Monday, November 28, 2011

BLS October Data Shows High Tax States and Low Tax States Gaining Jobs

That Can’t Be Right, That Contradicts Conservative Dogma (Ok, Not News, Everything Contradicts Conservative Dogma)

A basic tenet of modern Conservatism is that taxes are job killers.  High taxes make businesses move to low tax jurisdictions and prevent job creation in businesses that stay in high tax jurisdictions.  So the October state employment report ought to show that high tax states lost jobs and low tax states created jobs.  Except it doesn’t.

Over the year, 23 states experienced statistically significant changes in
employment, 22 of which were increases. The largest increase occurred in California (+239,100), followed by Texas (+231,600) and Florida (+93,900). The only state with an over-the-year statistically significant decrease in employment was Georgia (-33,300). (See table D.)

Yes, there are our good Conservative friends Texas and Florida, but wait there is also the high tax state of California.  What’s that doing there?  And if you look at the data there is Illinois, which raised taxes substantially to deal with a large budget deficit.  Illinois increased employment by 60,000.  And even New York, with its massive taxes and huge layoffs in the financial industry increased employment by 61,000.  Massachusetts, high taxes there didn’t prevent a 50,000 increase in jobs.

Georgia has been under Republican control for years.  The result, it was the only state with a significant decrease in jobs.  Maybe Georgia needs to return to the days of Democratic rule.

The lesson here is fairly clear.  Individual tax levels do not seem to be correlated with growth in employment in the various states.  Texas does have low taxes and high population growth and high job growth.  California and Illinois and New York have high taxes and high job growth.  That clear conclusion, state tax levels do not matter much in the job creation process, which is what people other than ideologues would expect.  Jobs are created when there is the demand for the goods and services those jobs produce.  No one ever hired an employee to produce something that could not be sold just because taxes were low. 

 Lesson learned Conservatives?  No, didn’t think so.

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