I have noted several times how GOP voodoo economics and huge tax cuts has sent Kansas into a deficit and left job growth shrinking. Indeed, Kansas lags behind most of the country and is rapidly racing toward a major budget deficit and finds itself slashing education and public services. In contrast to Kansas, the State of California has enacted tax increases and guess what? It is experiencing economic expansion and far better than average job growth. Will these real life experiences make any difference on GOP thinking? Of course not. Today's GOP is an anti-knowledge, sectarian party driven by ideology. Facts simply do not matter. Here are highlights on California's experience which ought to be a lesson to GOP Neanderthals:
Dire predictions about jobs being destroyed spread across California in 2012 as voters debated whether to enact the sales and, for those near the top of the income ladder, stiff income tax increases in Proposition 30. Million-dollar-plus earners face a 3 percentage-point increase on each additional dollar.“It hurts small business and kills jobs,” warned the Sacramento Taxpayers Association, the National Federation of Independent Business/California, and Joel Fox, president of the Small Business Action Committee.So what happened after voters approved the tax increases, which took effect at the start of 2013?Last year California added 410,418 jobs, an increase of 2.8 percent over 2012, significantly better than the 1.8 percent national increase in jobs.California is home to 12 percent of Americans, but last year it accounted for 17.5 percent of new jobs, Bureau of Labor Statistics data shows.America has more than 3,100 counties and what demographers call county equivalents. Eleven California counties, including Sacramento, accounted for almost 1 in every 7 new jobs in the U.S. last year.The Central Valley is home to nine of the nation’s 335 largest counties. The data show that all nine counties enjoyed better job growth overall than the rest of America. Sacramento County experienced a 2.7 percent increase, 50 percent better than the national average, as 15,425 jobs were added last year.“Does raising income tax rates reduce hiring?” “The answer is no. What firms care about when deciding how many workers to hire is the marginal product of workers and the marginal cost of those workers. So if you are an employer and your personal income tax rate is increased, that does not raise the marginal cost of your workers, but it may encourage you to work a little less hard,” Neumark noted, applying standard economic theory.Some research into tax rates indicates that high rates have the opposite effect: People may work harder, trying to make more money to achieve a desired after-tax income and may slough off if tax rates are lowered. This is known to be the case for people who have a savings target for money to leave their children and are subject to estate taxes – they save more to leave the after-tax sum they prefer, but save less when the tax is lowered or no longer applies to them.The empirical evidence also shows that the best-paying jobs tend to be clustered in states (and countries) with high taxes. The same tends to be true of wealth creators, including the most money-motivated among scientists, and existing wealth holders not actively engaged in business.How taxes are spent is also crucial to the effect on jobs. Increasing taxes can, in some cases, encourage job growth.Highly skilled and educated workers tend to place a high value on commonwealth amenities, such as quality public schools and colleges; extensive parks; honest and reliable law enforcement; as well as fast-responding ambulance and fire suppression services.So next time someone tries to tell you that raising income taxes will destroy jobs, tell them the evidence just does not support that claim.
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