Fast Growth in States with No Income Tax

Census Bureau director Robert Groves announced last week the first results of the 2010 census and the reapportionment of House seats (and therefore electoral votes) among the states, reports Michael Barone, a resident fellow with the American Enterprise Institute.

It’s hard to get a grasp the numbers, but Barone shares a few observations on what they mean.

First, the great engine of growth in America is not the Northeast Megalopolis, which was growing faster than average in the mid-20th century, or California, which grew lustily in the succeeding half-century — it is low-tax, business-friendly Texas.

As a result, the 2010 reapportionment gives Texas four additional House seats.

In contrast, California gets no new House seats, for the first time since it was admitted to the Union in 1850.

This leads to a second point, which is that growth tends to be stronger where taxes are lower.

Seven of the nine states that do not levy an income tax grew faster than the national average.

The other two, South Dakota and New Hampshire, had the fastest growth in their regions, the Midwest and New England.

Altogether, 35 percent of the nation’s total population growth occurred in these nine nontaxing states, which accounted for just 19 percent of total population at the beginning of the decade.

The net effect of the reapportionment was to add six House seats and electoral votes to the states John McCain carried in 2008 and to subtract six House seats and electoral votes from the states Barack Obama carried that year. Similarly, the states carried by George W. Bush in 2004 gained six seats and the states carried by John Kerry lost six.
That’s not an enormous change. But it’s part of a long-term trend that has reshaped the nation’s politics. The bottom line: You need a lot more than the Northeast and the industrial Midwest to get elected president these days, says Barone.

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6 Responses to Fast Growth in States with No Income Tax

  1. Joe Shaw says:

    “The Texas Comptroller’s office serves the state by collecting more than 60 separate taxes, fees and assessments, including local sales taxes collected on behalf of more than 1,400 cities, counties and other local governments around the state. State taxes and fees will generate an estimated $77.5 billion in the state’s 2008-09 budget period.” Susan Combs….Texas Comptroller of Public Accounts

    The point here is, all states are funded by taxes. What is the difference to the tax payer if they come from income tax, property tax, sales tax, license tax, gasoline tax, or estate tax? When you look at how much taxes that Texas collects from it’s citizens, I’d say that Texans pay more taxes in the end than most other states, if not all other states. However, there may be a point to be made that eliminating taxes in one area and raising them in another makes for a friendlier environment for business, and right now, states need business.

  2. Tina says:

    Joe comparing Texas to California it’s easy to see that Texas offers a better deal for individuals as well as businesses. Both states have similar sales and property tax rates but you get more house for your money in most areas of Texas. Since Texas has no income tax at all you make out better there too. Since it has a business friendly environment it attracts business and therefore with a larger business tax base and strong job opportunity the tax base is large rather than shrinking as it is in California.

    As I’ve said on many occassions, it makes sense to be business friendly; it’s a win/win/win/win. State government wins by collecting more revenue from a broad robust tax base. Business wins whith taxes and regulation that are reasonable and stable. People win with plenty of job opportunity and security. Our country also wins because stability creates a better atmosphere for innovation and growth.

    “…right now, states need business.”

    States, people and the entire country ALWAYS need business. All revenues and incomes flow from business.

  3. Nick F says:

    You dont think some taxes are more intrusive or less efficient than others Joe?

    I for one would vastly prefer a State sales tax to a state income tax. I would vastly prefer a national sales tax to a federal income tax.

    I would argue that there is significant difference in how one is taxed as well as how much they are taxed.

    “When you look at how much taxes that Texas collects from it’s citizens, I’d say that Texans pay more taxes in the end than most other states, if not all other states”

    You certainly may say it…not so sure you could prove it.

  4. Joe Shaw says:

    Nick, I stand corrected. I looked it up and as far as who pays the most taxes per capita (relative to their income) in each state, California ranks 6th while Texas ranks 43rd. New York is the highest while Alaska is the lowest. BTW, my inner republican has always felt that a national sales tax is the best way to go, but then again, this is coming from a guy who has recently been put thru the ringer with an in depth EDD audit followed by a nasty IRS audit. I’m all for anything that would simplify the whole system and it seems to me that a national sales tax would do just that.

  5. Libby says:

    But who’s gonna go live in hideously polluted Houston, or Dallas? Not me.

    Or South Dakota? Home of the 32% interest rate? … and the “Telemarketer Barn?” No, I don’t think so.

    Mind you, those Telemarketer Barns are drawing vast numbers of youngsters who have no prospects in the outlying rurals, but is that a good thing?

    No, I don’t think so.

  6. Peggy says:

    This was sent to me by a dear friend who recently moved to Florida.
    ===========

    December 15, 2010 12:00 P.M.
    Two Californias
    Abandoned farms, Third World living conditions, pervasive public
    assistance — welcome to the once-thriving Central Valley.

    The last three weeks I have traveled about, taking the pulse of the more
    forgotten areas of central California. I wanted to witness, even if
    superficially, what is happening to a state that has the highest sales
    and income taxes, the most lavish entitlements, the near-worst public
    schools (based on federal test scores), and the largest number of
    illegal aliens in the nation, along with an overregulated private
    sector, a stagnant and shrinking manufacturing base, and an elite
    environmental ethos that restricts commerce and productivity without
    curbing consumption.

    During this unscientific experiment, three times a week I rode a bike on
    a 20-mile trip over various rural roads in southwestern Fresno County. I
    also drove my car over to the coast to work, on various routes through
    towns like San Joaquin, Mendota, and Firebaugh. And near my home I have
    been driving, shopping, and touring by intent the rather segregated and
    impoverished areas of Caruthers, Fowler, Laton, Orange Cove, Parlier,
    and Selma. My own farmhouse is now in an area of abject poverty and
    almost no ethnic diversity; the closest elementary school (my alma
    mater, two miles away) is 94 percent Hispanic and 1 percent white, and
    well below federal testing norms in math and English.

    Here are some general observations about what I saw (other than that the
    rural roads of California are fast turning into rubble, poorly
    maintained and reverting to what I remember seeing long ago in the rural
    South). First, remember that these areas are the ground zero, so to
    speak, of 20 years of illegal immigration. There has been a general
    depression in farming – to such an extent that the 20- to-100-acre tree
    and vine farmer, the erstwhile backbone of the old rural California, for
    all practical purposes has ceased to exist.

    On the western side of the Central Valley, the effects of arbitrary
    cutoffs in federal irrigation water have idled tens of thousands of
    acres of prime agricultural land, leaving thousands unemployed.
    Manufacturing plants in the towns in these areas – which used to make
    harvesters, hydraulic lifts, trailers, food-processing equipment – have
    largely shut down; their production has been shipped off overseas or
    south of the border. Agriculture itself – from almonds to raisins – has
    increasingly become corporatized and mechanized, cutting by half the
    number of farm workers needed. So unemployment runs somewhere between 15
    and 20 percent.

    Many of the rural trailer-house compounds I saw appear to the naked eye
    no different from what I have seen in the Third World. There is a
    Caribbean look to the junked cars, electric wires crisscrossing between
    various outbuildings, plastic tarps substituting for replacement
    shingles, lean-tos cobbled together as auxiliary housing, pit bulls
    unleashed, and geese, goats, and chickens roaming around the yards. The
    public hears about all sorts of tough California regulations that stymie
    business – rigid zoning laws, strict building codes, constant
    inspections – but apparently none of that applies out here.

    It is almost as if the more California regulates, the more it does not
    regulate. Its public employees prefer to go after misdemeanors in the
    upscale areas to justify our expensive oversight industry, while
    ignoring the felonies in the downtrodden areas, which are becoming feral
    and beyond the ability of any inspector to do anything but feel
    irrelevant. But in the regulators’ defense, where would one get the
    money to redo an ad hoc trailer park with a spider web of illegal bare
    wires?

    Many of the rented-out rural shacks and stationary Winnebagos are on
    former small farms – the vineyards overgrown with weeds, or torn out
    with the ground lying fallow. I pass on the cultural consequences to
    communities from the loss of thousands of small farming families. I
    don’t think I can remember another time when so many acres in the
    eastern part of the valley have gone out of production, even though farm
    prices have recently rebounded. Apparently it is simply not worth the
    gamble of investing $7,000 to $10,000 an acre in a new orchard or
    vineyard. What an anomaly – with suddenly soaring farm prices, still we
    have thousands of acres in the world’s richest agricultural belt, with
    available water on the east side of the valley and plentiful labor, gone
    idle or in disuse. Is credit frozen? Are there simply no more farmers?
    Are the schools so bad as to scare away potential agricultural
    entrepreneurs? Or are we all terrified by the national debt and
    uncertain future?

    California coastal elites may worry about the oxygen content of water
    available to a three-inch smelt in the Sacramento-San Joaquin River
    Delta, but they seem to have no interest in the epidemic dumping of
    trash, furniture, and often toxic substances throughout California’s
    rural hinterland. Yesterday, for example, I rode my bike by a stopped
    van just as the occupants tossed seven plastic bags of raw refuse onto
    the side of the road. I rode up near their bumper and said in my broken
    Spanish not to throw garbage onto the public road. But there were three
    of them, and one of me. So I was lucky to be sworn at only. I note in
    passing that I would not drive into Mexico and, as a guest, dare to pull
    over and throw seven bags of trash into the environment of my host.

    In fact, trash piles are commonplace out here – composed of everything
    from half-empty paint cans and children’s plastic toys to diapers and
    moldy food. I have never seen a rural sheriff cite a litterer, or
    witnessed state EPA workers cleaning up these unauthorized wastelands.
    So I would suggest to Bay Area scientists that the environment is taking
    a much harder beating down here in central California than it is in the
    Delta. Perhaps before we cut off more irrigation water to the west side
    of the valley, we might invest some green dollars into cleaning up the
    unsightly and sometimes dangerous garbage that now litters the outskirts
    of our rural communities.

    We hear about the tough small-business regulations that have driven
    residents out of the state, at the rate of 2,000 to 3,000 a week. But
    from my unscientific observations these past weeks, it seems rather easy
    to open a small business in California without any oversight at all, or
    at least what I might call a “counter business.” I counted eleven mobile
    hot-kitchen trucks that simply park by the side of the road, spread
    about some plastic chairs, pull down a tarp canopy, and, presto, become
    mini-restaurants. There are no “facilities” such as toilets or
    washrooms. But I do frequently see lard trails on the isolated roads I
    bike on, where trucks apparently have simply opened their draining tanks
    and sped on, leaving a slick of cooking fats and oils. Crows and ground
    squirrels love them; they can be seen from a distance mysteriously
    occupied in the middle of the road.

    At crossroads, peddlers in a counter-California economy sell almost
    anything. Here is what I noticed at an intersection on the west side
    last week: shovels, rakes, hoes, gas pumps, lawnmowers, edgers, blowers,
    jackets, gloves, and caps. The merchandise was all new. I doubt whether
    in high-tax California sales taxes or income taxes were paid on any of
    these stop-and-go transactions.

    In two supermarkets 50 miles apart, I was the only one in line who did
    not pay with a social-service plastic card (gone are the days when “food
    stamps” were embarrassing bulky coupons). But I did not see any
    relationship between the use of the card and poverty as we once knew it:
    The electrical appurtenances owned by the user and the car into which
    the groceries were loaded were indistinguishable from those of the upper
    middle class.

    By that I mean that most consumers drove late-model Camrys, Accords, or
    Tauruses, had iPhones, Bluetooths, or BlackBerries, and bought
    everything in the store with public-assistance credit. This seemed a
    world apart from the trailers I had just ridden by the day before. I
    don’t editorialize here on the logic or morality of any of this, but I
    note only that there are vast numbers of people who apparently are not
    working, are on public food assistance, and enjoy the technological
    veneer of the middle class. California has a consumer market surely, but
    often no apparent source of income. Does the $40 million a day
    supplement to unemployment benefits from Washington explain some of
    this?

    Do diversity concerns, as in lack of diversity, work both ways? Over a
    hundred-mile stretch, when I stopped in San Joaquin for a bottled water,
    or drove through Orange Cove, or got gas in Parlier, or went to a corner
    market in southwestern Selma, my home town, I was the only non-Hispanic
    – there were no Asians, no blacks, no other whites. We may speak of the
    richness of “diversity,” but those who cherish that ideal simply have no
    idea that there are now countless inland communities that have become
    near-apartheid societies, where Spanish is the first language, the
    schools are not at all diverse, and the federal and state governments
    are either the main employers or at least the chief sources of income –
    whether through emergency rooms, rural health clinics, public schools,
    or social-service offices. An observer from Mars might conclude that our
    elites and masses have given up on the ideal of integration and
    assimilation, perhaps in the wake of the arrival of 11 to 15 million
    illegal aliens.

    Again, I do not editorialize, but I note these vast transformations over
    the last 20 years that are the paradoxical wages of unchecked illegal
    immigration from Mexico, a vast expansion of California’s entitlements
    and taxes, the flight of the upper middle class out of state, the
    deliberate effort not to tap natural resources, the downsizing in
    manufacturing and agriculture, and the departure of whites, blacks, and
    Asians from many of these small towns to more racially diverse and
    upscale areas of California.

    Fresno’s California State University campus is embroiled in controversy
    over the student body president’s announcing that he is an illegal
    alien, with all the requisite protests in favor of the DREAM Act. I
    won’t comment on the legislation per se, but again only note the
    anomaly. I taught at CSUF for 21 years. I think it fair to say that the
    predominant theme of the Chicano and Latin American Studies program’s
    sizable curriculum was a fuzzy American culpability. By that I mean that
    students in those classes heard of the sins of America more often than
    its attractions. In my home town, Mexican flag decals on car windows are
    far more common than their American counterparts.

    I note this because hundreds of students here illegally are now
    terrified of being deported to Mexico. I can understand that, given the
    chaos in Mexico and their own long residency in the United States. But
    here is what still confuses me: If one were to consider the classes that
    deal with Mexico at the university, or the visible displays of national
    chauvinism, then one might conclude that Mexico is a far more attractive
    and moral place than the United States.

    So there is a surreal nature to these protests: something like, “Please
    do not send me back to the culture I nostalgically praise; please let me
    stay in the culture that I ignore or deprecate.” I think the DREAM Act
    protestors might have been far more successful in winning public opinion
    had they stopped blaming the U.S. for suggesting that they might have to
    leave at some point, and instead explained why, in fact, they want to
    stay. What it is about America that makes a youth of 21 go on a hunger
    strike or demonstrate to be allowed to remain in this country rather
    than return to the place of his birth?

    I think I know the answer to this paradox. Missing entirely in the above
    description is the attitude of the host, which by any historical
    standard can only be termed “indifferent.” California does not care
    whether one broke the law to arrive here or continues to break it by
    staying. It asks nothing of the illegal immigrant – no proficiency in
    English, no acquaintance with American history and values, no proof of
    income, no record of education or skills. It does provide all the public
    assistance that it can afford (and more that it borrows for), and
    apparently waives enforcement of most of California’s burdensome
    regulations and civic statutes that increasingly have plagued productive
    citizens to the point of driving them out. How odd that we overregulate
    those who are citizens and have capital to the point of banishing them
    from the state, but do not regulate those who are aliens and without
    capital to the point of encouraging millions more to follow in their
    footsteps. How odd – to paraphrase what Critias once said of ancient
    Sparta – that California is at once both the nation’s most unfree and
    most free state, the most repressed and the wildest.

    Hundreds of thousands sense all that and vote accordingly with their
    feet, both into and out of California – and the result is a sort of
    social, cultural, economic, and political time-bomb, whose ticks are
    getting louder.

    – NRO contributor Victor Davis Hanson is a senior fellow at the Hoover
    Institution, the editor of Makers of Ancient Strategy: From the Persian
    Wars to the Fall of Rome, and the author of The Father of Us All: War
    and History, Ancient and Modern.

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