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State Watch
Laboratories of Democracy
Republicans control the governorship, senate, and house in 25 states. Here’s what they should do with that power.
The lesson of the 20th century is that Marxism was tried and tried and tried, and failed and failed and failed. But that lesson is lost on the true believer Barack Obama and his Democrat Party. Supposedly a forward looking progressive, Obama is dragging America back into cutting edge ideas from the late 19th century, already proven wrong to everyone except those in Obama’s freeze dried corner of American culture.
What else can we make of the spectacle of our re-elected, conquering, Democrat hero president — the cultural progeny of a 1960s radical American rejectionist mother and the openly Communist Kenyan she embraced to be Obama’s father — demanding multiple, explosive, income tax rate increases to make “the rich” pay their “fair share,” even though those very same rich already pay virtually all federal income taxes? The 51 percent that re-elected Obama will soon receive a lesson in economics: the renewed recession, soaring unemployment, declining tax revenue, and record-shattering deficits that those foolish tax increases will produce.
America’s Rational Remnant
But there are oases of rationalism found in the 25 states now governed under total Republican control, with a Republican governor, state senate, and state house. America is conducting a national experiment on capitalism versus socialism among these increasingly partisan states. Compare the fiscal and economic performance, for example, of Democrat-controlled California, Illinois, and New York, to that of Republican-controlled Texas, Florida, and Virginia, not to mention Indiana and Wisconsin.
What can the Republicans do with this state control? They can remake the economic and political map of America. Here are the policies that state Republicans should pursue to get their economies booming even more:
• Phase out State Income Taxes
There are nine states that prosper perfectly well with no state
income taxes. In fact, the south is ringed with them: Texas,
Florida, and booming Tennessee. That policy should spread across
the remaining South, from Louisiana to Virginia, up the Plains
states, following South Dakota’s lead, and to the rest of the West,
joining Wyoming, Nevada, Washington state, and Alaska. The
resulting economic competition will force the remaining states to
abandon state income taxes as well.
A study by Art Laffer, Stephen Moore, and Jonathon Williams in the Rich States, Poor States volume published in 2010 compared the nine states with no state income taxes to the nine with the highest top marginal income tax rates. Over the 10 year period from 1998 to 2008, economic growth was 50 percent higher in the states with no income tax. Jobs grew more than twice as fast. Yet total state tax receipts still grew 30 percent faster in the states with no income tax. Faster economic growth powered their tax receipts higher.
Moreover, the authors studied the 11 states that adopted an income tax in approximately the previous decade. Their economies and total state revenues grew more slowly after the income tax was adopted.
To cite a direct example: Between 2002 (after the tech boom and the 9/11 recession ended) and 2008, Texas added jobs more than twice as fast as California. Real economic growth rose almost 50 percent faster in the Lone Star state, and real personal income grew 46 percent faster. And jobs in Texas grew more than twice as fast as in California.
Americans for Tax Reform reports from official IRS data that in 2007, the nine states with no income tax gained 235,000 residents from the other 41 states. Those residents took with them $11.8 billion of net adjusted gross income. The 10 states with the highest tax burden together lost 441,000 residents, who took with them $12.8 billion in income.
Phasing out state income taxes does not require eliminating everything in the state budget. It just requires limiting the growth of state expenditures to a level below the rate of state economic growth, and using the savings to cut the income tax rate until it is phased out entirely. A good place to start would be something like the Colorado Taxpayer Bill of Rights, which limits the growth of state spending to the rate of population growth plus inflation. This is a desirable limitation in itself, since it keeps per capita spending stable in real dollars. And as I demonstrate in my 2011 book, America’s Ticking Bankruptcy Bomb, that policy alone would allow income taxes to be phased out in every state within 10 years.
• Right to Work
Laffer, Moore, and Williams also demonstrate that right to work
laws provide a big boost to state economic growth. All right to
work laws do is provide each worker with the personal, individual
freedom to decide whether or not to join a union. That is just
basic American freedom and fairness.
• Paycheck Protection
Experience shows that where government employees are free to decide
whether or not to pay union dues (just like any other membership
fee), the great majority of them decide not to do so. That was the
experience most recently in Wisconsin, where Governor Scott Walker
gave public employees that freedom. The dramatic reduction in union
income greatly reduces interference contrary to the will of the
people by such government unions in the state’s free elections.
• Government Employee Pension Reform
The unfunded liabilities for state and local pensions are
realistically estimated as $3.8 trillion, equivalent to one-fourth
the entire national debt, as currently calculated. Lavish pension
plans provide for retirement as early as 55 after 30 years of
service, with monthly benefits equal to 60 percent or more of the
employee’s last salary. This is, on average, more than twice the
average private sector pension of $13,100, on top of Social
Security — and most private sector workers no longer have employer
provided pensions in the first place.
Most government employee pensions are “defined benefit” plans, which specify a certain future benefit to be paid, based on some formula, regardless of how much money has accumulated to pay such benefits. These should all be reformed into “defined contribution” plans, in which the government provides a certain contribution to each worker’s pension, as defined by some formula, and future benefits are equal to whatever the contributions can finance. Defined contribution pension plans by definition involve no unfunded liabilities, or further obligations on taxpayers. Further, most government workers would gain from such plans, as the typical defined benefit plan favors the longest tenure worker at the expense of all the others.
About the Author
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.
Joellen| 11.21.12 @ 6:56AM
I do wish all a blessed Thanksgiving, you are my family now, and for that I am grateful.
Remember this passage, when sadden by the recent events, "and do not be conformed to the world, but be transformed by the renewing of your mind that you may prove what is that good and acceptable perfect will of GOD"!
Special thank you to all our Veterans and current Military and their families for their sacrifices that I may yet again enjoy another Thanksgiving.
CJW| 11.21.12 @ 8:50AM
Joellen
Thanks, and have a happy and safe Thanksgiving. Despite the efforts of Obama and Laughing Boy Biden, it is the greatest country ever.
Von Mises Jr| 11.21.12 @ 10:00AM
Dittos Joellen and CJW. Conservatives must stick together. Liberals are destroying themselves as the wealthy liberals just joined CA deciding to tax them into poverty while the uneducated liberals turn their lives over to government. Let them have at it. Conservatives should simply look out for each other.
I think Peter Ferrara is on to something, but I think it needs a fine point on it. It is not the country that is dying. And it is not only the Northeast and West Coast that are in death throws. It is the Federal Government and everything about Washington DC.
So the preference is not to wall off these dying regions, but it is mandatory that the 25 Red states wall off these dying regions and DC to survive.
G0d blesses you all and Happy Thanksgiving.
CJW| 11.21.12 @ 11:01AM
Von
Thanks. Have a happy and safe Thanksgiving. Keep attacking and mocking the lefty loons.
Al Adab| 11.21.12 @ 12:10PM
The States remain the last bastion of Liberty in this land. It is through their actions that we might yet retain the rights which the nations founders supposed were the inherent rights of all.
Have a great Thanksgiving day and remember to whom it is we owe our gratitude.
JD| 11.21.12 @ 3:04PM
Liberals are not destroying themselves. They are destroying US. The key to their evil is to direct the consequences of their failures onto us, and to siphon prosperity from us. They are nothing if not people who separate actions from consequences, and they go farther still by assigning consequences opposite to those deserved to every action.
They then misrepresent these results as evidence that we ARE suffering the consequences of our actions when we conservatives struggle and they do well.
Von Mises Jr| 11.22.12 @ 7:32AM
Most liberals are either uneducated laborers that will have their hours cut to 28 so their employers can avoid ObamaCare or the Upper Middle Class that live in these Blue States that will have to pay for the Medicaid Expansion. In New Jersey, the Association of American Physicians and Surgeons estimates the Medicaid expansion will cost $5B per year and that would increase property taxes by 20% ranges. So if you live in a nice neighborhood in Jersey and pay $12K to $15K for property tax, it is going up about $3K per year.
The Red States Governors are already telling Obama that they are not implementing the Exchanges or doing the expansion. Florida's Property Taxes will go up zero, along with Texas, Alabama and Indiana.
If I were owner of a national company, you can bet I would downsize the people in the states that voted to screw me, especially if my business Property Taxes were going up in those States.
Ralph Novy| 11.23.12 @ 8:38PM
Wow.
It would take me quite a while to put together a pile of bullshit like that.
Congratulations!
Rhoetus| 11.23.12 @ 3:28PM
"The first thing we do, let's kill all the lawyers." [Dick the butcher, Henry VI, part 2 act 4, scene 2 by William Shakespeare]. The first thing we should really do is destroy Agenda 21. Then de-collectivize America, before it becomes "America in name only".
Ralph Novy| 11.23.12 @ 8:41PM
Ooooh..... "decollectivize."
You know, that sounds kind of ivory-tower hoity-toity.
As a matter of fact, I think it sounds "witchy!
Burn him!
Joellen| 11.22.12 @ 9:24AM
Von, blessed Thanksgiving to you too!
Ralph Novy| 11.23.12 @ 8:39PM
Yes, I'm sure you think "God" especially blesses the American Indians.
Right?
Fool.
Aristocat| 11.21.12 @ 11:29PM
Yes, let's get these things done...
Aristocat| 11.21.12 @ 11:28PM
These are all great suggestions by Mr. Ferrara & we should all contact our state reps. to ask them to make them happen...
Ralph Novy| 11.23.12 @ 8:42PM
Yeah, Joellen, pass along your "blessed Thanksgiving" message to the American Indians at Pine Ridge, etc.
Stupid, nasty, racist bitch, you!
Ralph Novy| 11.23.12 @ 8:45PM
Remember Libby Custer?
That worthless camp whore made a living off her butcher husband's animalistic idiocy for 50+ years.
Rhoetus| 11.25.12 @ 10:46AM
I grant you absolution from your White Guilt, go in peace my Son.
Stan Redmond| 11.25.12 @ 4:13PM
In fact. You can get him a certificate of absolution from both Ken Hamblin and Walter Williams.
Gary B| 11.21.12 @ 7:54AM
"Here's what they should do with that power." Republicans have never done what they should do. The power at the top of the party hates conservatives. End of story...
Nancy in NC| 11.21.12 @ 8:20AM
Peter, the condensed version of this article: embrace liberty!
Suzyqpie| 11.21.12 @ 8:58AM
Thomas Sowell, "How does allowing politician to take more money from Americas most successful to squander in ways that enhance their reelection prospects make anything more "fair" for others?"
Stan Redmond| 11.23.12 @ 2:52PM
Vengence is a tasty dish. It doesn't make your life better but it feels good.
Ralph Novy| 11.23.12 @ 8:36PM
Speaks poorly of your character, Stan.
Do you, by any chance, fancy yourself a Christian?
Stan Redmond| 11.25.12 @ 4:14PM
If you bother to assign some context you will understand. But your knee jerk reactions to everything posted here explains why you don't bother to put 2 and 2 together.
JmsA| 11.21.12 @ 10:48AM
Happy Thanksgiving to all.
Derek Leaberry| 11.21.12 @ 10:56AM
Don't expect them to cut the government. Republicans like to lie to their voters, throw their gullible voters the red meat that they are for small government, and then spend like Democrats. Witness Governor Bob McDonnell of Virginia. He's been spending like Tip O'Neill on road projects in Northern Virginia. You see, Northern Virginia for 40 years now has been locked in a cycle where developers build giant projects which create giant traffic jams. The result is a clamor for more roads which leads to more development and more traffic congestion. And so on and so on the cycle self-perpetuates. McDonnell is planning to ask for an increase in the Virginia gas tax at the beginning of the next legislative session and the Republican small government, small taxers legislators will be compliant to McDonnell's wishes. Which makes you wonder why a conservative should vote Republican in the first place.
My first vote was in 1980 when the Republicans and Ronald Reagan promised to scale back the government. Thirty-two years later, I'm still waiting.
SUBVET| 11.21.12 @ 11:17AM
Derek.............term limits !!!!
No difference between Dems & GOP read your history book.
It's all about $$$$ and CONTROL the rest is just icing on the cake.
We the people lost control in 1913 when 6 men on an island decided to tax the citizens.
Al Adab| 11.21.12 @ 12:07PM
Derek, Vet:
Never confuse the GOP with the Conservative Movement. While the Movement chose the GOP as its vehicle and brought success to the party in 1980 and 1994, the GOP consistently betrays the Movement through its spending and accomodationist tendencies. Only when the Movement preponderates does the GOP enjoy success.
May you all enjoy a great day of Thanksgiving rememebring always to whom it is we are grateful.
soljerblue| 11.22.12 @ 9:24PM
You are so right, Al. Conservatives generally, and the Tea Party in particular, will continue to work to move the GOP back (forward) to recover its historic principles. If the Progs see that as 'far right', tough. We're here to stay, and I have a feeling we'll be focused in the next couple of years on our individual states. As originally conceived, the states are systemic to the federalist SYSTEM. We intend doi0ng our best to resurrect that concept and apply it on the local and state level. And with the new found strength of the Party in so many red states, we're gaining ground. A good fighter knows how to move his feet to get inside his opponent and land his punches. Politics is just a different venue but the same strategy applies.
Ralph Novy| 11.23.12 @ 9:25PM
If you can perceive no difference between Dems and GOPers, over the past however-many years, I can perceive no difference between you and a lamp-post or a hog turd, sir.
howard lohmuller| 11.21.12 @ 10:59AM
Everything Mr. Ferrara says is encouraging and mitigates the economic and legal damage damage that the Federal Government can do to States. But States can only slow down the damage. What is required along side State economic policy is a formula regulating how much money and regulation can be taken and given to each State. Otherwise States like California will wind up getting more from the national pie than they produce. States like Texas will pay for Califonia's bad policies.
Gary B| 11.21.12 @ 11:39AM
The wheels have already started to come off the economy. Huge numbers of idiot Obama voters are losing their jobs. Business investment has all but stopped. Muslims are running our foreign policy. Our foreign friends can't trust us any more. We'll soon have a comic book Supreme Court. Eric Holder will continue his policy of immunity for black criminals. More anti-Christian outrages will occur. Other people's money is in short supply. The press is doing a victory dance. This is Obama's America. What could possibly go wrong?
Apparently, the pendulum hasn't swung far enough.
Ralph Novy| 11.23.12 @ 8:34PM
Hold your finger to the wind -- or at least read The Wall Street Journal, pal.
The wheels aren't coming off the machine, pal.
Change your media sources or your medication.
Who Knows?| 11.21.12 @ 11:50AM
I can see the future, NOW.
Since the takers, aka the Democratic Party machine, have achieved total control of the vote via fraud and indoctrination by the public “schools”—including the MSM and entertainment and so on---so that federal elections are rigged in their favor “forever”, the only choice left for makers will be to—
Vote with their feet.
There IS already two Americas, and over time rational producers will migrate to live with their own kind.
There will be a “fixed cost” for all, inescapable, wrenched from makers to pay for the wretches left in “loser” states like California and areas like the Northeast. But, on the margin, “winners” will congregate in states that welcome them, and indeed encourage them.
Fluck the federal government!
Bypass it, do not PASS it, and instead of collecting $200, or donating it, make do with what’s left over after paying for the foolish losers.
The “Hell no, I won’t go!” crowd of takers, by and large, can just stay where they are, as the “Heavens yes, I will go!” individual makers get away from their muggers, ASAP.
Ignore DC as much as possible, legally reduce your tribute to the tax collectors from that sinkhole, and use your remaining earnings to grow your own wealth.
Fluck ‘em!
TeaPartyNow| 11.21.12 @ 12:43PM
There is zero power in government & zero potential for powers gain in government.
The only power in America are the American People. The right needs to lead a nation wide civil rebellion against tyranny. Against unfair cost & intrusion. Wake up right, civil rebellion is the only way.
Rhoetus| 11.23.12 @ 3:31PM
Now we have 1000 tyrants one mile away rather than one tyrant [King George II] 1000 miles away.
Ralph Novy| 11.23.12 @ 8:28PM
You've got 1,000 tyrants one mile away?
Run!
J.C.Eaton| 11.21.12 @ 1:21PM
McGovern? Massachusetts? Oh well, a triviality lost in a worthwhile message. Happy Thanksgiving ALL!
Russel| 11.21.12 @ 8:39PM
Peter , what you say is great , as far as it goes . But our country is a Republic and each state has its own Constitution . Our Founders never intended the Feds to ' run ' anything aside from national security . So , the states are not bound to feds beyond that . Point is : each state has the right to tell the feds to go pound sand , and they should . What's going to happen , send in the military and assume control of a state legislature ? . Take Dumbo'scare -- the feds have to ask the states to set up an exchange , not demand it . Ditto the SCOTUS . The states should tell nine lawyers to OFFER an interpretation and not assume it's some sort of final say on the destiny of our nation . Go F#&* off , Roberts . We're not going to sell out our whole state of law abiding citizens because YOU , one twerp lawyer , says so . Our Founders wouldn't have it any other way
Albertus Magnus| 11.21.12 @ 10:06PM
Look for the Feds to force State governments to "cooperate" by coercion or threats or even outright dictatorial edicts. These guys absolutely will not take "no" for an answer. Governors may stand up to the Feds, but they will be overruled by Federal Courts in a demonstration of raw political power.
Quartermaster| 11.22.12 @ 12:36AM
That is why the wrong side won in the war of northern aggression. Both parties are leftist. The GOP started out as a radical leftist party and were surpassed only when Wilson brought progressivism into the Dimocrat party. The GOP has never changed, but the Dims sure did.
I doubt Jefferson would not think secession is a bad idea under current circumstances. He would wonder why it took so long as we are suffering far worse than King George forced on the founders.
Ralph Novy| 11.23.12 @ 8:49PM
Lookee here, Quartermaster.
"Quartermaster" doesn't mean that you're only master of that quarter of your brains that concern themselves with revenge and other stupid, petty things.
Ralph Novy| 11.23.12 @ 8:49PM
Master the whole of yourself, sir.
Take the whole into account and adjust things accordingly.
Eh?
sdfhlk | 11.22.12 @ 4:57AM
Obama ,do with it
Obama’s freeze dried corner of American culture.
Bilejones| 11.22.12 @ 5:50PM
I found this para interesting:
"Americans for Tax Reform reports from official IRS data that in 2007, the nine states with no income tax gained 235,000 residents from the other 41 states. Those residents took with them $11.8 billion of net adjusted gross income. The 10 states with the highest tax burden together lost 441,000 residents, who took with them $12.8 billion in income."
So the individuals leaving the States with the highest tax burden had an income materially less ($29k v $50k) than those moving overall.
Seems to suggest that taxes weren't the motivating factor, no?
Stan Redmond| 11.23.12 @ 3:02PM
Are you kidding? Taxes aren't a factor? ADJUSTED GROSS incomes of that range means they are making a good amount of money. And if they are business owners not paying a state income tax makes a huge difference in what you can pay yourself or reinvest. Also don't discount the regulations (environmental, labor, et al) that a state like Texas does not have is quite attractive. Do you know how big of a pain in the ass it is to comply with the stupid little taxes in a state like California? At any time an assesor can walk in to your shop and assign, out of the blue, a value to, well, anything and charge you property taxes. If you compete with a politically connected company guess who's visiting you to shut you down through unreasonable taxes? Who wants that guillotine hanging over you?
As for the low income who are able to move they have to follow the jobs.
topcat52| 11.22.12 @ 11:20PM
All points well taken, except that regarding pensions. All union pensions are essentially salary increases eschewed in favor of retirement benefits. Of course, those same contributions could be made to defined contribution plans, but to the detriment of plan participants. The true difference between the two plans is not in the unfunded liabilities - to the extent that the plan is ongoing, those liabilities are irrelevant. The difference is in where the asset risk lies. In a defined benefit plan, if the assets are not properly invested, the employer is required to make up the difference. In a defined contribution plan, if the assets in a participant's account do not perform, it is the participant who is out of luck. Consider an employee with a sufficient 401(k) plan at the beginning of 2008, who desired to retire using those funds at the end of 2008. 2008 saw plan assets fall by as much as 1/3. That participant can NEVER recoup that money. In a defined benefit plan, however, those losses, in a properly run plan, would not mean the loss of 1 cent of retirement income. The funds could be made up after markets, and, therefore, the plan funds, recovered. I've never quite understood why conservative pundits never seem to understand how pension work, but they don't.
Rhoetus| 11.23.12 @ 3:36PM
Why was this ever offered? Politics- so in these times put the risk back on the beneficiary and removed from the tax payer - new hires should be in a 401k in Greek public debt.
topcat52| 11.22.12 @ 11:21PM
All points well taken, except that regarding pensions. All union pensions are essentially salary increases eschewed in favor of retirement benefits. Of course, those same contributions could be made to defined contribution plans, but to the detriment of plan participants. The true difference between the two plans is not in the unfunded liabilities - to the extent that the plan is ongoing, those liabilities are irrelevant. The difference is in where the asset risk lies. In a defined benefit plan, if the assets are not properly invested, the employer is required to make up the difference. In a defined contribution plan, if the assets in a participant's account do not perform, it is the participant who is out of luck. Consider an employee with a sufficient 401(k) plan at the beginning of 2008, who desired to retire using those funds at the end of 2008. 2008 saw plan assets fall by as much as 1/3. That participant can NEVER recoup that money. In a defined benefit plan, however, those losses, in a properly run plan, would not mean the loss of 1 cent of retirement income. The funds could be made up after markets, and, therefore, the plan funds, recovered. I've never quite understood why conservative pundits never seem to understand how pension work, but they don't.
Stan Redmond| 11.23.12 @ 3:08PM
I am surprised a resident liberal hasn't come in with the "Red states get way more federal dollars than blue states" meme. It has been quite popular at Am Spec. lately.
Rhoetus| 11.23.12 @ 3:32PM
Rules for Conservatives @
http://www.saveamericanow.us.com
Ralph Novy| 11.23.12 @ 8:26PM
Wow.
So that's your "big idea," Ferrara? Take us back to the 1860s/70s?
I'm not going to waste much breath on half-baked, assholish ideas that have long been discredited.
Suffice it to say: To the extent you weren't outright lying through your statistics, you were torturing the others beyond recognition.
I think you're a paid liar, Ferrara. A liar for hire.
Feel good about yourself?
Tell your kids what you do?
How's your wife feel about it?
How do your parents, if still living, feel about it?
I suggest you take at least a couple of those questions to heart. It's in your own longer-term interest.
Ralph Novy| 11.24.12 @ 2:20PM
"Laboratories of Democracy"?
Seriously?
... when you know full well that they are, if anything, "laboratories of plutocracy"?
Disgustingly dishonest!
Ralph Novy| 11.24.12 @ 2:48PM
Maybe you think you're smarter than the sleazy dumbasses who produced "The Men Who Built America," eh?
You know -- the people who put together a paean to capitalism that started off with commentary by Donald Trump, Jim Cramer and Jack Welch.
... and thought no-one would mind that all three of them are extraordinarily ignorant, extraordinarily arrogant, and extraordinarily dishonest.
Whew.
Stan Redmond| 11.25.12 @ 4:20PM
Put down your Alinsky. This bile you're spewing here is nothing more than rambling profanity laced hatred for anyone with a different opinion of yourself. Go hang out at Zucotti Park with all the other vermin.