Latest / Words & Numbers / Episode 453: Running Away from Taxes

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Episode 453: Running Away from Taxes · Words & Numbers

0:00
This week on words and numbers, illegal tweets.
0:02
What happens if we roll back the tariffs?
0:04
The Fox. Newsmax Debate.
0:06
And people move in response to taxes.
0:09
All this and more this week on Words and Numbers, a civil
0:12
original podcast. Hi, I'm James.
0:14
And I'm Anthony and. This is words and numbers.
0:21
Check us out every week Tuesdays and Thursdays at 7:00 AM
0:25
Eastern. Ant, what's new and exciting in
0:28
your world this week? Well, the big news this week is
0:31
the appeals court that ruled, on the one hand, that President
0:37
Trump overstepped his authority in imposing the tariffs and, on
0:41
the other hand, said that the tariffs are going to stay in
0:44
place until the Supreme Court reviews the case.
0:48
So now we're all waiting to see what happens.
0:51
And you and I had discussed in at least one earlier episode the
0:56
legalities involved with the president imposing tariffs.
1:01
What I want to think about is what happens if the Supreme
1:08
Court rules that the tariffs were unconstitutional?
1:12
They get rolled back and then opens the door for somebody to
1:19
say, well, give us back the tariff revenue that we paid in
1:23
and of course that somebody is more likely than not to be
1:27
companies and right. Not the not the people who paid
1:32
the tariffs, exactly. This is where life gets rather
1:36
interesting. The fact is when you impose
1:39
tariffs like that, the tariffs at least in part and a lot of
1:43
economists would say in large part, the tariff gets passed on
1:46
to the consumer in the form of higher prices.
1:49
And you know, any of us who have gone to the store recently and
1:53
bought something that involves that was either imported or was
1:58
used imported goods in its making, understand that the
2:02
tariffs have jacked up prices of things.
2:05
So on the one hand, the companies pass the tariffs on to
2:08
the consumers. On the other, if all of a sudden
2:12
the government has to hand back these tariffs and the companies
2:15
are the ones that have their hands out saying, OK, give us
2:18
back all of this money that we paid in.
2:22
They're not going to turn it over to the consumers.
2:24
In fact, there's nothing to my knowledge, there's no economic
2:29
force that's going to cause them to want to pass them back to the
2:33
consumers like there was an economic force that caused them
2:36
to want to pass the tax on to them in the first place.
2:40
And so when we're all done here, what we may well end up with is
2:46
a six to nine month economic unconstitutional economic policy
2:53
that had the net effect of taking money from consumers at
2:57
large and handing them to shareholders.
3:00
Yeah, I want my money back. Let's be real clear about you.
3:05
Aren't getting anything. Yeah, no, that's right.
3:08
As usual, I'm left holding an empty bag.
3:11
And let's also be clear that we did an episode on this with Phil
3:15
Magnus, who has been way out in front on this issue for a very
3:20
long time. So give Phil a look if you want
3:23
to see what's really going on. This is a disaster in the
3:28
making, but it's been a disaster in the making right from day
3:32
one. Well, it's been a disaster from
3:34
day one. And The thing is, economic
3:37
experts, political science experts have all said the same
3:40
thing, that this is a disaster and we're going to pay for it
3:44
one way or the other. And I'm left to point out who
3:48
could have predicted such a thing?
3:50
And the answer is, once again, us, and this time with Phil,
3:55
Right? So here we go.
3:58
I want to take our attention abroad, something that I rarely
4:02
do. I'm on record as saying that I'm
4:04
not terribly comfortable criticizing other people's
4:07
governments. That's for them to do, not us.
4:11
And yet this one is so ridiculous that I think we have
4:15
to. There's a comedian or ATV
4:18
writer, depending on how you like to look at things, by the
4:20
name of Grand Linneham. You ever hear of him?
4:23
No. Probably, probably, probably
4:25
not. A lot of Americans haven't.
4:27
He's a Brit, and he made a bunch of tweets which I think we're
4:32
supposed to call posts now on Axe, not Twitter, wherein he
4:37
criticized various aspects of the trans rights movement.
4:43
And you would think, well, he's probably going to be in for a
4:47
healthy dose of criticism when he gets home.
4:51
But they arrested him instead. Oh my, really?
4:55
Yes, Russ, his tweets were termed hate speech, illegal,
5:01
whatever, whatever the Brits call this kind of nonsense, and
5:04
they rounded him right up. Having left the great state of
5:08
Arizona where I I currently reside, going back to Great
5:11
Britain, they rounded him up and put him in jail.
5:15
Yeah, I I over the past three or four months have gotten on a the
5:20
kick of watching British police police dramas.
5:25
And it's shocking to me every time it happens.
5:28
But invariably there's something in there that someone's arrested
5:31
for saying something or writing something.
5:34
And it's shocking to me as an American, you know, we have it
5:36
deep down, this freedom of speech after remind myself.
5:39
Wait, wait, wait. This is in the United States.
5:41
Yeah, it it, it's strange because I've been watching this
5:45
new nonsense play out in in Great Britain whereby people are
5:50
arrested for flying various British flags.
5:54
Really. Hear what I just said?
5:57
We're making it against the law to burn it, and they make it
6:00
against the law to fly. It yeah, the the West is not
6:05
united in its opinions on these matters.
6:09
But it it seems to me an outsider and I hope some of our
6:12
British listeners will, will chime in on this.
6:16
It seems to me that the Brits are making everything
6:21
prosecutable except actual crime.
6:24
I mean, what the hell is going? On, you know, we, we really
6:29
can't be pointing fingers there. I just pointed a finger.
6:33
But no, well, I'm going to continue.
6:36
You know, we have a long history of making all sort, calling all
6:39
sorts of things for which there is no victim a crime.
6:44
And I am long on record as pointing my fingers at those
6:48
things too. So I think I've earned the right
6:52
to ask the Brits why you can't say things and why you can't fly
6:57
a British flag. These just don't seem to be
7:00
complicated questions. Perhaps somebody from the
7:03
British government would like to come on over and explain to us
7:07
what the hell is going on over there.
7:09
Yeah, but for God's sake, don't go over there and ask them.
7:13
Yeah, no, I'm. I'm thinking that given my
7:16
Twitter output, I might not be welcome.
7:19
I guess we'll all find out one day when I have a connection at
7:23
Heathrow. Get words and numbers on
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Regular episodes are free. Sign up for an annual membership
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to support our show and for access to member exclusive
7:36
content. That was not instantly the
7:39
foolishness of the week. So we are brought to the
7:42
foolishness of the week, which involves Fox News of all things
7:48
and Newsmax to conservative. I guess I don't even like to use
7:55
the word conservative anymore. Too right leaning.
7:59
That's not quite that doesn't capture it either. 2 news
8:03
sources. No wait, that's no good either.
8:08
Wow, this is harder than it first appears. 2 cable
8:13
television channels that are, unlike CNN and MSNBC, in
8:19
meaningful political ways and very similar to one another.
8:24
There. I think I did it.
8:25
I don't think anything I just said is a lie.
8:28
Anyway. Newsmax is suing Fox News
8:34
because go ahead, ask me. Ask me why.
8:36
Go ahead. Why?
8:39
Because Fox News has a monopoly on the conservative news market,
8:47
and it's involved in unfair competition.
8:52
How do you have a monopoly on the news market?
8:56
Oh no, no, no. They have a monopoly on the
9:00
conservative news market, Aunt. How do you have a monopoly on
9:04
that? Allow me to read from the from
9:09
the Web article that I found that I'm going to read from one
9:12
from NPR, which of course will make everybody angry, but you
9:17
can go find your preferred outlet.
9:20
They're all covering this. The suit alleges that Fox Corp
9:23
engages in at least three anti competitive practices, imposing
9:29
explicit or tacit no carry provisions for competing right
9:34
wing outlets as it strikes deals for cable providers to offer Fox
9:39
News to subscribers, requiring those that carry Newsmax or
9:44
other competitors to carry Fox Business and sister outlets, and
9:49
in inserting what Newsmax's legal team calls contractual
9:54
barriers intended to prevent Newsmax and others from
9:57
competing. While stated that way, it does
10:00
sound like something akin to we're going to have non
10:05
competition. We're going to have some fun
10:08
here. And, and let's, let's keep in
10:10
mind that both Fox News and Newsmax have both been sued by
10:16
two voting machine companies and three of those and three of
10:21
those 4 lawsuits have been settled by Newsmax and Fox.
10:28
So now they're just going to turn on each other after after
10:31
all of the election denying that they they both did.
10:35
So I wonder which one claims the mantle as being the true
10:39
conservative media outlet and and who the hell and who the
10:44
hell do they claim it by being further to the right or further
10:47
to the center? Again, who the hell cares?
10:52
This is just going to be hilarious.
10:54
Hilarious. And I can't.
10:56
I can't wait until the Trump administration weighs in on this
11:00
at a press conference in some kind of off the cuff way that
11:04
muddies the legal waters beyond all.
11:06
Repair. Oh, you know that's coming.
11:13
Oh of course, of course. I know it's coming and I
11:15
literally can't wait. I am actually going to start
11:18
watching both of these channels to see how they themselves cover
11:22
this lawsuit. Good fun for everybody.
11:26
Anyway, what do you got this week?
11:28
Well, an interesting thing. There's a data set, and I've
11:32
worked with it from time to time over the past, good Lord, maybe
11:37
20 years. And this data set tracks
11:42
people's move. I should let me be careful about
11:45
my wording here. It tracks people's movements
11:48
across states. What I mean by that is not that
11:50
they're tracking actual people, but rather it's coming from the
11:53
IRS and it the data set indicates when a given person
12:00
has filed a tax return in one state one year, in a different
12:04
state the other year, indicating that they moved from one state
12:08
to the other. Yeah, there's a couple of things
12:10
to say here. It's inflows and outflows.
12:13
Right, right. It's going both directions.
12:15
And what gets us on this topic is the Tax Foundation released a
12:21
graphic which takes it from the state level to the county level.
12:26
It's really interesting. And keep in mind that this data
12:30
is, I believe from the Tax Foundation.
12:33
It's not only from the IRS, it's from Census.
12:38
So they've combined a couple of data sets to get a fuller
12:40
picture and it's 2020 to 2022, right?
12:45
Because there's a real lag in this kind of data.
12:49
As we've talked, we've talked about data lag before and it's
12:52
important to mention it again here.
12:55
This isn't what happened last year.
12:57
This isn't about Biden and Trump, right it?
13:00
Well, maybe it is in some way, but not in the most immediate
13:04
sense. But nonetheless, we've got a
13:07
fuller picture now than we had before.
13:10
Yeah. And you know, I'll say a lot of
13:13
these things. People kind of will get on to me
13:15
from time to time demanding the latest data and a lot of
13:19
economic data doesn't change that much year to year.
13:23
In fact, I I did this study both at the county and the state
13:29
level back in 2011 and directionally the results we got
13:34
are the same as what you're seeing here.
13:37
Yeah, not, not a big surprise, right?
13:39
Because the question to ask and and it's.
13:42
It's weird too, because the data is muddied a bit right when
13:48
families of 6 move. Right.
13:52
Because and and you see how that would complicate matters, right?
13:56
How do you count that outflow? Is it 1?
13:58
Is it 6? Yeah.
14:00
And and to the extent that you're using IRS data and
14:03
everybody in the households filed under one filing, that's
14:07
what's tracked. So actually that's a better way
14:09
to say it. It's not the people are being
14:10
tracked, it's the filing that's being tracked.
14:14
But with the addition of census data, now people are being
14:18
tracked. Oh, you can do, Yeah.
14:19
You can add some color, some census like color to it, Yeah.
14:23
And it, it and color is exactly the right word to use when you
14:26
look at the at the county map. And, and we've all gotten a
14:30
little more familiar with county maps as we have considered
14:34
presidential elections, right? We look at the red and blue
14:37
counties instead of red and blue states, and you get a radically
14:41
different answer, right? Turns out almost all the
14:44
counties are red. There's an interest.
14:46
Almost all the counties that have lots of people are blue.
14:49
There's an interesting thing that happens with economic data
14:52
in counties, and that is that under certain circumstances, the
14:57
data is effectively blanked out. For example, you can be dealing
15:04
with a county and there are 3000 of them, right?
15:06
Most of them are rural. You could be dealing with a
15:09
county that has a small enough population that when you start
15:14
to say things like how many households here earn over
15:18
$1,000,000? Well, now you're at, you know,
15:21
if there's only three or four of them, you're the data can
15:24
actually identify precisely who that is.
15:27
So in those instances, they'll blank out the, the data.
15:30
So you'll get holes here depending on what it is you're
15:33
looking at. But but as you talk about
15:37
migration, keep in mind here the data is very rich.
15:41
It shows if the county level's even richer, but at the state
15:45
level, it shows movement from state A to state B and from
15:52
state B to state A. So with 50 states, that's 2500
15:59
different directions if you think of all the combinations in
16:02
and out amongst the each of the 50 states.
16:05
So there's tremendous amount of richness in this data.
16:09
It's unlike, for example, saying, well, people moved from
16:15
West of the Mississippi to east of the Mississippi.
16:18
It's hard to say why that would have happened because there's so
16:21
many things going on and there's only one movement there from
16:25
point A to point B. But if you got 2500 movements
16:28
now you can start to look for interesting commonalities.
16:32
And one of the commonalities that that stands out and I wrote
16:36
about it and they write about it here in Tax Foundation is
16:38
differences in taxes. Well, let me give you the five
16:42
states experiencing inbound migration.
16:45
See if you can figure out what it is that links them all.
16:50
Florida, Texas, North Carolina, South Carolina, Tennessee.
16:54
OK. So right off, I would look at
16:56
that, not being an economist, and say, well, those are warmer
17:00
states, maybe with the exception of Tennessee, yeah.
17:04
They're all southern states, so people are going from north to
17:09
South. They're also going from the far
17:12
West to the not so far West, right?
17:14
We get lots of inbound Californians here in Arizona,
17:19
and our friends in Texas are getting quite a few of them
17:21
there. Am I?
17:22
Correct that the states that experienced the most net
17:26
outbound were California and New York outbound migration.
17:30
Top five Louisiana, California, Illinois, New York, South
17:34
Dakota. Yeah.
17:36
It's odd that we haven't talked about Illinois because Illinois
17:41
as a state is an utter train wreck.
17:44
It is. But interestingly, and I go to
17:47
in my current job, I go to Illinois frequently and speak
17:51
with people there and I get the sense from the people themselves
17:57
that when you think of Illinois and problems, economic,
18:01
political, what have you, it's really not Illinois you're
18:04
talking about, it's Chicago. It's Chicago.
18:07
We found that when we looked at at gun ownership, gun violence
18:11
rates, Chicago pulls the whole state in One Direction as far as
18:16
the statistics go. But as soon as you get out of
18:18
Chicago, things look very different.
18:20
It it really does. But the budgetary problems that
18:24
Chicago brings are profound, right it it, It's hard to let
18:29
the entire state off the hook when you see what they have to
18:34
do, the cartwheels and the gymnastics they have to do to
18:37
make it all work. And I I suspect that we're going
18:40
to get there with New York City before long, too.
18:43
Yeah, yeah, very much. So I mean, in a in a lot of ways
18:47
we already have, but New York City isn't the same kind of
18:52
drain on New York that Chicago is on Illinois.
18:56
Yeah. And, and Even so, I used to live
18:58
in upstate New York, and this would have been, good Lord, 30
19:02
years ago or more. And even back then, it was just
19:05
a thing. People upstate New York would
19:07
shake their heads and say, yeah, they wish New York City would
19:10
just break off and be its own state.
19:12
Break off. I I lived in upstate New York
19:15
myself from 2001 to 2005 or 6, something like that.
19:22
And in every place I lived in, in every year I lived there,
19:26
that was exactly what people were saying then, too.
19:29
Yeah, but it, it's interesting, right, 'cause you, you talk a
19:32
lot about the right of exit and we typically talk about that at
19:38
at the, the national level, right?
19:41
They we should be able to leave a country and go to another one.
19:47
And we all know that that's really not quite possible.
19:50
So when people say goofy things like if you don't like it here,
19:54
you should go. Well, all right, Rufus, where am
19:58
I supposed to go? Yo.
20:00
Where's this magical land that I can just leave and go to?
20:04
Without having to get somebody's permission and or pay a bunch of
20:08
money. Well, well, or both of those
20:11
things. You're generally going to have
20:13
to do both of those things, and it's probably going to be more
20:16
than you've ever had if it's a place that you want to go to,
20:21
and it's probably going to take you a very long time.
20:25
Right. So generally speaking, you live
20:30
where you live and tough shit, that's just how it is.
20:34
Well, I can give you one, one example of that.
20:38
I've for a long time now, I've had a fondness for Portugal.
20:42
And Portugal is one of the one of the countries that, dear as I
20:47
can tell, has made it easiest for Americans to go there and
20:51
become citizens. Very friendly.
20:54
How easy is it to go there and become a citizen?
20:57
You drop $250,000 on a piece of property, own it for five years,
21:04
and then you you're in line to be a citizen.
21:07
That's actually. Not a bad deal, it's not.
21:09
But to most Americans to that's a quarter of $1,000,000.
21:12
That's the cost. That's of leaving right now.
21:16
Do Australia. Yeah, no, I don't know anything
21:19
about Australia. You're going to need millions.
21:22
Really. And you're going to have to do
21:25
something for a living that they think is valuable and that they
21:31
don't have enough of. Isn't that interesting?
21:34
Pack a racist. So in in this.
21:36
Yeah, right. On the one hand.
21:38
Let's dwell on that. Let's dwell on that for a
21:40
minute. When we try in the United States
21:43
to espouse, and I'm not saying you and I do, but when people do
21:48
try to espouse something like the Australians have, we are
21:52
referred to as racists. Are the Australians also racists
21:58
or is that the right of a corporate people to determine
22:02
who will and will not be allowed to join them?
22:06
Yeah, that's that's well worth at least dwelling on in your
22:11
minds for a minute. We don't have to make a big
22:14
thing of it, but most countries have rather strict rules about
22:18
who can comment under what circumstances.
22:21
And it's, it's understandable if you think about it, particularly
22:25
if you have a significant welfare component to the, to the
22:29
government, you want to be bringing people that are going
22:32
to contribute or at least be a net zero to that system.
22:37
Yeah. And we try to do that here.
22:40
And what's been the the latest flare up?
22:43
And, and I think it's rather unfortunate politically, it's
22:48
become acceptable to say that Indians shouldn't be allowed
22:53
into the country, even though the Indians who come here have
22:57
advanced typically mathematic and computer science skills that
23:01
we don't have enough of. Right.
23:04
And yet it I do actually see a lot of racist commentary about
23:08
keeping Indians out because they they somehow dilute whatever
23:13
America is. But you, you know, all right, I,
23:17
I can't let that go because go back through our 200 plus years
23:25
and you'll find that there was, we're constantly being diluted.
23:30
Someone would call your people, the Irish would come in and
23:32
dilute. But but then what happens 2
23:35
generations later? There's no dilution.
23:37
Why? Because your part, part and
23:39
parcel of what it is to be an American.
23:42
I'm Irish, Italian. Neither of those groups was
23:46
considered human when they arrived.
23:48
Yeah. Now they're considered quote UN
23:51
quote white people. Yeah, I had.
23:53
It reminds me, I had a one of my favorite professors in college
24:00
taught. I just, he's one of these guys
24:01
that he was so good. I took him for whatever he was
24:03
teaching. It didn't matter.
24:04
So I ended up in several courses on Chinese history, which again,
24:10
I would have no interest in except, you know, he was
24:12
teaching it. So I'm going to go in and take
24:14
this course. And I could recall him saying
24:18
the Chinese have never been conquered.
24:21
And. And he says if that statement is
24:23
confusing to you, good. You understand Chinese history
24:26
because throughout their thousand pluses of years, many
24:30
people have come in and conquered China.
24:32
So what does he mean by the Chinese had never been
24:34
conquered? That the conquerors end up
24:37
adopting the Chinese culture and several generations later, they
24:41
end up being Chinese. Right.
24:43
Yeah. And, and so too, I think the
24:46
Americans, I mean, we're not, we're not monolithic in, in
24:51
that, in that sense. But when you think about what it
24:54
is that what it is that makes us the same Americans.
24:58
It's this entrepreneurial spirit.
25:00
The sense of people aren't going to tell me what to do.
25:02
I'm going to figure this out. I'm going to pull myself up.
25:04
I'm going to be entrepreneurial, all of that.
25:08
Anybody who shares in that shares in the core of what, in
25:11
my mind, makes an American. Yeah, I I would go a step
25:15
further and say that America is a country founded on an idea.
25:19
And if you accept the idea is true, congratulations, you're an
25:23
American. It's that simple.
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Use the code words and numbers. That's one word for 50% off an
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annual subscription. We've gone a little bit.
26:36
We have, we've, we've gone astray here because we do have
26:40
the right to exit, at least to some degree here in the United
26:45
States, right? We can go from one state to
26:47
another anytime we feel like it. And God, I, I should count up
26:52
how many of them I've lived in. It's quite a few.
26:55
Yeah. And and we, we move between
26:58
states for all manner of reasons.
27:00
So we're not claiming here that there's one thing.
27:04
Well, it's usually financial. It's not always financial, but
27:09
it's usually financial, right? It's about a job.
27:12
It's about retirement. Sure.
27:15
And one of the one of the many factors that comes in when
27:19
you're thinking about finances is taxation, taxes.
27:23
Yeah. And, And so it's, you know, it's
27:25
for that reason that from time to time, when I think about
27:28
retirement, immediately I think of Florida for no other reason
27:32
than that it sticks in my mind that they have no income tax
27:36
now. After retiring, what do you care
27:38
about income? Right.
27:39
Well, it's not to say that I would move there, but it's
27:41
something that sticks in my mind, right?
27:42
And so too, when it comes to taxes, this is 1 factor that
27:46
that weigh weighs on people as they think about moving.
27:50
And what I did in this study and what Tax Foundation is doing in
27:53
theirs is to compare differences in taxation across the states to
28:00
that migration. And and I can only throw a bit
28:03
of. Trivia at you Let me throw a bit
28:05
of trivia at you. Many most professional golfers
28:10
and many professional athletes live in Florida because they
28:15
have massive incomes. Right, right.
28:19
And it it goes untaxed right? There are other taxes that will
28:22
get you in Florida. They have property taxes and all
28:25
the rest. But if you have a multi
28:27
$1,000,000 income, you probably want to maintain your primary
28:31
residence there. One of when you think about
28:35
taxes, it's not just we tend to think about the level.
28:38
Are the taxes high or are they low?
28:40
And that does matter. But sometimes what matters even
28:43
more is not the level of the tax, but the form of the tax.
28:48
For example, you could have a tax system that collects, let's
28:54
call it state A. State A's tax system collects,
28:59
in theory, the same amount as State B's collects.
29:03
And yet, if State B's is a flat tax and State A's is a
29:06
progressive tax, you're going to have people migrating out of
29:10
state. A In fact, and when you look,
29:13
when you look at out of state migration and into state
29:17
migration, you're typically very typically looking at people with
29:22
with higher incomes. Yes and yeah.
29:26
And that's the next thing. That.
29:29
Progressive taxes filter out 'cause 'cause people to leave.
29:34
Who are exactly the people you don't want to leave the most
29:37
productive? You're alienating the people who
29:40
would have paid the most into your coffers had your taxation
29:46
scheme been what they thought fair.
29:48
Yeah, and that could become a big problem.
29:51
For example, I just looked up the numbers New York State, the
29:56
top 1% of taxpayers in New York State pay 55% of New York
30:05
State's income tax. And that is?
30:07
Not the group you want to anchor.
30:09
It's it's only 92,000 people 1/2 More than half of the state's
30:14
income tax revenue is coming from 92,000 people.
30:19
Piss those people off and you've just lost a huge chunk of your
30:22
tax revenue. Yeah, let me let me ask you a a
30:25
hypothetical question. How long or how much longer do
30:30
you think Wall Street will be the economic center of of
30:34
American life? Oh, that's a good question, I
30:38
would imagine. Tradition on its side, right?
30:41
But they'd all be better off in Houston.
30:43
They would be, but with the way things are becoming remote, it's
30:48
entirely possible that most of them will end up in Houston.
30:51
We'll just still call it Wall Street because that's where the
30:53
computers seem, you know, reside.
30:57
I, I think it'll happen in my lifetime where we no longer
31:00
refer to Wall Street as that place.
31:04
I don't know. It's just a guess, right?
31:06
It's, well, it's an informed guess, but it's just a guess,
31:08
so. To Hollywood for similar
31:11
reasons, well. And that that's been happening,
31:14
I think in dribs and drabs for a while, right?
31:18
There's a robust Toronto Film industry.
31:21
You do well in Atlanta, right? And, and what you end up finding
31:25
is that these places are luring productions in with gigantic tax
31:30
breaks, right? That they don't give to all the
31:32
other businesses in the state, right?
31:34
Pittsburgh used. To do that, yeah.
31:37
Pittsburgh. And it causes its own set of
31:39
problems, right? Because why not the guy who
31:42
sells hot dogs to the actors who are working on the movie set?
31:46
Right, right. Yeah.
31:47
Right. Why?
31:48
Why just the movie production? Why not everybody?
31:50
But that's neither here nor there.
31:53
I mean, look, I've lived in Connecticut, I've lived in
31:56
Massachusetts. These are states that rich
31:59
people don't want to live in anymore.
32:02
Now there's a level of wealth Ant that if I won that jackpot,
32:07
you can bet that I would move or have a living arrangement of
32:13
some kind in Boston by the end of the month.
32:17
All right, there's a level of wealth where it just doesn't
32:18
matter anymore. But if I won $1 million, I would
32:24
get as far away from Boston as I could possibly get.
32:27
Right. Yes.
32:28
Because you have to be reasonable about these things,
32:31
right? In many parts of the country,
32:33
you can retire on $1,000,000. In many other parts of the
32:37
country, New England, New York, eastern Pennsylvania, you're
32:42
going to slowly bleed dry. Yes, let me go back to tax level
32:47
versus form. So form is level, of course, is
32:50
the number. Form is the manner in which you
32:53
collect it. And one of the things that we
32:55
have found is that progressive taxation is a bad form.
32:59
It it alienates the the more productive people send them out.
33:03
And what happens is you get into this weird spiral.
33:06
California's is feeling this now.
33:08
California's income tax system is so progressive that once you
33:13
become a highly productive person, you're making into the
33:17
six figures, There's a tremendous economics incentive
33:20
to leave. And so as the, as the productive
33:24
people do that California has to respond by making its tax system
33:29
even more progressive, which puts even more pressure on
33:33
people. Even before you know it, you
33:34
have a problem. Like I was looking at their, at
33:37
the, the growth in California's year to year growth in their tax
33:41
revenue. It swings widely, and I'm just
33:45
looking going back to roughly 2010, 2012 year to year change
33:53
in the tax rate. And I mean, think about your
33:55
household income. Our household incomes change
33:57
year to year, but you don't expect to change that like that
34:00
much, you know, unless something horrible happens, right?
34:04
You know ±5%, something like that.
34:06
Perhaps California? Their tax revenue has swung back
34:11
and forth by as as low as -23% to as high as +47%.
34:19
Now and they've got, they've got massive outflows.
34:22
Yeah. And and so what's going on
34:24
there? Your, your tax revenue is
34:27
becoming so incredibly volatile. It becomes difficult to to write
34:32
a budget because you have no idea what your revenue is going
34:34
to be. Your revenue is volatile because
34:36
so much of it has come to depend on so few people because it's so
34:39
progressive. Yeah, and you know, some some
34:42
people are paying a lot of attention to Gavin Newsom right
34:44
now for all kinds of reasons, both good and ridiculous.
34:49
And one of the things that they love to say is, well, he's had a
34:52
surplus in California. Yeah, till, till the data was
34:57
revised. Yeah.
34:59
Right. Till all the data came in and
35:01
then it turns out there was no such thing as right.
35:06
So it's always like this, people.
35:08
People draw conclusions long before they should.
35:11
And even And then when when presented with evidence to the
35:15
contrary, they just double down on their.
35:17
Foolishness. And even then I I don't trust
35:20
state level data that well. Not to say that there's anything
35:24
wrong with the numbers themselves, but rather it's much
35:28
easier at the state level to, how should I say, reclassify.
35:34
Things. Cook the books.
35:36
Say it. Say it like you made.
35:37
Example, for example, in Pennsylvania, it was, this was
35:41
would have been maybe 20 years ago or so.
35:44
The politicians were claiming that Pennsylvania was in surplus
35:48
and all all of this stuff. And so therefore we can spend
35:51
more money. And more money.
35:53
What they had done is they had ignored the future pension
35:57
obligations for teachers. You and I wrote about.
36:01
This right off the table, right? Yeah, I mean, there's, OK, I'm
36:04
not spending that money right now, but I'm going to have to
36:06
spend it. I know I'm going to have to
36:07
spend it. I need to to to account for it
36:10
somehow. It it's like spending your
36:12
entire paycheck the day after you get it and and saying to
36:16
yourself, I know I'm going to need food in the future, but it
36:23
that doesn't count. Right.
36:24
Look at how much money I made today, right?
36:27
Woo Hoo. Yeah.
36:28
Yeah, it's a, it's a, it's, it's really insane.
36:31
And you know, I think there's another pernicious element to
36:34
progressive taxation because the inflow, because the, the tax
36:42
collection varies so much. Politicians play with the tax
36:49
code so much that you can't predict where it's ever going to
36:54
be. Right.
36:55
Yeah. So when, when you need to have a
36:58
pretty good idea of what the level of taxation will be both
37:03
for your own purposes and for any business you might be
37:06
starting right now, you can't, right?
37:12
And that's, that's really dangerous.
37:15
Yeah, I've come to come to think of April 15th as the lottery.
37:19
Sometimes I owe money, sometimes I get money back.
37:21
I have no idea what's going to happen until I send the papers
37:25
in. And there seems to be no way to
37:27
even predict it, right? Yeah, stable tax.
37:31
A stable tax code would be perfectly predictable.
37:33
But see, and who who that hurts are the middle income, lower
37:37
income people. If I'm a particularly rich guy,
37:40
I can afford to pay accountants and lawyers.
37:43
They'll figure it out for me. In fact, they'll come back and
37:45
say do this, this and this and we can make the number smaller.
37:48
The regular person can't afford that.
37:50
It's it's, it becomes a tax lottery.
37:53
That's right. So what can you do?
37:55
You can move. Yes, you can move.
37:58
And people are moving and they're moving a lot.
38:02
I would dare say looking at at the data I'm looking at, we're
38:07
probably moving more now than we have in a very long time.
38:12
In fact, I was looking at this in a regional basis for the
38:15
United States population projections.
38:18
And of course we know that the US population is topping out.
38:21
It's it's going to start to decline.
38:23
What I was unaware of until a couple of weeks ago is that the
38:27
decline happens regionally. It happens first in the western
38:30
states. They're going to see their
38:32
populations start, start to drop off and then it moves up to the
38:36
to the middle states in the Northeast.
38:39
But the last one is the Southeast.
38:42
In fact, as far out as the projections go, the Southeast is
38:45
topping out but isn't coming down yet.
38:47
And that makes perfect sense, right?
38:49
Because they've made it an attractive area to live and an
38:53
attractive area to do business, so the more attractive it gets,
38:58
the more people will go there. And it it is nice there the, the
39:01
weather is much better. You don't have the earthquakes,
39:04
you do have hurricanes from time to time, hurricanes.
39:07
One thing that you do have in common across almost all of
39:12
those southeastern states is a low flat tax system.
39:19
And no snow. And no snow there's there's
39:23
always, there are always non economic things that really
39:26
matter. We've, we've said several times
39:30
about voting with your feet of just of moving, leaving, and
39:34
that has beneficial effects for you.
39:37
You get to go and live under a a better tax system than the one
39:41
you came from, but it also has a beneficial effect for everybody
39:46
who you left behind because it forces the state's politicians
39:51
to compete with the politicians of other states.
39:55
And the the simple declaratory effect of an outflow is it it's
40:03
meaningful. Politicians see it, they know
40:07
it's a problem. They have to address it.
40:10
There's there's no two ways about it.
40:13
And there you have it. You want you want to make a big
40:17
a big change move. And you know, we, we talk aunt
40:21
about the need for human respect and human dignity.
40:26
What could lead to more of that? However you want to, however you
40:32
want to count it up, then people having the ability to escape a
40:38
more tyrannical state government in favor of a less tyrannical
40:42
state government. Yeah, that's kind of the very
40:46
definition of human dignity. And I'll, I'll go a step further
40:50
that the reason we're escaping the more tyrannical government
40:55
for the, for the less tyrannical is that the more tyrannical
40:59
governments have in place policies.
41:01
Here we're talking about taxes, but it probably applies to other
41:04
things as well. Policies that treat half the
41:07
population as as mouths to be fed, as problems to be solved,
41:14
and the other half of the population treats as a resource,
41:16
as wallets to be dipped into whenever we want.
41:19
I, I think of, I think of it as as treating them as ATMs. You
41:24
just wander up to them and you press some buttons and money
41:27
comes out and you never have to consider where it came from or
41:31
why. And, and, and that's, I would
41:35
argue that's dehumanizing to the people who are net taxpayers,
41:39
but to the people who are net tax recipients, I think it's
41:42
equally dehumanizing. Maybe more so in a lot of ways
41:46
when you're told that you're just a problem that society has
41:50
to solve, right? Not that you're a human being
41:54
who we would prefer to be flourishing.
41:56
Right. Right.
41:59
And because what far too few of us flourish given how many of us
42:06
could, is it ever going to be everybody?
42:10
No, I think not. Is it?
42:13
Could it be a lot more than it is right now?
42:15
I absolutely, it could be. Absolutely it could be.
42:20
And that's the crime if it all. And this is the way you get to
42:24
dig in your heels and point your finger, which finger is up to
42:29
you as you walk out of the state.
42:32
And And look, man, I don't think in my entire life.
42:37
I mean, yeah, you hesitate to say this kind of thing because,
42:40
you know, children were born you you attended a wedding Once Upon
42:43
a time, these sorts of things. But you know, above and beyond
42:47
those sorts of things, about the happiest I ever was is when I
42:52
saw the sign that said you are now leaving the state of
42:54
California. When I moved out, I, I was, I, I
42:58
actually burst out laughing as I drove out of that state.
43:03
Couldn't wait to leave it behind.
43:05
Every, every single part of it had come to annoy me.
43:10
And look, I was just way out in front of it.
43:12
I left in 1999. A lot of people have left since
43:16
then or, and even more are leaving now.
43:19
And it's not just California, It's a lot of places just like
43:23
California. I've got a couple of notes here
43:26
for our So what segment. And I think, I think you've just
43:30
trumped all of them with the with the single.
43:33
What I would say the single take away from this is that when you
43:38
do and it will, there will come a point in your life when you
43:40
decide I'm leaving wherever I am for somewhere else.
43:43
And largely it's going to be for for financial reasons and taxes
43:46
will matter. When you do this and you get to
43:49
your new place, that's better. Think carefully about how you're
43:53
voting and make sure that you you aren't one of the people who
43:56
contributed by your voting habits to the problem that you
44:00
just escaped. Yeah, couldn't have said it
44:04
better. Couldn't have said it better,
44:06
although it's said in much more colorful terms here in Tucson,
44:09
AZ, as you might well imagine. Oh, I can't say the things they
44:15
say about the Californians who come here and start voting in
44:18
Californian ways, but there you have it.
44:22
And, you know, look, I, I think we've probably got a lot of
44:25
Gavin Newsom talk in our future. So I'm, I'm going to keep it to
44:29
a minimum here. But he's presiding over a
44:33
disaster of the state and he wants to be president.
44:38
Good luck with that. Now I have to say that I think
44:42
his mocking tweets of Donald Trump are absolutely hilarious.
44:48
I haven't. Seen any of those?
44:50
He he is tweeting in that, well, more to the point, somebody in
44:53
his office is tweeting in the form of Donald Trump with all
44:58
capital letters and crazy things and exclamation points
45:03
everywhere. And it's absolutely hilarious
45:06
and it's a political masterstroke.
45:08
It's catapulted him way in front of everybody else on that side
45:13
of the aisle who's eyeballing the White House right now.
45:17
I don't think he's going to be able to hold on to that mojo
45:21
because he's going to have to answer a lot of uncomfortable
45:24
questions about what's happened on his watch.
45:27
Yeah, and it's been a long, long.
45:28
We'll see. Well, hasn't.
45:30
It it has, it has and and we'll see how it goes.
45:33
I'm I'm interested, I'm interested, but until we get
45:38
back to that, I think we're probably just about done here.
45:42
You got anything else you want to tell the people this week?
45:45
No, I think you've run. You've run through both pages of
45:47
notes. It's nice that you take notes
45:52
and I can divine them from 2020, 500 miles away.
45:57
Anyway, everybody should remember that everything we
46:01
talked about, it's important, right?
46:03
We wouldn't talk about it if it weren't important, but if this
46:07
is the most important thing in your life, you're living wrong.
46:11
Go find that thing that makes you happy within the bounds of
46:15
good taste, decency in the law, and do that more than you do
46:19
anything else. Take a deep breath, consider
46:24
your life a little bit, and be nice to each other.
46:27
And until next time, and I hope you have a great week.
46:30
See you next time, James. Take it easy.
46:33
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