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From the Los Angeles Times:

Can California’s next governor fix the state’s problems? It depends on Palo Alto

By MELANIE MASON

While Democrat Gavin Newsom and Republican John Cox campaign on their visions for the state’s next chapter, it’s the financial success of residents in Palo Alto’s 94301 and a handful of other affluent ZIP Codes that will determine whether promises to build more houses, overhaul healthcare or invest in schools can actually be kept.

We are very dependent on millionaires. If the millionaires get a cold, we all die of the flu.
— Mike Genest, former budget director for Gov. Arnold Schwarzenegger.

The state scooped up just under $1 billion from nearly 9,000 tax returns filed in 94301 in 2016 — more revenue than from any other ZIP Code in California.

Much is made of the widening gap between California’s very rich and very poor. But just as significant is how the fate of the latter depends heavily on the former.

For example, while the 94301 zip code (population 17,000) in Silicon Valley’s Palo Alto paid $934 million in California state income taxes, the 93215 zip code in rural Delano County (population 56,000), where Cesar Chavez launched his grape boycott in the 1960s, paid $12 million.

Various booms and busts in Silicon Valley (and to a lesser extent in Hollywood) have driven California income tax revenue up and down. Lately it’s been up, up, up.

Supply side economics isn’t that appealing in Silicon Valley or Hollywood, since the payoff from hitting it big is so huge that marginal tax rates are a minor question. It’s a little noticed paradox that Winner Take All capitalism, which is currently centered in Palo Alto, undermines the logic of supply side economics, which appeals more when and where the opportunities for getting rich are more limited and thus entrepreneurs are more concerned about their costs (such as taxes) more carefully.

It’s not a coincidence that the intellectual foundations of supply side economics were laid during the low profit 1970s.

So this is a major issue for those thinking about splitting up California. The rich liberal parts of the state subsidize a big chunk of government expenditures in the poor parts of the state. On the other hand, they also impose high cost policies on less desirable parts of the state that, leaving aside the tax subsidy question, would do better under a Texas-style low cost system. (A similar argument has been made about the state of New York: the vast tax revenues generated by Wall Street pays for a lot of stuff in Upstate New York, but policies that make sense for NYC keep Upstate too expensive relative to the limited returns that can be generated there.)

 
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  1. Dave Pinsen says: • Website

    Also, capital gains are taxed at lower rates than income, and, in some cases, apparently not taxed at all.

  2. Some years ago I spent a few days at Lake Tahoe. At the north end of the lake are two towns – really contiguous with each other, but divided by the California/Nevada border: Kings Beach, California and Incline Village, Nevada. The contrast is remarkable, and visible as one crosses the state line.

    Kings Beach is a town of small cabins on small lots, with modest shops and cafés. Incline Village is one of mansions, luxury hotels, and high-end restaurants. The difference? California has the highest personal income tax rate in the country. Nevada has no personal income tax.

    My impression is that a lot of people who live in Incline Village have chosen it as a tax domicile. It is not difficult for a very rich person to do whatever work he has to do from any place in the country. His office moves wherever he is.

  3. It’s a little noticed paradox that Winner Take All capitalism, which is currently centered in Palo Alto, undermines the logic of supply side economics, which appeals more when and where the opportunities for getting rich are more limited and thus entrepreneurs are more concerned about their costs (such as taxes) more carefully.

    Jesus, Steve, that is actually significant progress in general economic thinking, published in a Sunday-afternoon blogpost from an unmentionable blogger! When I consider how it applies to .ie, a small economy with very few billionaires, where tax and social policies have always been significantly influenced by Britain, a much larger economy with a large number of politically important billionaires, it makes it much easier to understand the different policy decisions and why much of the chatter from the chattering classes here is completely unreasonable; we clearly don’t have winner-takes-all capitalism, otherwise all the billionaires wouldn’t have emigrated; as someone making a gross of about € 120,000 per year, I am paying sufficient tax and structuring things in a such a carefully tax-efficient way that I am certainly not going to employ anyone before my gross is € 160,000 a year, at a minimum, whereas that would have been more of a possibility with lower tax (and employment insurance) rates.

    • Replies: @Steve Sailer
    , @Reg Cæsar
  4. J.Ross says: • Website

    So this is a major issue for those thinking about splitting up California. The rich liberal parts of the state subsidize a big chunk of government expenditures in the poor parts of the state.

    Another way to use this same framing is asking if recently arrived nonwhites in California and elsewhere would stick around (or would have made the trip) if they could not expect to depend on the kindness of strange millionaires.

  5. There needs to be a concept like “socioeconomic climate” that clusters human ecologies in a variety of critical dimensions. Just as in natural ecosystems, certain species just can’t make it and other species thrive. The difference in human ecologies is that human subspecies can alter the socioeconomic climate to wipe out competing subspecies while making the environment suitable for themselves.

    This is what happened in Silicon Valley’s transformation from an exemplar of American innovation to 70% Asian STEM workers in the span of less than a generation.

    California is becoming India — but with a more diverse caste of untouchables.

  6. Forbes says:

    The upstate/downstate NY dilemma has been killing upstate since the Mario Cuomo era, if not before. All one needs to understand is to look at the election returns for Cuomo’s last winning election vs his loss to the nobody state senator George Pataki–all the large upstate counties flipped to the Republican to swamp Cuomo’s downstate advantage. In 1990, Cuomo won ~53% of the vote, in 1994, he won only one county (Albany) outside of NYC’s 5 boroughs.

    Unfortunately Pataki couldn’t stem the tide, and the Republican party barely exists in NYS.

    • Replies: @Bubba
  7. Jack D says:

    On the other hand, they also impose high cost policies on less desirable parts of the state that, leaving aside the tax subsidy question, would do better under a Texas-style low cost system.

    In NY, all contractors, even if they are not unionized, must pay all of their workers “the prevailing wage” for their particular trade (which is practice is equal to the union wage) when working on a job paid for with state funding. Of course this drives up costs for government construction tremendously – even in upstate NY the “prevailing” rate is maybe $50 or more/hr (a lot more in NYC) even for low skilled labor depending on the trade. Next time you hear about how a certain bridge or subway tunnel in NY cost $X billion, this is part of the reason why. For example, the $4 BILLION subway station:

    https://www.cnbc.com/2016/09/02/million-dollar-marble-at-ground-zero-an-oculus-is-born.html

    Before the WTC came down, the last stop of the PATH system (which is basically a subway that goes under the Hudson to NJ) was under one of the WTC towers. With the towers gone, they had to rebuild the stop – the new station is very nice but $4 BILLION nice? It’s crazy.

    This kind of stuff also drags out the timeline. One of the subway stops in Lower Manhattan was crushed under the wreckage of the WTC. That stop was just reopened this month. It took them 17 years to rebuild 1 subway station (again at God knows what kind of cost).

  8. @Small businessman from a small country

    I first noticed this in 1992 when the founder of the start-up where I worked mentioned he was going to vote for Bill Clinton. As a faithful reader of the WSJ Editorial Page, I was initially astonished that Clinton’s promise to modestly raise taxes on the top brackets wasn’t depressing his entrepreneurial Animal Spirits. But then it struck me that my boss was either going to make 9 figures off his venture or lose 8 figures, so a few percentage points in marginal tax rates wasn’t that big of a deal to him.

    He’d earlier founded a highly successful publicly traded company in the wake of, I believe, the 1978 tax cuts on capital gains taxes, a tax cut which seems to have sent out the message that the government thinks it’s good for you to get rich (as Deng was saying about the same time in China). So that tax cut may well have boosted the Animal Spirits of businessmen, which had been pretty depressed in the 1970s. But by 1992, post Berlin Wall and all that, it was clear capitalism was here to stay.

  9. Alfa158 says:
    @Crawfurdmuir

    The nicest houses in Incline Village go for over $20M. If you need big city culture the Bay Area is not an unreasonable drive away (well, except during blizzards), and you can save seven figures a year in state income taxes.

  10. Dave Pinsen says: • Website
    @Steve Sailer

    Also worth remembering Clinton lowered the capital gains tax rate from 28% to 20%. He basically lowered rates on investors and entrepreneurs while raising them on high salary earners. It may not be equitable, but when you consider that capital is more mobile than labor, there’s a sort of logic to it.

  11. It may not be equitable, but when you consider that capital is more mobile than labor, there’s a sort of logic to it.

    Whoa. You sound like one of those weirdos who claim that Ricardo was wrong because capital is mobile but labor not, and that you can’t turn wine presses into weaving machines.

    Sheesh.

    • Replies: @Dave Pinsen
    , @Reg Cæsar
  12. Bugg says:

    My business is tax prep and legal work. Bulk of my clients are working people,-cops, firefighters, teachers, nurses, blue collar jobs, smattering of Wall Streeters and small businesses. Simply without correcting AMT, very few working people benefited from any Bush tax cuts. The 2017 program ran the anticipated changes that taxpayers could expect for 2018 and for most the Trump tax cuts were either a wash or a small improvement. It does simplify things somewhat, but anyone with a big mortgage or high local taxes is in for a jolt. For reasons known only to themselves the GOP in Congress has made this the centerpiece of their policies rather than border enforcement, and it makes no sense. Illegals are suppressing wages and ruining quality of life in schools, hospitals, courts, housing and so many other ways. Wages are stagnating and that is not a coincidence. At a time of increased AI and robot automated labor, why do we need over 22 million illegals sucking up what few blue collar jobs are left?

    • Replies: @Wilkey
    , @Redneck farmer
  13. Dave Pinsen says: • Website
    @Peripatetic commenter

    Nothing to do with Ricardo. The point is if you want to raise tax revenues, people who get big paychecks are lower hanging fruit than people who own businesses. Business owners have a lot more flexibility in what gets characterized as income, where their business is domiciled, how much they pay themselves, etc.

  14. @Crawfurdmuir

    Yeah, the contrast is striking. You might have added that King’s Beach is mostly Hispanic — workers in the tourist and construction industries. At this point, a rich person wouldn’t want to live in King’s Beach — even in a fine mansion on the water — if only because of, wink-wink, “bad schools” (even if their kids are grown up already or it’s a vacation home anyway). There are some splendid mansions on the California shores of Lake Tahoe, they’re just not up against the Nevada border, they’re along the lake’s west shore. (One of those mansions, of course, features in an early scene of “The Godfather, part 2″.)

    State income tax couldn’t matter much anyway, in Incline Village; those are by and large vacation homes. So you’re not going to avoid California’s income tax if your vacation home is in Nevada but you make your money in Palo Alto, California.

    Nevada might be more easygoing about environmental stuff, though (like permits to build right on the water). That might give Incline Village a bit of an edge.

    Interestingly, the same gradient is visible at the southern end of the lake. The city of South Lake Tahoe, though more upscale than Kings Beach, is quite modest in comparison to Zephyr Cove, a few miles inside Nevada.

    • Replies: @Wilkey
    , @Crawfurdmuir
  15. @Steve Sailer

    And above a certain large amount of profit, you can afford to invest in tax shelters.

  16. @Small businessman from a small country

    In Europe, the upper middle class, the rich, pay for the welfare state. The rich are all in Monaco, the Caribbean, or other such places.

    That is irrelevant in the US, where the arm of the taxman reaches everywhere in the world. However, the individual states work like other countries, once you’re out, you’re out. I understand Nevada may be the exception, so maybe rich Nevadans decide to stay home, if Carson City taxing them anyway.

  17. @Dave Pinsen

    Hell, you don’t even have to be an angel investor to avoid capital gains. Just rollover your capital gains into an Opportunity Zone. Granted, you have to lock up your money for 10 years, but if it’s a real estate deal, that’s not too much of an issue.

    https://www.congress.gov/bill/115th-congress/senate-bill/293

  18. In addition, I believe that higher incomes are volatile. As a result, states and the federal government are riding high during the booms but are in more trouble during the busts.

    Now, if politicians were smart, they’d pay down their debt during the boom times so they’d be able to safely borrow during the bust. But, of course, that’s not the way that it works. They spend more in the good times and get more indebted in the bad times. Rise and repeat until you run into a serious problem.

  19. @Steve Sailer

    It’s all about the utility of money, isn’t it. How many units of happiness or whatever good feeling can you buy with each new additional dollar. At some point, you have the house, the neighborhood, the car, the vacations that you want. Each additional dollar just doesn’t increase your happiness in terms of material goods.

    But you can buy the feeling of being morally superior to others. That’s why many very high income people don’t mind paying high taxes. They’re getting something for their money, even if that thing isn’t tangible.

    • Replies: @Reg Cæsar
    , @Anonymous
  20. Btw, is that Ron Unz’s zip code. That sounds about right.

  21. @Jack D

    In NY, all contractors, even if they are not unionized, must pay all of their workers “the prevailing wage” for their particular trade (which is practice is equal to the union wage) when working on a job paid for with state funding. Of course this drives up costs for government construction tremendously – even in upstate NY the “prevailing” rate is maybe $50 or more/hr (a lot more in NYC) even for low skilled labor depending on the trade.

    Good. We want high wages for labor.

    • Replies: @Jack D
    , @JMcG
    , @ScarletNumber
  22. Good. We want high wages for labor.

    It should be illegal to pay union members less than $100 an hour. If ballplayers and TV actors are worth it, why those with more important jobs?

  23. @Citizen of a Silly Country

    But you can buy the feeling of being morally superior to others. That’s why many very high income people don’t mind paying high taxes. They’re getting something for their money, even if that thing isn’t tangible.

    And financially superior. It keeps others from catching up to you.

  24. Spud Boy says:

    “Much is made of the widening gap between California’s very rich and very poor.”

    Defining “rich” based on income on a national basis is misleading at best. When a small 3BR home sells for $2M, making $500K/year doesn’t make you rich, it makes you middle class.
    .
    .

  25. Jack D says:
    @27 year old

    No, we want market wage for labor. Taxing guys who work in Walmart for $10 an hour so that politically connected union construction workers can make $50/hr is not fair.

    • Agree: Mr. Rational
  26. @Peripatetic commenter

    …that you can’t turn wine presses into weaving machines.

    How does that compare to turning swords into ploughshares?

  27. Lagertha says:
    @Crawfurdmuir

    The sell-out, Steve Schmidt (trainer of Sarah Palin), lives in Incline – he had been a Republican (now works for CNN/MNBC…one of those). I’m sure he does not want his new colleagues to know that. I think it would be fun to list all the home towns of all pundits and Democrats in Congress! I bet each one is a Whitopia full of “good schools” especially, since journalists don’t have million dollar salaries. This list of towns would be amusing ( & embarrassing) to let the public know just how Deplorable they are.

    • Agree: Dtbb
  28. Anonymous[960] • Disclaimer says:

    A bit OT but I noticed that the obesity map for NYC seems to fit your description of SoCal: Blue in Chinatown, Greenwich Village and in the Yuppie gentrifiying areas, red in Harlem. Interestingly, Wall Street area was pretty blue too. Guess all those Masters of the Universe need to look like HeMan.

    • Replies: @Steve Sailer
  29. Anonymous[960] • Disclaimer says:
    @Citizen of a Silly Country

    If the rich didn’t mind paying taxes then why do so many get accountants to help them stash their wealth in tax shelters? Also why does reducing the upper tax rates result in more revenue from the wealthy?

  30. J.Ross says: • Website
    @Jack D

    Prevailing wage eliminates the advantage of bringing in less competent workers who, in another state, would save money.

  31. @Anonymous

    I’m concerned that what I tweeted out as an Obesity Map might actually be an Ethnicity Map. I can’t track down the original to check.

    • LOL: Bubba
  32. Bubba says:
    @Forbes

    Yes, this result was very similar to when Lew Lehrman ran against the corrupt Mario Cuomo in 1982. Mr. Lehrman only lost by 2%, which was amazing since he had never run for a public office. My father said it was the end of New York state if Cuomo won. He was right.

    And Lew Lehrman is an unsung genius in America.

    For the 1st time I disagree with the great iSteve. Upstate NY is kept an economic basket case because of the corruptocrats in Albany led by the NYC mafia. For example, there is plenty of money to be made upstate in shale natural gas, but Andrew Cuomo refuses to let anyone drill for it. He also closed down Indian Point nuclear power plant, just like his a’hole father closed down Shoreham nuclear power plant in the 80′s after it was built. Now it buys plenty of power from Canada instead of making it locally in New York.

    NY is far more corrupt than CA, if you can possibly imagine that.

    • Agree: Mr. Rational
    • Replies: @The Wild Geese Howard
  33. dvorak says:

    It’s not a coincidence that the intellectual foundations of supply side economics were laid during the low profit 1970s.

    The low profit margin, high inflation ’70s. For the first time in a while, the tax code didn’t work for the majority of people and businesses. It wasn’t indexed to inflation.

    In retrospect, if the old-school Democrats had conceded the point to the neoliberals (Jimmy Carter) and quickly indexed the tax brackets to inflation, they could have headed off the Reagan Revolution. (n.b., check the actual history on this, I’m speculating). Just think, no Jack Kemp/Jude Wanniski/Robert Bartley. What a wonderful world it would have been.

    Super-high top-bracket rates work OK because they are paired with massive loopholes (Mad Men era, when you could write off your girlfriend’s apartment and your country club dues as a corporate expense). Low top-bracket rates also work if the loopholes are pared down (like today). What doesn’t work is tax brackets not indexed to inflation.

    • Replies: @Steve Sailer
  34. Wilkey says:
    @Bugg

    For reasons known only to themselves the GOP in Congress has made this the centerpiece of their policies rather than border enforcement, and it makes no sense.

    I’ve been saying this for years, and predicted it would happen when Trump was elected. The first “conservative” thing Republicans do when they win control of government is cut taxes on the rich. It is also one of the last conservative things they do. That may be an exaggeration, but not by much.

  35. Wilkey says:
    @International Jew

    A few years ago one of the executives of Tommy Hilfiger Inc, Joel Horowitz, had his Lake Tahoe home up for sale for a measly $100 million. It was, needless to see, on the Nevada side of the lake.

    • Replies: @International Jew
  36. Thomm says:

    The first “conservative” thing Republicans do when they win control of government is cut taxes on the rich.

    False. The ultra-wealthy don’t pay the ‘retail’ tax rate anyway. Their money is shielded from ever being on the 1040 in the first place.

    Only the upper-middle-class gets shafted from an increase in the retail tax rate. Get a clue.

    If there were a serious campaign for a flat 21% tax that taxes just a minute to do, the biggest opponents would be the ultra-rich, for they are going from nearly 0% to 21% due to the loss of their loopholes.

    Why is the tax code so complicated? To conceal the loopholes for the ultra-rich. Again, the upfront tax rate does not affect them.

    • Agree: Carbon blob, Autochthon
  37. @Anonymous

    First off, those tax loopholes that you hear about are mostly BS. Higher income people pay the vast majority of taxes. If it wasn’t for SS and Medicare taxes, higher income people would pay all of the taxes.

    Second, don’t confuse wanting to the least amount possible with not being willing to pay for a higher tax rate to support Obama. It’s confusing, I’ll admit. But high income people are generally willing for to support higher tax rates to say that they back the “right” side. Naturally, once those rates have been put in place, they do their best to minimize the damage.

    That said, high income people’s future wealth has a lot more to do with their careers, businesses and investment portfolios than their tax rate, assuming taxes are at least reasonable. Crank up the top marginal tax bracket to 80% and don’t allow them in actual loopholes and even high income people will squeal.

    It’s a matter of degree.

    • Replies: @Anonymous
  38. @dvorak

    Politicians tended to like inflation driving taxpayers into higher marginal tax brackets because they could periodically magnanimously bestow a minor tax cut on the public.

    I believe Bob Dole added indexing to the Reagan tax cuts. The funny thing is the Reagan brain trust figured that inflation would cause smaller deficits, but then the collapse in inflation in 1982-83 combined with the Dole indexing meant the Reagan tax cuts turned out bigger than planned, which led to a boom in 1984 but also bigger than expected deficits.

    • Agree: Mr. Rational
    • Replies: @Sam
  39. JMcG says:
    @Jack D

    What kind of income tax is paid on a yearly wage of 21000? Let’s get the folks at Walmart unionized too.

  40. Anonymous[273] • Disclaimer says:
    @Jack D

    People making $10 an hour probably pay almost no income tax after the earned income and other credits. Those $50 per hour construction worker wages are paid by the taxes of middle and upper middle class people.

  41. @Bubba

    Upstate NY is kept an economic basket case because of the corruptocrats in Albany led by the NYC mafia.

    A total lack of vision and innovative thinking among local corporations sure hasn’t helped.

    Take Kodak for example.

    An engineer at Kodak was the first to create a working prototype of a self-contained digital camera in 1975. The execs couldn’t see beyond all the money they were going to make selling everyone film and chemicals until the end of time.

    Sadly, this same engineer still worked for Kodak into the early part of this decade, which is equally depressing.

    Xerox could have been far more instrumental in the computing realm than they are. Instead, their execs saw the work at PARC, the Palo Alto Research Center, as nothing more than toys. A couple guys named Bill Gates and Steve Jobs saw the potential of the concepts there and shamelessly appropriated them for use in their own products.

    • Replies: @Bubba
    , @education realist
  42. @Jack D

    Yes I’ve been railing about this for a while here. Prevailing wage is a total ripoff for the taxpayers. It doesn’t even make sense: if it’s the “prevailing wage”, why is it 50% higher than the same work in the private sector?

    Oh, I want higher wages for workers, but I want it set by the market, not some kickbacking bureaucrat in the Capitol.

  43. Anonymous[337] • Disclaimer says:
    @Citizen of a Silly Country

    I think you’re mistakenly viewing virtue signalling as a sincere want.

    You’ve jumped topic a bit here on your first point. Whether the rich disproportionately pay a higher tax bill is quite a different thing from wanting to pay higher taxes.

    And your second and later points go against the idea of wanting to pay higher taxes. Basically you are saying they publicly support higher taxes but do everything possible to minimize it for themselves. That’s different from actually wanting to pay higher taxes. That’s basically just empty virtue signalling. It’s like a white leftist who goes on and on about how white people are a terrible cancer, and brown people are wonderful, then goes and lives in a 99% white neighborhood. That person actually thinks much more highly of whites, otherwise they’d go and surround themselves with brown neighbors; what they do is more relevant to observing their true beliefs than what they preach.

  44. Anon[257] • Disclaimer says:
    @Crawfurdmuir

    You’re right. Thousands of corporations and businesses have Incline Village addresses. The operations of course are done in California and the owners have official address homes in Nevada and another place near the actual business in California

  45. @Wilkey

    That was seven years ago, but granted, $100 million will still buy you a lot of house.

  46. Anon[257] • Disclaimer says:
    @Jack D

    $ 10.00 an hour 32 hours a week especially with a dependent or 2 pays almost no taxes and use food stamps, medi caid and county hospital eligible for section 8 often doesn’t have a car thus no sales tax registration tax gas tax. No disposable income so no sales tax for clothes movies new TVs

    Whatever, I don’t see how even if the Walmart worker paid $20,ooo in taxes every year how could those taxes subsidize any other workers but government workers

  47. Delano is a city, not a county.

  48. FPD72 says:
    @Jack D

    Another cost imposed on contractors in NY is what is referred to as “gravity” liability. The general contractor is held liable for any fall experienced by a subcontractor employee. Unlike workers compensation, there are no statutory limits of liability. This increases insurance costs significantly for both GCs and subs, since the GCs attempt to transfer the liability back to the subs through indemnification and status as additional insureds in the subs’ general liability policies.

    It’s possible that this has been changed since I’ve been retired for a while but was still in place the last I heard.

    • Replies: @Jack D
  49. Anonymous[764] • Disclaimer says:

    I just wonder how the Californian fiscal situation would have wound up if the post 1960s nonsense of ‘liberal’ immigration policy, non enforcement of the Mexican border, the ending of ‘Operation Wetback’ etc never occurred?

    Would the god-awful quasi feudal/serf set up of today have occurred?

  50. Sam says:
    @Steve Sailer

    For all his critique of Carter on this issue, Reagan mainstreamed deficits to the point Cheney could confidently say ”Reagan proved that deficits don’t matter.“After that it was two reckless fiscal parties. The old Republican Party at least believed that tax cuts had to be earned the hard way.

    Being a free market supporter I figured that this Laffet stuff had to be true since everybody I like advocated it as gospel. Then I heard tax cut lover Murray Rothbard question the whole thing as demagoguery after questioning Laffer and Kristol:

    Here he makes a very good point that I’ve yet to see leftists take to heart. All supply side tax cutters always assume we’re currently on the right side of the Laffer curve thereby necessitating a painless and revenue enhancing tax cut. Leftists could simply accept the Laffer curve as a real fact and argue that perhaps we’re really on the left side of the curve. Force tax cutters to prove we really are “overtaxed” from a fiscal efficiency point of view.

    • Replies: @Redneck farmer
    , @tsotha
  51. @27 year old

    What do you mean “we”, Kemosabe?

  52. @Sam

    Laffer’s original curve showed income tax revenue maximizing around 48%. Figure in state taxes, we’re probably around maximum revenue. Not a good idea to raise taxes, but cuts WON’T increase revenue as much as some think.

  53. @Bugg

    A lot of the people with the “big jolt” voted for Hillary. They deserve to get hammered.

  54. A similar argument has been made about the state of New York: the vast tax revenues generated by Wall Street pays for a lot of stuff in Upstate New York, but policies that make sense for NYC keep Upstate too expensive relative to the limited returns that can be generated there.

    I wonder how Illinois fares with this? The people of Downstate Illinois believe that they subsidize Chicago, but I think that this is BS considering how wealthy the Chicago Area is. It is possibly the other way around.

  55. The same holds for the US in general. Revenue from the liberal coasts pay for flyover country, but the cost is policies which may make sense in Berkeley, but not in Peoria.

    • Replies: @William Badwhite
  56. @Anonymous

    Yeah, that’s about right. They want to be able to publicly claim to be progressive, which, in a sense, allows them to live in a way that is the complete opposite of what they claim to back.

    I guess my point is that they really do vote for the liberal candidate. They don’t lie about that. For some reason, claiming to be a liberal in public but voting for the lower taxes candidate is a bridge too far for these guys.

    Again, my guess is that by pulling the lever for the liberal candidate, they mentally let themselves off the hook for betraying everything else they claim to believe. They can live as though they’re KKK members (well, the 12 non-FBI KKK members) if they’re backing progressive candidates because the good things that the politician will do outweighs the small betrayals of their personal life. They’re full of shit, but it works in their minds.

    The Clintons are an extreme example of this. Bill, the individual, can be abuse individual women because Bill, the politician, is supposedly helping women as a group. The good outweighs the bad, not just in his mind but in the minds of women’s groups which left him alone all those years and even backed him when accused.

    Almost all wealthy liberal live by this code.

    • Agree: Autochthon
  57. Brutusale says:

    I see that the true Masters of Silicon Valley in Atherton have managed to keep their neighboring hamlet out of the conversation.

    • LOL: Mr. Rational
    • Replies: @education realist
  58. It really doesn’t matter what the economic upsides or downsides or tax incentives or disincentives are for splitting up California, or even for California secession, for that matter. what DOES matter is that we both encourage and allow these crackpots to go ahead and DO it, and get away with it. Please! Secede, then break up the state into independent Cali-federated micro-states!

    Not b/c I care about the fate of California any longer anyway. Its fate is sealed, at least in the near term, it will turn into a banged-up Latino/Third World sweat-hole (awkward combination of sweatshop and shit-hole, but sounds mildly better than shit-shop) with a thin veneer of super-rich Shlomo’s, homos, Sanjays, and Ching Chang Chows riding herd over the roiling peons.

    The point is to set the precedent for a peaceful no-fault divorce, so that when the time comes for the Great White Divorce, it can go about smoothly and with minimal violence, hopefully avoiding a civil war.

  59. Mark G. says:
    @Jack D

    Yes, taxing private sector workers so that politically connected union construction workers can make more than them is unfair. You also have to consider that in many cases that government workers are doing something there is little market demand for. It may not be digging holes and filling them in again but sometimes it’s close to that. If you didn’t tax people to pay for overpaid government workers they could take their money instead and buy goods or services that would provide profits and jobs in the private sector. They might spend the extra money at Walmart and that would increase the demand for more Walmart workers to be there and then the increased demand would drive up the wages of Walmart workers as Walmart competed with other companies for those extra workers. So diverting money to high paid government workers is causing private sector workers to receive lower wages.

  60. Jack D says:
    @FPD72

    NY still has the “Scaffolding Law”, which means that liability insurance rates are double what they are in nearby states. This costs the taxpayers of NY almost $1 billion alone (forget about what it costs private industry).

    https://corporatesolutions.swissre.com/insights/knowledge/newyork_law_coverage.html

    In most other states, if a worker falls from a scaffold or ladder (or if something falls onto him) this is treated like any other workmen’s comp claim. Workers comp was a brilliant early 20th century statutory invention that was laid on top of the common law – it was always the law that an employer was liable if an employee was injured due to the employer’s negligence, but negligence was hard to prove – usually it was the employee himself who stuck his own fingers into the path of the saw, didn’t secure the bottom of the ladder properly, etc. There were all sorts of common law defenses – assumption of risk, etc. The grand bargain in workers comp was that in return for giving up the jackpot of a jury verdict (worker comp rewards are relatively modest) ALL job related injuries would be compensated regardless of proof of fault or negligence. The scaffold law goes further – no only is the employer required to pay in all “gravity injuries” but there is NO cap on the damages.

  61. @Tom, flyover citizen

    Revenue from the liberal coasts pay for flyover country

    Citation needed.

    Be sure to factor the trillions sent to the IRS every year as well as the periodic financial bailouts for NYC when tallying up who pays for what. Also factor in the amount of federal spending that is borrowed, not paid for.

    • Agree: Mr. Rational
  62. Bubba says:
    @The Wild Geese Howard

    Totally agree and thanks for the reminder about Kodak – awful story. Equally pathetic was the Westinghouse demise that occurred across the western NY border in Pittsburgh.

    This was a good read years ago – http://old.post-gazette.com/westinghouse/

  63. tsotha says:
    @Sam

    The Laffer curve is axiomatic – it’s true at the very right and also at the very left. The substantive argument has always been over the particular shape of the curve and where you think the current system resides. IMO Laffer was wrong about the benefits of cutting taxes in the early 1980s, but these kinds of things always boil down to opinions since there’s no way to tease out the effects of tax policy from other economic drivers.

    Also, I suspect there’s also a lag. New, widely applied taxes nearly always raise more money in the short run, but to really know the effect you have to go out ten years. It takes time for businesses and individuals to adjust to the new rules – sometimes current business arrangements mean you have no choice but to pay for a few years, but you might pare back on riskier (tax generating) ventures going forward if the new taxes make the risk/reward ratio unfavorable.

  64. @Brutusale

    Woodside isn’t on the list either. And what the hell is Burlingame doing on it?

    I wonder if all the gazillionaires in Woodside, widely regarded as one of the richest small towns in the world, have tax shelters in Incline Village.

  65. @The Wild Geese Howard

    Quite a few PARC folks left to found their own companies, most notably Bob Metcalf and John Warnock.

    The reality is Xerox made copiers. They were able to branch out into laser printing (also largely invented at PARC). But most of the other innovations really didn’t make sense with Xerox’s company. Hardly a tragedy.

    PARC was just the China of high tech. Old China, the one that invented gun powder and pasta.

    • Replies: @Jim Don Bob
    , @Jack D
  66. @education realist

    https://www.amazon.com/Fumbling-Future-Invented-Personal-Computer/dp/1583482660

    Xerox was making so much money from copiers that they were just not interested in what PARC was doing. Their CEO was also big on virtue signalling.

  67. Jack D says:
    @education realist

    And IBM made punch clocks and meat scales, but they successfully transitioned into something else.

    Ditto Apple – with Xerox mgmt in charge = “We’re a computer company. Making cell phones doesn’t make any sense for us.”

    Xerox was like one of those people who inherit a Rembrandt or a DaVinci and they don’t know what they have and sell it for $50 at a tag sale.

    The irony is that Xerox was THE hot tech company of the 1950s, but by the ’70s the rot had set in.

  68. I’ve read far more than just one book about Silicon Valley and the invention of the PC. I also worked at IBM longer than almost anywhere in my tech career. Each journalist wants to put their own spin on the story, but it’s silly. Xerox was probably right not to pursue pc opportunities. The real question is why they wasted their money on PARC, but they did, so why not quit pretending Xerox was just a few decisions away from becoming a computer company?

    As for Apple, it had never dominated a market. Full stop. So taking chances makes more sense for them. Ditto HP, who never really succeeded outside printers, but printers wasn’t their first success, so they had a history.

    None of them dominated their market like Xerox did. And Xerox didn’t jump into fame–they took a long time to research and produce the 914. It explains why they thought research was important.

  69. @International Jew

    State income tax couldn’t matter much anyway, in Incline Village; those are by and large vacation homes. So you’re not going to avoid California’s income tax if your vacation home is in Nevada but you make your money in Palo Alto, California.

    All one has to do to establish a tax domicile outside California is to spend 6 months and 1 day outside California. That enables one to avoid California’s personal income tax. As noted, persons of the class in question typically may work from wherever they happen to be. They do not travel to their offices – their offices travel with them.

    One establishes legal domicile by obtaining a residence in, and transferring car registration, voter registration, and address of record for such matters as bank accounts, utility and credit card bills to, the low- or no-tax state of one’s choice. One need not spend more than half the year at the tax domicile address; one just has to spend less than half the year in the high-tax state. So, while Incline Village may in practice be a vacation home for high-income California businessmen, in law it is a principal domicile for tax purposes.

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