Let’s check in with our discussion on which city or state government is going to get to bankruptcy court first. Our primary cities in the race to bankruptcy include New York City, Chicago, Los Angeles, San Francisco, and newcomer, Seattle. The state governments that we think are soon heading into bankruptcy include New York, New Jersey, Illinois, and California with Washington state a newcomer to the race.
The reason for returning to this topic in the midst of our corruption series is because there have been some significant developments in the race to bankruptcy court. However, before reviewing the latest news and seeing which state or city is making the best progress towards government bankruptcy, let’s review how these cities and states got themselves into this financial death spiral position to begin with:
A government entity keeps expanding its budget, eventually putting pressure on the tax revenue stream it receives.
At some point, rather than cut government spending or make its programs more efficient financially, the politicians in charge raise taxes to meet the ever growing government expenditures.
The raising of taxes causes some residents and businesses to leave the city or state for less tax burdensome areas, reducing the tax base and reducing the revenue stream.
Rather than cut expenses and become more efficient to match the reduced tax revenue stream, politicians in the above cities or states raise the tax burden even more.
This causes more residents and businesses to flee the city or state, further reducing the tax base and tax revenue stream.
At some point politicians panic and raise taxes more and start cutting vital government services (e.g. police, fire, education) in order to try and balance government spending against the shrinking tax base and revenue stream.
The reduction in quality of government services in particular and quality of life in general drives more residents and businesses out of the area.
Eventually, the expenses, costs and financial liabilities outstrip the reduced tax stream and bankruptcy occurs.
Okay that’s the process. Let’s see what is going on in the newest and possibly the strongest contender for bankruptcy court.
1)Certainly a major reason why residents and businesses leave a city or state is because of the high cost of taxes and business regulations. But rampant crime is also a major reason that contributes to the out-migration of people and businesses. And New York City is suffering from both financial death spiral symptoms, high taxes and violent crime:
Recently, a deranged woman walking through Times Square killed a young working mom and seriously injured a 68 year old man by stabbing them, having shoved knives into both of them.
Apparently, these were random attacks and the perp did not know either victim, just violence for no apparent reason.
Fortunately, following protocol, the police officers responding to the scene had to eventually fatally shoot the woman.
Separately, a 90 year old woman was strolling casually down a street in Brooklyn.
In an unprovoked attack, a man grabbed a portable baby crib that was sitting on the sidewalk that was filled with trash, lifted it up, and attacked the 90 year old with the crib.
The force of the attack drove the 90 year old to the ground while the perp ran away.
Witnesses came to the aid of the woman but the perp got away.
According to the New York Post: “Assaults on New Yorkers over 65 have spiked by 14% compared to last year — and have skyrocketed 143% over the same span in 2018.”
The attack was actually caught on video by a street camera and can be viewed at:
So let’s review: senseless violence against a young mom, a senior citizen, and a very senior citizen, victims that did nothing to provoke the attacks. Is it any surprise that along with high taxes that residents and businesses are leaving the city and taking their tax stream with them?
2)We have always felt that the primary states likely to go bankrupt pretty soon were Illinois, New York, New Jersey, and California. But given the financial, crime and homelessness disaster that Seattle has become, so much so that it is now our bet that it will be the next major city to go bankrupt, maybe we should start looking at whether the state of Washington, home state of Seattle, might also be in the running for bankruptcy court;
A recent study by the Association of Washington Business (AWB) showed that a whopping 24% of businesses that were surveyed are actively considering taking their respective businesses out of state.
This is up from 17% just six months before and almost three times higher when the survey was conducted a year ago.
Even worse, 55% of those business leaders surveyed said they are considering personally moving themselves out of the state.
The main reason given for the potential moves is the higher and higher tax burden, not surprising given that the state that was rated the sixth best tax climate in 2014 is now almost the worst in the country today.
And since 2014 the taxes have just kept on coming: Business and Occupation Tax and related surcharges, taxes on income over $250 million, first ever state income tax, Seattle’s Jumpstart tax, etc.
Businesses have already started moving their operations to Tennessee, Idaho, Utah, and other lower taxing states.
Unfortunately, Washington’s liberal politicians don't understand basic economics: you increase your tax revenue stream by increasing the size of your tax base, NOT increasing the size of your tax burden and tax rates. And maybe, just maybe, Washington state is the latest entrant in the race to bankruptcy court, given that a huge chunk of its business tax base has already left the state and many are considering following their lead.
3)Back to crime driving away businesses and residents. Hundreds of people a year are murdered and thousands are wounded in Chicago, a prime city candidate to go bankrupt. And this past Labor Day weekend did nothing to convince residents and business that Chicago is a safe place to do business and raise a family:
According to Chicago Sun Times reporting, 38 people were shot in the city over the holiday weekend that ended yesterday.
Of the 38 who were shot, 8 died from their wounds.
This comes on top of the 122 city residents that were killed in June, July, and August, more than one murder a day on average.
A ninth person was killed when he was shoved out of a city train.
So high taxes, high violent crime rate, and out-migration from Chicago, keeping this city as a prime candidate to go bankrupt and abandoned.
Senseless crime and senseless over taxation, a sure fire formula to get a city or a state to go bankrupt.
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Vote Now!!!! Go to to the following link and vote on which state or city government you think will go bankrupt first:
https://www.facebook.com/profile.php?id=61592458935721
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If you agree that we need to deseat every member of Congress for their lack of success and accomplishment, then please consider going to the following petition link to help the cause:
https://www.change.org/p/deseat-congress-reset-freedom
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