Like most people, I’m a sucker for a heartwarming story around the holidays.
Sometimes, you get that nice feeling when good things happen to good people, like you find at the end of a classic movie like “It’s a Wonderful Life.”
But since I’m a bit of a curmudgeon, I also feel all warm and fuzzy when bad things happen to bad people.
That’s why I always smile when I read stories about taxpayers moving across borders, thus preventing greedy tax-hiking politicians from collecting more revenue.
“Where’s our tax revenue?!?”
I’m glad when that happens to French politicians. I’m glad when it happens to Italian politicians. I’m glad when it happens to Illinois politicians. And British politicians. And Spanish politicians. And Maryland politicians. I could continue, but I think you get the point.
I’m even glad when it happens to the politicians in Washington.
I smile because I envision the moment when some budget geek tells these sleazy politicians that projected revenues aren’t materializing and they don’t have more money to spend.
So I wish I could be a fly on the wall when this moment of truth happens to California politicians. They convinced voters in the state to enact Prop 30, a huge tax increase targeting those evil, awful, bad rich people.
Governor Brown and his fellow kleptocrats in Sacramento doubtlessly are salivating at the thought of more money to waste.
But notwithstanding a satirical suggestion from Walter Williams, there aren’t guard towers and barbed-wire fences surrounding the state. Productive people can leave, and that’s happening every day. And they take their taxable income with them.
Usually in ways that don’t attract attention. But sometimes a bunch of them leave at the same times, and that is newsworthy. Here’s an example of that happening, as reported by the San Francisco Chronicle.
Chevron Corp. will move up to 800 jobs – about a quarter of its current headquarters staff – from the Bay Area to Houston over the next two years but will remain based in San Ramon, the oil company told employees Thursday. …The company already employs far more people in Houston – about 9,000 full-time employees and contractors – than it does in San Ramon.
We don’t know a lot of details, but these were positions at the company’s headquarters and they were “technical positions dealing with information and advanced energy technologies…tied to Chevron’s worldwide oil exploration and production business.”
Let’s assume these highly skilled employees earn an average of $250,000. I imagine that’s a low-ball estimate, but this is just for purposes of a thought experiment. Now multiply that average salary by 800 workers and you get $200 million of income.
And every penny of that $200 million no longer will be subject to tax by the kleptocrats in the state’s capital.
In other words, we’re seeing the Laffer Curve in action.
Politicians can raise tax rates all day long, but that doesn’t automatically translate into more tax revenue. Politicians keep forgetting that taxable income is not a fixed variable.
What’s happening in a big way with Chevron is happening in small ways every single day with investors, entrepreneurs, small business owners, and other “rich’ people.
That’s good for the people escaping. And it also will warm my heart when California’s despicable politicians discover next year that there’s an “unexpected” revenue shortfall.
P.S. It’s just an anecdote that the Chevron jobs are going to Texas. But when you add together a bunch of anecdotes, you get data. And according to the data, Texas is kicking the you-know-what out of California. Maybe there’s a lesson to be learned?
This may sound picky, but you stated, “Politicians keep forgetting that taxable income is not a fixed variable.” A variable by definition is something that changes. It may have been better to say “…income is not a constant,” since a constant is a fixed value. You could have also stated, “…income is a variable,” since that would be more in line with your stated argument.
Reblogged this on Public Secrets and commented:
I’m staying to laugh at the idiots in Sacramento when their revenue projections crash — again.
[...] via The Continuing Exodus of Jobs – and Taxable Income – from California « International Liberty. [...]
When California goes undere, won’t Obama bail them out (the state is too big to fail)?
“There’s no need for a fence. Just a law to force Californians to keep paying tax to California, even after they leave California. You know, like Americans when they leave America.
Otherwise, with tax base shrinking what are average Californians to do? They, for sure, are going to have to raise taxes even more next time. I mean, who can blame them. A decade or two ago, the average Californian was in the top five percent of worldwide income. Now it has slid to the top six or even, horrific, seven percent. The average Californian is stressed out! It is finally high time they institute some of the redistribution that is so prevalent in ninety five percent of the world.”
Recently, at my California company, we failed to recruit the top candidates for two positions. We had to settle for good, but second to top tier candidates. When it comes to innovation, the difference between very good and excellent can be astronomical. An anecdote again, but a pattern that has been evolving in the last decade or so. Many candidates choosing to stay in their home states — in Asia. These are now countless superior brains that will compete with California, and America, from outside US borders, using foreign capital — to the myopic delight of protectionists who fail to see the monumental shifts taking place in the world, as three billion people are beginning to emulate traditional American attitudes. Attitudes that Americans themselves are abandoning.
Unfortunately, failure to recruit these highly productive individuals will not show up in next year’s California budget, or even the next. These are young people whose peak productivity and contribution is five, ten, fifteen years down the line. The fact that California continues to be a high tech hub, means that the productivity process has too much inertia built into it for voter lemmings to notice. A Laffer curve hysteresis, if you will. But inertia means that by the time you decide to change you behavior at the polling booth, it is already too late. Way too late. Just ask France, whoose BTW decline is still debatable amongst American progressive forces. In any case, american interstate migration is a modest phenomenon. The much bigger overall tectonic shift of American demise is happening on the international scene: as I said above, Americans are abandoning the very values that propelled them to success, while three billion people are beginning to emulate them. By historical timeframe, the pace of convergence is precipitous. The American lemming ninety nine percent, once in the top ten percent of world prosperity, will keep converging towards the true worldwide ninety nine percent, at fast speed. No, it is no longer your children’s problem. It will be here much sooner than you think. It is happening as we speak, under your European emulating nose, dear HopNChanger.
[...] http://danieljmitchell.wordpress.com/2012/12/27/the-continuing-exodus-of-jobs-and-taxable-income-fro… [...]
I always like to contrast the visible effects of Calfornian/New York tax increases with the Global Warming scaremonger claims about how many refugees will be fleeing the coast over the next hundred years and the problems that will supposedly cause.
[...] The Continuing Exodus of Jobs – and Taxable Income – from California [...]
[...] of Laffer Curve effects. My comments about successful people escaping places like France and California touched on the issue, but I should have been much more [...]
[...] of Obama’s class-warfare tax hike and additional tax increases by kleptocrats at the state level, many successful taxpayers will now lose more than 50 percent of any additional income they [...]
[...] real mystery is why both a state and a nation on the other side of the Pacific Ocean want to copy Japan’s suicidal fiscal [...]
[...] the gap will soon get even wider since California voters recently decided to drive away more productive people by raising top tax [...]
[...] We know that people cross state borders all the time, and it’s usually to travel from high-tax states to low-tax states. And we’ve already seen some evidence that the state’s new top tax rate is causing a loss of highly valued jobs. [...]
[...] already written about the exodus of jobs from California, and expect even more in the [...]
[...] already written about the exodus of jobs from California, and expect even more in the [...]
[...] no surprise that lots of high-paying jobs are relocating to states like Texas with better tax policy. Nor is it a surprise when pro golfers like Phil Mickelson warn they may [...]
[...] no surprise that lots of high-paying jobs are relocating to states like Texas with better tax policy. Nor is it a surprise when pro golfers like Phil Mickelson warn they may [...]
[...] also shared a specific example of high-quality jobs moving from San Francisco to Houston. And I was also greatly amused by this [...]
[...] also shared a specific example of high-quality jobs moving from San Francisco to Houston. And I was also greatly amused by this [...]