxpayers and a taxpayer base that earns less money on average and thus, pays less taxes.
You get the idea: as state and city politicians spend more and more taxpayer money, they continue to raise taxpayers’ tax burden. At some point the increased tax burden becomes too much and those that are more able to leave the state, i.e. the wealthier, move out for states that allow them to keep more of their wealth. In the face of less taxpayers with less taxable wages, the state tax revenue stream is reduced.
Rather than reducing state government spending to match the reduced tax revenue, state politicians like those in Illinois, New York, and elsewhere raise tax rates. These increased tax rates drive more people out of the state, reducing the tax revenue stream and the financial death spiral is underway.
And despite losing residents and taxable income for years, these politicians in those states still do not get it: people want to be free and that involves keeping as much of their hard earned wealth as possible. Without change, Illinois, California, New York and New Jersey will go bankrupt and that bankruptcy will occur in the not too distant future.
2)According to a recent Forbes magazine article, several of the above states sit at the top of the list when it comes to net moves in and out of their states according moving company data:
In the latest annual moving company information, of all the moves involving the state of New York, out of state moves were 60.6% of all moves while moves into the state were only 39.4%, i.e. for every six moves out of the state only four moves were offsetting that out migration.
For New Jersey, 62.9% of all moves were out of the state and only 37.1% moves were into the state.
And for Illinois, 63.4% of all moves were out of state while only 36.6% of all moves were into the state.
A state government cannot stay financially viable if it continues to steadily lose more and more residents than it gains unless it drastically reduces government spending. Since we have seen no indication that this will happen even in these distressed states, we continue to be confident in our forecast that Illinois, New York,New jersey and California will continue to be the leaders when it comes to declaring bankruptcy.
3)Despite facing the increasing chance of going bankrupt, the state of California continues to toy with the ridiculous concept of “slavery reparations.” The basic concept is that descendants of slaves should be paid for being related to people that were slaves over 170 years ago.
These folks today were not slaves, they never picked cotton and never lived on a southern plantation. And yet, liberals in the state think these folks deserve to be paid simply because of a long ago ancestor.
And the amounts of money that supporters want to give to these state slave descentants is not insignificant. The overall cost is estimated to be a whopping $800,000,000,000. Think about how large this number is, especially in a state that is losing its residents, business, and tax base at an alarming rate and as we have reported previously, has almost a trillion dollars in unfunded future financial liabilities:
There are over 39 million residents in the state which means that every resident would have to pay over $20,000 out of their own pocket to cover this $800 billion reparation number, i.e. a family of four would pay $80,000.
Since the current state government budget is just under $300 billion, this means that the state would need almost three years of devoting its ENTIRE annual budget to pay off the reparations bill, i.e. no government functions would be funded for almost three years to pay this number off.
All of which means the state would have to raise taxes to account for the $800,000,000,000 and this would undoubtedly lead to more out migration of residents and businesses further reducing the tax base and state government bankruptcy happens even sooner.
A state that is hurtling towards bankruptcy, losing residents and busineses every day is considering paying $800 billion to slave ancestors, taking money from people who never owned slaves and whose ancestors likley never owned slaves.. Insanity.
While politicians lie, numbers do not: and the numbers show that the leading states to go bankrupt have not changed over time, California, Illinois, New York and New Jersey, whose state politicians refuse to cut government spending even in the face of a dwindling tax base.
Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:
No comments:
Post a Comment