5 replies on “Being from a blue state this is worth reading”

  1. I think the article sums it up pretty well. Both coasts are headed towards insolvency. Municiple budgets across the Commonwealth also grossly underestimate the unfunded pension/healthcare liabilities. We’re not as bad off as CA but that’s not saying much. Re: leadership- at least Rep. Brownsberger is willing to recognize the structural deficit we’re facing. That’s more than can be said for our governor who still believes in the fantasy that there’s plenty of resources to pay for “immigration reform” and other 2nd tier priorities…it will take CA going bankrupt for our own citizens to wake up…

  2. Two things are clear in our financial outlook:

    1) FY2012 will be hard — we have to struggle with that.
    2) We have long term liabilities that are going to cause big problems — pensions and post-employment health care. That’s the real challenge.

    We may be kind of OK in the medium term — FY2013 and FY2014. If we can balance the 2012 budget, the next couple of years should not represent hard squeezes — the economic outlook suggests sufficient rebound revenue growth to cover our structural deficit for a couple of years. Can’t speak for other states.

  3. Paul, other factors are larger. Years ago when we lived in California, there was much noise made about how people were leaving California to live in neighboring “low tax” states. Then someone checked the math, and discovered that often, the destination states had higher tax rates. In that case, it was the insane cost of housing in California (apples-to-apples, about twice what we pay here).

    So, consider our situation – in 1994, we bought a house here with about a $1350/month mortgage. Doubling that would have meant an extra $16,000 per year in housing costs. At a 6% tax rate (what was effective then) you’d have to make $270,000 (then, in 1994 dollars!) to pay that much in Massachusetts income tax — and that’s if you pretended that California had no income tax.

    Now, if we could have found jobs there, we might have moved to the famously low-tax state where we both grew up, Florida. Oops. No good jobs. Here, we have good jobs. We did the most basic sanity check to be sure that we weren’t walking into some sort of tax craziness, saw that we weren’t, and moved here.

    In addition, compared to the nation as a whole, we’re not a high tax state, measured as a percentage of wages (I specifically remember that the comparison I saw used wages, not total income — but I can’t find the link right now). We’re about in the middle of the pack. We could raise the income tax back to 6%, and that would put us squarely in the middle of the pack. (I’ll try to find that link.)

    And if I may say something slightly politically incorrect about tax policy. An obvious answer to my assertions about taxes is that when people retire, they move away to lower-tax states. They definitely do that. If you’re an employer, looking for people to hire, do you look in Florida, to hire a bunch of retired people? Maybe for Walmart greeters. Any recent population movements will also show a confounding effect of early-retiring baby-boomers (the oldest of them turns 65 this year). We’re likely to see more of this in the future.

  4. David… the devil is in the details when raising taxes.
    http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/low-tax-states-will-gain-seats-high-tax-states-will-lose-them-108681159.html

    It’s not a surprise that people flee from high taxes. The consequence is less representation in Congress as this link shows. With the corrupt politicians in our State that is probably good for America 😉

    OT: Is it any surprise that the Globe runs the Probation patronage scandal after the election?

  5. It looks unfortunately likely. We could raise the state income tax, if we cared to. It would not be the end of the world, or even close to it. We happily moved here in late 1993, and paid higher taxes then.

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