RG

No nation ever taxed itself into prosperity, either. :)

FYI, your comments held for moderation, probably b/c you’re not supplying an e-mail address, but I’m not sure. In any event, I don’t want you to think that they’re being deleted or something.

I really am not trying to dodge your questions. I’ll respond again, in due time, be patient.

You also ignored another key point of my questioning, which you brushed away by not wanting to discuss “abstractions” such as economies. (A very odd position for a financial blogger.) Anyway, the point I was trying to get across was that obviously a tax rise in NJ did not cause job losses in other states; and it didn’t cause those job losses in NJ either. There was likely another cause for all the job losses (perhaps the rise of foreign shipyards, or a drop in consumption over that period, or poor management at the firms in question, or bad unions, etc.).

Taxes are really not as big a factor in the global economy as dogma would have it.

Let me put it in sound-bite terms:

No state has ever reduced its taxes to prosper.

Another way: this is why the rich (read: “High Tax”) countries manage to prosper, in spite of (?) their tax rates. The PC was created in the U.S. when the marginal tax rate was 91%.

Similarly, you analyze NY, MA, and CA taxes on the basis of their income, sales, and corporate tax rates. However, you totally forgot City of NYC taxes for New York (you didn’t think I was using Syracuse as an example, did you?). Additionally, you forgot property taxes (which must be nonexistent where you live, or you wouldn’t have skipped them). The indisputable point is that the places that create our industries also have the highest tax rates.

But you think I chose special cases, so let’s examine: Cali is indeed beautiful. But again, did you think I meant that Cali’s industries came from the lower-tax Inland Empire or central Cali? No, those jobs come from the higher tax coastal and Bay regions. Similarly, NY’s engine of growth is the highest-tax part: NYC (which is also the engine of growth for NJ). I missed your argument about why the high tax rate in MA (specifically, the Boston area) does not drag on growth. In any case, you seem rational so I’d love to see a counterexample of a place with a substantially lower overall tax burden that has created a non-extractive (i.e. mining) industry.

My first point is this: these places create jobs because they are the types of places where people who create jobs want to live. (Incidentally, NYC didn’t just happen to end up as the hub of global finance. They had to work at it e.g. by building subways and schools and bridges.)

Incidentally, multinationals that relocate to India often request larger tax levies from the government. Why? Because wouldn’t it be better if the government built roads, airports, water, sewer, etc.? A software company does not want to build these facilities. Further, it is a waste of finite resources to duplicate them everywhere.

My second point is this: society matters. It’s strange to make this argument with a blogger over the U.S.-government developed Internet — obviously you are not very introspective about your place in the world — but I will try. People organize into societies. Those societies have shared values. In our society (let’s call it The Rich World), those values include some notion of addressing Problems of the Commons as well as addressing Common Defense. Any system of human organization that does not address these two fundamental issues will collapse. This is the fundamental characteristic of zero-tax systems.

I should interrupt myself: you are not at the point of a gun. You may always retire to the other major society on Earth (let’s call it The Developing World) or a non-society (let’s call it Antartica).

I will not address the question of why a country might need a robust defense mechanism when it is many miles away from any current enemy. Instead, I will leave it as an exercise to the reader (once that reader has become acquainted with the history of World War II).