It’s called voting with your feet.
A remarkable number of well-heeled Americans are doing just that, and it should serve as a warning to Nevada voters and candidates as we enter an election year. Though Republican governors in recent years have shepherded through the Legislature record-high tax increases, Nevada still fares fairly well in comparison to other states when it comes to the tax burden borne by citizens of the Silver State.
According to the Tax Foundation’s analysis of state and local tax burdens per capita for fiscal year 2012 — which is after Gov. Kenny Guinn’s billion-dollar tax hike but before the $1.5 billion tax hike pushed by Gov. Brian Sandoval — Nevada ranked 43rd lowest in the nation, while neighboring Taxafornia ranked sixth highest.
Nevada tax collectors grabbed 8.1 percent of the state income through state and local taxes or $3,349 per capita. Meanwhile, California snatched 11 percent of state income or $5,237 per capita.
Perhaps that explains why, according to Internal Revenue Service data on taxpayer migration, from 2014 to 2015 about 10,500 Nevada taxpayers moved to California, while 17,700 California taxpayers moved to Nevada. Even more telling is the fact that the Californians fleeing to lower-taxed Nevada averaged $91,000 in gross adjusted income, while the Nevadans heading to California averaged only $47,400 in adjusted gross income.
It seems people with higher income have a tendency to find ways to keep more of it for themselves.
From 2014 to 2015 Nevada netted an increase in total adjusted gross income reported to the IRS of $1.43 billion. Of that, $1.1 billion came due to the influx of Californians changing residencies.
An analysis of a sampling of that IRS data shows the California-Nevada migration pattern is no anomaly.
In that one year, the state of New York, which has the highest state and local tax burden of any state at 12.7 percent of income and $6,993 per capita, lost $4.4 billion in income.
No. 2 highest Connecticut lost $1.3 billion in income. No. 3 highest New Jersey lost $2.46 billion. No. 5 Illinois lost $3.47 billion. No. 6 California lost $2.09 billion.
Meanwhile, state income tax-free Texas, ranked 46th lowest, added $3.61 billion, and state income tax-free Florida, though only 34th lowest, added $11.65 billion. The latter might have something to do with weather as well, since $2.62 billion of that came in from former New Yorkers, $1.49 billion from former New Jersey residents and $1.47 billion from former Illinoisans.
The New Jersey residents who moved to Florida had an average income of $121,000, while Floridians moving to New Jersey averaged $72,500.
This is hardly surprising nor a new phenomenon. In an article in The Wall Street Journal in 2009 under the headline, “Soak the Rich, Lose the Rich,” economist Arthur Laffer and WSJ economics writer Stephen Moore updated previous studies and found that from 1998 to 2007, more than 1,100 people every day of the year relocated from the nine highest income-tax states — such as California, New Jersey, New York and Ohio — mostly to the nine tax-haven states with no income tax — including Florida, Nevada, New Hampshire and Texas.
Laffer and Moore determined that over that period of time the no-income tax states created 89 percent more jobs and had 32 percent faster personal income growth than the high-tax states.
“Did the greater prosperity in low-tax states happen by chance? Is it coincidence that the two highest tax-rate states in the nation, California and New York, have the biggest fiscal holes to repair?” they asked. “No. Dozens of academic studies — old and new — have found clear and irrefutable statistical evidence that high state and local taxes repel jobs and businesses.”
A recent WSJ editorial noted that billions in income are still flowing out of New York, New Jersey and Connecticut and into Florida.
“As these state laboratories of Democratic governance show, dunning the rich ultimately hurts people of all incomes by repressing the growth needed to create jobs, boost wages and raise government revenues that fund public services,” the editorial concluded.
Voting with the feet is sure to increase since the recent tax reform limits federal income tax deductions for state and local taxes.
Let this be a lesson for Nevada. Chase the rich, they’ll run away.
WASHINGTON (AP) — Anchorage, Alaska, was warmer Tuesday than Jacksonville, Florida. The weather in the U.S. is that upside down.
That’s because the Arctic’s deeply frigid weather escaped its regular atmospheric jail that traps the worst cold. It then meandered south to the central and eastern United States.
And this has been happening more often in recent times, scientists say.
Super cold air is normally locked up in the Arctic in the polar vortex , which is a gigantic circular weather pattern around the North Pole. A strong polar vortex keeps that cold air hemmed in.
“Then when it weakens, it causes like a dam to burst,” and the cold air heads south, said Judah Cohen, a winter storm expert for Atmospheric Environmental Research, a private firm outside Boston.
“This is not record-breaking for Canada or Alaska or northern Siberia, it’s just misplaced,” said Cohen, who had forecast a colder than normal winter for much of the U.S.
Yes, but more for how long — about 10 days — the cold has lasted, than how cold it has been. On Tuesday, Boston tied its seven-day record for the most consecutive days at or below 20 degrees that was set exactly 100 years ago.
More than 1,600 daily records for cold were tied or broken in the last week of December, according to the National Oceanic and Atmospheric Administration. For Greg Carbin of the National Weather Service’s Weather Prediction Center, the most meaningful statistics are how last week’s average temperature was the second coldest in more than a century of record-keeping for Minneapolis, Chicago, Detroit and Kansas City, third coldest in Pittsburgh and fifth coldest in New York City.
Pretty much. While the United States has been in the deep freeze, the rest of the globe has been toastier than normal. The globe as a whole was 0.9 degrees (0.5 degrees Celsius) warmer than normal Tuesday and the Arctic was more than 6 degrees warmer than normal (3.4 degrees Celsius), according to the University of Maine Climate Change Institute’s analysis .
The cold will continue and could actually worsen for much of the East Coast this weekend because of a monster storm that’s brewing in the Atlantic and Caribbean, what meteorologists are calling a “snow hurricane” or “bomb cyclone.”
But forecasters don’t think the storm will hit the East Coast, keeping most of the snow and worst winds over open ocean, although parts of the Northeast are still likely to get high winds, waves and some snow.
“For the Northeast, this weekend might be the coldest of the coldest with the storm,” said Jason Furtado, a University of Oklahoma meteorology professor. “We could be ending (the cold snap) with a big hurrah.”
This is an area of hot debate and research among scientists and probably is a mix of human-caused climate change and natural variability, said Furtado. Climate change hasn’t made the polar vortex more extreme, but it probably is making it move more, which makes the weather seem more extreme, he said.
A recent study by Potsdam Institute climate scientist Marlene Kretschmer found the polar vortex has weakened and meandered more often since 1990, but that study focused more on Europe. Ongoing research shows that there seems to be a similar connection for more frequent Arctic cold snaps like what the U.S. is now experiencing, Kretschmer said.
HOW CAN IT BE SO COLD WITH GLOBAL WARMING?
Don’t confuse weather — which is a few days or weeks in one region — with climate, which is over years and decades and global. Weather is like a person’s mood, which changes frequently, while climate is like someone’s personality, which is more long-term, Furtado said.
“A few cold days doesn’t disprove climate change,” Furtado said. “That’s just silly. Just like a couple down days on the stock market doesn’t mean the economy is going into the trash.”
President Trump’s December 22 signing of the Tax Cuts and Jobs Act of 2017 was met with the overheated, partisan rhetoric of our current politics.
At a White House rally celebrating its passage, over-the-top praise was heaped on Trump by congressional Republicans. He was lauded for “exquisite presidential leadership,” as a “man of action,” and “the president of the United States, whom I love and appreciate so much.” Utah Senator Orrin Hatch may have set a record for fawning by declaring that Mr. Trump may be the greatest president ever. Ever? Not Washington — or Lincoln?
Not to be outdone rhetorically, Democrats launched their own fusillade of criticism directed at Trump and the tax bill. Senate Democratic leader Chuck Schumer employed the standard line used against all Republican tax cuts — that they benefit only the rich. “There are only two places where America is popping champagne,” said Sen. Schumer, “the White House and corporate board rooms.”
Democratic House Leader Nancy Pelosi denounced “the greed of those with power, the cruelty that is in the heart of the tax scam.” And, California Governor Jerry Brown labeled the bill a “monstrosity,” likening Republicans to “mafia thugs.”
The tax bill is not popular in the polls. A recent Wall Street Journal/NBC survey found 41 percent opposing it with only 24 percent in support. The reason: the poll reflects few people believe it will provide tax relief for middle-class families.
While it’s the most significant tax measure since the Tax Reform Act of 1986, the bipartisanship of 31 years ago seems unattainable today. The 1986 tax reform was driven as much by Democrats as by President Ronald Reagan. Dick Gephardt and Dan Rostenkowski moved the bill in the House, and Bill Bradley was a leading architect in the Senate. The bill cut the top income tax rate from 50 percent to 28 percent, consolidated 14 tax brackets down to two, removed six million poor Americans from the income tax rolls, eliminated tax loopholes and shifted tax burdens to corporations — while being revenue neutral.
The real test for the 2017 tax bill — setting aside the rhetoric on both sides — will it make things a little better or worse? Since 2005, Democrats and Republicans have acknowledged the 35 percent corporate tax rate as uncompetitive. The United States has the highest top statutory corporate tax rate among the Group of 20 (G20) nations, according to the Congressional Budget Office. Beginning in 2012, President Obama annually proposed a reduced 28 percent tax rate. His 2012 GOP rival, Mitt Romney, pushed for 25 percent. At times, a deal looked possible but partisanship always intervened.
As a direct result of the reduced corporate rate to 21 percent, six large corporations immediately announced plans to do more for their employees — bonuses, increases in their minimum wage, additional hiring, more business investment. The new rate offers hope of broader prosperity after a decade of slow growth and rising inequality.
The individual tax reform essentially gives everyone a tax cut by retaining the existing seven tax brackets and trimming most of the rates by a few points. In the end, the TCJA of 2017 will have tax brackets of 10, 12, 22, 24, 32, 35 and a top rate of 37 percent. Tax simplification is given a major boost with the near doubling of the standard deduction to $12,000 for singles and $24,000 for couples. The child tax credit has been doubled to $2,000 per child.
The nonpartisan Tax Foundation estimates the bill will result in an average $610 annual savings for middle-income Nevada families. A single Nevadan earning $45,000 taking the standard deduction will save $909. A married household with two kids and combined earnings of $65,000 will save $1,825. The Tax Foundation further estimates economic gains achieved from the reduction in the corporate rate will result in the creation of an additional 3,048 Nevada jobs.
In 2018, the vast majority of Nevada workers will see a boost in their paychecks — that’s good news to celebrate.
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