Author: tarek

Speaker Boehner Uses Different Words to Repeat Unchanged Opposition to Giving Up Tax Cuts for the Rich

On Wednesday, Republican House Speaker John Boehner repeated his stance that his caucus would not approve any increase in tax revenue except for a revenue boost driven by economic growth that they claim will result from the sort of tax overhaul proposed by Mitt Romney.

Boehner attempted to present this position as a compromise, saying his caucus is “willing to accept some additional revenues” but then went on to say, “There’s a model for tax reform that supports economic growth. It happened in 1986 with a Democrat House run by Tip O’Neill, and a Republican President named Ronald Reagan.”

The Tax Reform Act of 1986 was projected by Congress’s official revenue-estimators to be “revenue-neutral.” The law ended many tax loopholes and special breaks, but used the revenue saved to offset reductions in rates, just as Mitt Romney claimed (but failed to demonstrate) his plan would do.

Nonetheless, Boehner argued that this sort of tax reform improves the economy so much that the resulting increased incomes lead to increases in the amount of tax revenue collected. He said that by “creating a fairer, simpler, cleaner tax code, we can give our country a stronger, healthier economy. A stronger economy means more revenue, which is what the President seeks.”

But the projections of revenue-neutrality in 1986 were correct. Several studies on the impacts of the 1986 reform were done by economists on all sides of the tax issue in the 1990s, and none found evidence that it expanded the entire economy in a way that would boost revenue as Boehner claims.

The 1986 reform did a lot of good, but it was revenue-neutral and it was very different from what Republicans have been talking about today. The 1986 reform enhanced fairness by ending tax breaks for investment income that allowed wealthy investors to pay lower effective tax rates than middle-income people, and these reforms were sustained for several years before these breaks were brought back into the tax code. But Congressional Republicans want to expand those breaks or at least make permanent the Bush-era provisions that expanded them (the 15 percent special top rate for capital gains and stock dividends).

The 1986 reform also made U.S. corporations collectively pay higher taxes, by closing loopholes and cracking down on offshore profit-shifting, largely by curbing “deferral” on taxes on U.S. profits that companies artificially shifted to tax havens (reforms that have largely been eroded since then). Higher corporate taxes made it possible to reduce personal income tax rates, while keeping some popular and useful personal tax deductions and credits. But Congressional Republicans, and sadly even President Obama, propose that the corporate part of tax reform should, by itself, be revenue-neutral (if not revenue-negative).

Curbing unwarranted tax breaks, as happened in 1986, is an excellent idea. But the revenues from such reforms should be used to make public investments or cut the deficit, not reduce tax rates. In fact, the highest priority of tax reform should be raising revenue — real revenue, not the voodoo-economics sort of revenue gains that Boehner mistakenly claims will come from tax-rate reductions.

Most people forget that President Reagan actually increased taxes substantially (and repeatedly) after his 1981 tax reductions failed to achieve the economic goals he had been told to expect by his “supply-side” advisers (whom Reagan fired). Congressional Republicans, who say they admire Reagan, should emulate his responsible later policies, rather than try to repeat his early (and admitted) mistakes.

Last night Americans in states from coast to coast cast their ballots on a wide range of tax and budget issues.  On the whole, they should feel proud of their choices.

Generally, just as voters nationally favored a presidential candidate who supports higher taxes on the best-off Americans and made tax fairness a centerpiece of his candidacy, when given the opportunity at the state level to raise taxes on, or reject tax cuts for, the wealthy, voters overwhelmingly were on the side of fairness. In California Governor Jerry Brown’s revenue raising plan, which increases income taxes on the richest Californians and raises the sales tax by a quarter cent, passed handily. Californians also voted to repeal a special billion-dollar tax break for multi-state corporations. In Oregon, voters shot down a measure that would have repealed the state’s estate tax and allowed family members to transfer property tax-free. Oregonians also voted to eliminate the state’s “corporate kicker” refund program. Instead of providing a tax rebate to corporate income taxpayers when total corporate tax revenues exceed expectations, now that excess revenue will be used to support K-12 education.

The vote on the Oregon “kicker” refund was part of a broader rejection of measures designed to strangle future revenue growth in the states.  Voters in Florida rejected both a “TABOR” style state tax limitation and a cap on local property tax increases. Michigan voters decisively rejected a measure that would have required a two-thirds vote of each legislative chamber to eliminate any tax break or raise any tax rate.  And New Hampshire voters opted not to ratify a constitutional amendment that would have handcuffed future lawmakers by banning them from ever enacting a tax on earned income (which the state does not currently levy).

Unfortunately, some lower-profile efforts to curb state revenue growth met with success.  Oklahoma slightly tightened an existing cap on its property tax, and Arizona created a new property tax cap. Washington voters also approved a statutory change requiring a supermajority vote of the legislature to raise taxes, though since the requirement is not enshrined in the state’s constitution it’s possible for lawmakers to work around it as they have similar limitations in the past.

Proposals to increase taxes that fall most heavily on middle- and low-income Americans, like the sales tax and cigarette tax, generally didn’t fare as well as the more progressive tax plan put before California voters. In Arizona and South Dakota, measures that would have increased the sales tax rate were rejected handily, and Missouri voters rejected a measure that would have hiked the cigarette tax. Arkansas voters, however, gave their approval to a half cent sales tax increase that state lawmakers had already passed.

Below is a complete listing of the results for the state tax ballot initiatives we’ve been following:

Arizona Proposition 204 FAILED
Proposition 204 would have made permanent a temporary 1 percent sales tax increase that voters approved in 2010, and that is scheduled to expire in mid-2013.

Arizona Proposition 117 PASSED
Proposition 117 limits property taxes by preventing the taxable assessed value of properties from rising by more than 5 percent per year.

Arkansas Issue #1  PASSED
Issue #1 amends the Arkansas constitution to allow for a temporary increase in the state’s sales tax to pay for large-scale transportation needs like highways, bridges, and county roads.

California Proposition 30 PASSED and Proposition 38 FAILED
Governor Jerry Brown’s revenue raising measure, Proposition 30, won handily while the rival revenue raising proposal was defeated.  Proposition 30 will raise significant revenue to stave off cuts to education through a tax hike on wealthy Californians and sales tax increase.

California Proposition 39  PASSED
California voters supported Proposition 39 which repeals a billion dollar tax break for multi-national corporations.

Florida Amendment 3 FAILED
Amendment 3 would have created a Colorado-style TABOR (or “Taxpayer Bill of Rights”) limit on state revenue growth, based on a formula tied to population and cost-of-living growth.

Florida Amendment 4 FAILED
Amendment 4 would have cut property taxes for businesses, non-residents, and Floridians with multiple homes by capping growth in the taxable value of their properties at no more than 5 percent per year.

Michigan Proposal 5 FAILED
Proposal 5 would have amended the state constitution to require a two-thirds vote in both the House and Senate to raise revenue either by increasing tax rates or eliminating special tax breaks.

Missouri Proposition B FAILED
Proposition B would have increased the state’s cigarette tax by 73 cents to 90 cents a pack.

New Hampshire Question 1 FAILED
Voters rejected Question 1 which would have enshrined a permanent ban on taxing earned income into the Granite State’s constitution.  New Hampshire is already one of nine states without a broad-based personal income tax.

Oklahoma State Question 758 PASSED
State Question 758 tightens the state’s property tax cap by limiting increases in home’s taxable assessed value to 3 percent per year, rather than the previous limit of 5 percent.

Oklahoma State Question 766 PASSED
State Question 766 creates a new exemption for certain corporations’ intangible property, such as mineral interests, trademarks, and software.

Oregon Measure 84 FAILED
Voters rejected Measure 84 which would have eliminated the state’s inheritance and estate tax and allowed for tax-free property transfers between family members.

Oregon Measure 85 PASSED
Voters approved Measure 85 choosing to eliminate Oregon’s “corporate kicker” refund program which provides a rebate to corporate income taxpayers when total state corporate income tax revenue collections exceed the forecast by two or more percent. Now, the excess revenue above collections will go to the state’s General Fund to support K-12 education.

Oregon Measure 79 PASSED
Measure 79 constitutionally bans the state from levying real estate transfer taxes and fees even though such taxes are currently nonexistent in Oregon.

South Dakota Initiated Measure #15 FAILED
Initiated Measure #15 would have raised the state’s sales tax by one cent, from 4 to 5 percent. The additional revenue raised would have been split between two funding priorities: Medicaid and K-12 public schools.

Washington Initiative 1185  PASSED
Initiative 1185 requires a supermajority of the legislature or a vote of the people to raise revenue.

If yesterday’s election was a referendum on taxes, what voters rejected was the tired oldargument that cutting taxes is good for an ailing economy, and that is a welcome development. For his part, President Obama has said winning would give him a mandate to raise revenue by ending the Bush tax cuts for the wealthiest Americans, one of his campaign promises. Republicans have said if he follows through on that promise, it will destroy any chance of the two parties working together in the coming years.

As we head into the lame duck Congressional session that begins next week and look ahead to 2013, let’s review the (frankly) uninspiring policy options both parties are proposing – proposing for a country where tax rates are at historic lows, income inequality is at historic highs, tax avoidance by the wealthy and corporations is epidemic and revenues are anemic.

Sadly, President Obama’s “balanced” fiscal plan comes up short.  Far from raising needed revenues or “raising taxes on the rich” as many describe it, the President’s plan actually cuts taxes dramatically for most Americans. If President Obama’s plan to keep all but the high end Bush tax cuts in place is implemented, the lion’s share of the unaffordable and unfair tax cuts pushed through by President George W. Bush more than a decade ago would remain in place for another year, through the end of 2013 – at a one-year cost of $250 billion or more.

Whether the President succeeds in getting a grand bargain that includes a one year extension of most of the Bush tax cuts, or we end up with the Republicans’ latest idea for a six month “bridge” across the fiscal cliff, what both parties are saying is that the time they buy with these bargains will be used to rewrite the tax code in a permanent way. And while we agree that some kind of tax code overhaul is necessary, any overhaul that fails to raise revenue and increase tax fairness is not worthy of the word “reform.” 

Our corporate tax system is currently in a shambles, with hugely profitable multinational corporations aggressively using shady tax dodges as well as tax breaks enacted by Congress to zero out their tax bills.  Unfortunately, most Democrats and Republicans are listening to corporate lobbyists’ complaints that the U.S. statutory corporate income tax rate of 35 percent is too high.  This complaint is largely baseless.  We studied most of the Fortune 500 corporations that were consistently profitable in recent years and found that they collectively paid just 18.5 percent of their profits in taxes, and many paid nothing at all.  Still, most plans for corporate tax reform from both sides of the aisle call for closing loopholes only to lower the rate, resulting in no new revenues for the Treasury. 

We acknowledge, however, that Democrats have articulated some encouraging goals. In Congress, for example, Senator Carl Levin is actively working to close loopholes that allow corporations to shift profits to offshore tax havens. And President Obama has indicated he wants to restrict the most egregious corporate loophole, the rule allowing corporations to “defer” paying taxes on their foreign profits (which are often U.S. profits artificially shifted offshore).  Contrasted with the Republican Party’s support of a territorial tax system that permanently widens that loophole and exempts all foreign profits, the President’s corporate tax framework looks progressive, even if it is woefully short on detail.

Our view, though, is that ending “deferral” entirely is the only road to real reform of the corporate tax. In this global economy, deferral is the massive hole in which our most profitable companies can legally hide their profits, even as those profits are at historic highs.  

And the personal income tax, with or without the Bush tax cuts in place, contains expensive and unwarranted loopholes that make it possible for wealthy investors to pay taxes at a lower rate than middle-income workers – as Warren Buffett has so helpfully illustrated.  There is a simple way to fix this, of course, and that is to tax capital gains and dividends the same way we tax income from salaries and wages.  Other provisions of the personal income tax (like tax breaks for charitable deductions on appreciated property and the “carried interest” loophole) can be reformed or eliminated so that they no longer provide tax shelters for the richest Americans.  But it’s the low rates on capital gains (and dividends) that overwhelmingly benefit the very wealthiest Americans, and tax reform that maintains a progressive federal income tax must end that special break.

Tax policy is often inscrutable, and one aspect that can complicate and thwart a constructive public discussion is the issue of which “baseline” or assumptions an analysis begins with.  For example, there are those who characterize the scheduled expiration of the Bush tax cuts as a tax increase.  Don’t believe them. Nor should you believe those who say that President Obama’s proposal to extend most of the Bush tax cuts would “raise revenue.” By law, the Bush tax cuts are still temporary and are set to expire at the end of this year.  Allowing them all to expire is not a tax increase, and the President’s approach to extending most of them would result in less revenue (and a much higher budget deficit) than we’d get if Congress just did nothing, let the Bush cuts (and scores of smaller temporary tax expenditures) expire and went home.

Indeed, Congress simply going home next month and allowing the Bush tax cuts to expire on January 1, 2013 would not be the worst result.  You hear people say that we can’t possibly allow all the Bush tax cuts to expire because they benefit low- and middle-income Americans who need help, especially right now. But this is no reason to enact a bill that also extends tax cuts for the rich, which are far larger, and that’s exactly what it would mean to extend the Bush tax cuts wholesale. We’ve estimated that if Congressional Republicans get their way and all the Bush tax cuts are extended, 32 percent of the benefits would go to the richest one percent of Americans and just one percent of the benefits would go to the poorest fifth of Americans. Under President Obama’s approach, 11 percent of the benefits of the extended tax cuts would go to the richest one percent of Americans and three percent of the benefits would go to the poorest fifth of Americans. Clearly Obama’s plan is the fairer one, though it’s hardly something to celebrate.

The White House and Congress will be working on a deal during the lame duck session to tide us over through 2013. If the only deal they can reach is a bad deal – one that preserves all those expensive Bush tax cuts – the President should reject that deal.  We believe the public would support him if he did.

While we aren’t enthusiastic about any of the short term deals we know of, we are hopeful that 2013 can bring positive change to our tax code if Congress follows some basic principles.  Like the historic tax reform of 1986, reform next year should close loopholes in the personal and corporate income taxes.  Unlike ’86, however, it should not be revenue-neutral.  Today, following decades of tax cuts, we have shrinking revenues and swelling deficits.  So the next tax overhaul must raise revenues sufficient to fund the government and provide services citizens deserve and depend on. Real reform will also leave the code fairer than it is today by closing loopholes that have slowly eroded the progressivity the federal income tax was designed to deliver. We know that when you include local and state taxes, lower and middle income Americans are, in fact, paying their fare share.  At Citizens for Tax Justice, our mission is advocating for those taxpayers, and we will continue to do so into 2013 as a still divided Congress and Democratic White House debate reform of the entire tax code.

A Missouri child advocacy group is planning on lobbying for an extension of the “Children in Crisis” tax credit during the upcoming legislative session.  But Missouri doesn’t need more tax breaks, even if they are designed with noble causes in mind. Instead, lawmakers should be looking at ways to sustainably raise enough revenue to adequately support children’s programs so they don’t have to resort to special tax breaks.

Some Wisconsin lawmakers continue to insist that Wisconsin’s progressive income taxes are too complex and unfair and that the best remedy is a flatter tax structure with a single rate. But this post from the Wisconsin Budget Project reminds us that moving to a flatter income tax structure “would benefit the biggest earners and could raise taxes for people in the working class.”  Flatter does not mean fairer.

In their brief arguing for increasing the state’s earned income tax credit, the Louisiana Budget Project (LBP) cites Institute on Taxation and Economic Policy (ITEP) data showing how the state’s tax structure asks low income families to pay more taxes as a share of their income than wealthier Louisianans. LBP advocates doubling the state’s current 3.5 percent tax credit saying, “the benefits for Louisiana families and children are proven.”

We’ve made the case for why tax breaks for big oil and gas companies should be repealed at the federal level, and now the Oklahoma Policy Institute has weighed in with their take on why state tax breaks for oil and gas should be jettisoned as well. According to the Institute, “Oklahoma’s oil and gas companies have ranked tax incentives as the least important factor affecting drilling decisions,” and offering these breaks is therefore unnecessarily “squeezing out resources for schools, roads, public safety, and other keys to long-term economic growth.”

A new report from Citizens for Tax Justice shows that the Making Work Pay Credit, a tax credit that was in effect in 2009 and 2010, is better targeted towards low- and middle-income families than the payroll tax cut in effect today, at half the cost. It is dramatically more targeted to these families than the Bush tax cuts, at just over a sixth of the cost.

Prominent Washington figures and media outlets have suggested in recent days that either the payroll tax cut might be extended or the Making Work Pay Credit might be revived to help the economy.

Read the report.

Local governments in Ohio have taken tremendous fiscal hits in recent years and now many are resorting to the ballot box to close their budget gaps. Next week Ohio voters will be voting on 194 school levies, including 123 for additional funding. According to the Columbus Dispatch this is “the highest percentage of new tax issues in a general election in at least the past decade.” Recently, the state cut aid to local governments from by more than a billion dollars and then eliminated the state’s estate tax, a key revenue source for cities and towns which brought in $230 million to local government coffers in 2010, for example.  Wendy Patton with Policy Matters Ohio wrote earlier this summer, “Gov. John Kasich and the General Assembly pushed the fiscal crisis down to local schools and communities.”  

Ohio is not the only state where local governments are turning to voters this year to approve new revenue in the wake of state aid reductions.  More than 1000  local governments across the country in more than a dozen states have tax or fee related questions on their November 6 ballots.

California voters will not only have to decide on two competing statewide tax increase measures, but will also likely face similar decisions at the local level.  Hundreds of measures will appear on local ballots including sales tax increases, school parcel taxes, and hotel tax hikes.  The revenue raised from these initiatives will be used for everything from schools to police and fire services to the upkeep of parks.

In a 60 Minutes interview after his 2011 tax returns were released, Republican presidential candidate Mitt Romney was asked if his federal income tax rate was fair.

CBS’s Scott Pelley: And you paid 14 percent in federal taxes. That’s the capital gains rate. Is that fair to the guy who makes $50,000 and paid a higher rate than you did?

Romney: It is a low rate. And one of the reasons why the capital gains tax rate is lower is because capital has already been taxed once at the corporate level, as high as 35 percent.

Pelley: So you think it is fair?

Romney: Yeah, I think it’s the right way to encourage economic growth, to get people to invest, to start businesses, to put people to work.

Mitt Romney is wrong, and so is the tax system that he defends. His proposals would make it even worse.

In defending his tax rate, Romney is relying on the double taxation argument – that it’s fair to tax capital gain and dividend income at a much lower rate than other income, like salaries and wages, because it’s already been taxed once at the corporate level.

Here are three reasons why the double-taxation argument is unconvincing:

Ÿ1) Much of the income qualifying for the low rate is not related to corporations
2) Even the income that is related to corporations may not have been previously taxed
3) Romney’s income in particular is not from corporate profits

For one thing, all kinds of income that didn’t come from corporations is taxed at the special low rate, such as profits from selling office buildings, corn futures and exotic sports cars. Romney’s own reported income is dominated by so-called capital gains that are really “carried interest” – compensation from managing Bain Capital, his leveraged-buyout firm, that he can restructure as investment income so it doesn’t get taxed like ordinary salary or wages. Romney also has millions in gains from hedge funds, bonds, and foreign corporations, none of which was subject to the U.S. corporate income tax.

Even when corporate dividends are paid to shareholders, it’s highly likely that the corporation hasn’t paid much tax on the income they use to cover those dividend payments. Take G.E., for example. Over the last decade the company has paid out $87 billion in dividends but paid an average federal income tax rate of just 1.8 percent.

Significantly, many of the companies managed by Romney’s Bain Capital aren’t paying income tax either. Sensata Technologies, for example, used to pay tax – before Bain loaded it up with debt and started moving its operations offshore. Now it doesn’t have any U.S. income to tax

But wait, defenders of low- or no-capital gains taxes say – the money Romney earned to make those investments was taxed when he earned it, and then the government taxes it again when the investments go up in value. Not true! Only the appreciation in the investments is taxed when you sell. The original investment isn’t taxed again.

When all is said and done, the low capital gains tax rate is a windfall for the wealthy. In 2013, it’s estimated that the share of capital gains going to the top five percent will be 83 percent. This low tax rate on capital gains and dividends is also the reason that Warren Buffett pays a lower tax rate than his secretary and that Mitt Romney pays a lower rate than the middle-income worker 60 Minutes asked him about.

Whether you make $60,000 or $60 million, if your income is from work you’ll pay more than twice as much federal income tax than someone whose income is from wealth, and you’ll pay payroll taxes on top of that.  Romney’s tax plan would make it even worse because he’s proposing to completely exempt up to $200,000 of interest, dividends, and capital gains from income taxes.

Now, this might sound great to a lot of middle-income Americans who have a little bit of investment income – saving the tax on their interest from the bank or on dividends from that mutual fund. But consider this: under Romney’s plan, an heiress or day trader with $200,000 of investment income but no salary or business income would pay zero federal income tax, while working Americans with that much income would pay plenty of tax on their salaries and wages.

Getting rid of the unwarranted tax breaks for wealthy investors and treating working taxpayers more fairly should be at the heart of real tax reform. But real tax reform is just the opposite of what Mitt Romney has in mind.

Happy Halloween to our readers!

In honor of the spookiest of all holidays, we want to start by sharing this recent Wall Street Journal piece called Meet One of the Super-PAC Men which profiles Missouri’s Rex Sinquefield, the masked financier behind of one of the scariest state tax policy proposals around — eliminating Missouri’s income tax and replacing it with increased sales tax revenues.

Word is that fracking taxes, income tax cuts, bank “tax reform” and possibly privatizing the Ohio Turnpike could all be priorities for Ohio’s ghoulishly anti-tax governor, John Kasich. Given the Governor’s track record of supporting tax cuts above all else, we are more than a little afraid about what is to come in the Buckeye State.

Kansas Governor Sam Brownback recently proposed a “property tax transparency” plan which will prevent automatic property tax increases when property values rise. But this proposal leaves local governments who depend on the property tax at the mercy of a zombie math formula. Brownback’s plan should spook all the citizens who depend on local government services.

This one will send a shudder up the spines of supply-siders who want to cut taxes on businesses and the wealthy under the guise of economic development.  The Wisconsin Budget Project is reporting on a national poll which found that a “majority of small-business owners believe that raising taxes on the top 2% of taxpayers is the right thing to do.” On this issue, anyway, it looks as though the good goblins are giving Grover a run for his money!

Presidential candidate Mitt Romney has proposed to make permanent the Bush tax cuts without offsetting the costs and also enact new, additional tax cuts that would be paid for by limiting tax expenditures (special breaks or loopholes in the tax code). Romney recently suggested that his new tax cuts could be paid for by limiting itemized deductions to $25,000 per tax return, which we estimate would offset just 36 percent of their costs. The percentage of Romney’s new tax cuts offset by this limit on itemized deductions would vary dramatically by state.

Read the report.

There’s been a lot of good research these past few years debunking claims that state taxes – particularly income taxes on the rich – send wealthy taxpayers fleeing from “unfriendly” states.  CTJ’s partner organization, the Institute on Taxation and Economic Policy (ITEP), took a lead role in disproving those claims in Maryland (PDF), New York, and Oregon (PDF), for example. CTJ has also been covering the controversy in several states and in the media.

Some particularly thorough research on this topic has come out of New Jersey, where researchers at Princeton and Stanford Universities were granted access to actual tax return data, which is not available to the public, in order to investigate the issue in more detail. The resulting paper (PDF) found a “negligible” impact of higher taxes on the migration patterns of the wealthy.

And now, for the further benefit of lawmakers seeking to become better informed about tax policy, those same Princeton and Stanford researchers were recently granted access to similar confidential taxpayer data in California. Unsurprisingly, the findings of their newest paper (PDF) were similar to those out of New Jersey: “the highest-income Californians were less likely to leave the state after the [2005] millionaire tax was passed… [and] the 1996 tax cuts on high incomes … had no consistent effect on migration.”

That’s right.  California millionaires actually became less interested in leaving the state after the tax rate on incomes over $1 million rose by one percentage point starting in 2005.

Another important finding: migration is only a very small piece of what determines the size of a state’s millionaire population.  “At the most, migration accounts for 1.2 percent of the annual changes in the millionaire population,” they explain.  The other 98.8 percent is due to yearly fluctuations in rich taxpayers’ income that moves them above or below the $1 million mark.  

This finding (which is not entirely new) defeats the very logic that anti-tax activists use to argue their “millionaire migration” case. Here’s more from the researchers:

“Most people who earn $1 million or more are having an unusually good year. Income for these individuals was notably lower in years past, and will decline in future years as well. A representative “millionaire” will only have a handful of years in the $1 million + tax bracket. The somewhat temporary nature of very-high earnings is one reason why the tax changes examined here generate no observable tax flight. It is difficult to migrate away from an unusually good year of income.”

But for every new piece of serious research on this issue, there are just as many bogus studies purporting to show the opposite.  Of particular note is a September “study” from the Manhattan Institute, recently torn apart by Sacramento Bee columnist Dan Walters.

Somewhat surprisingly for a right-wing organization’s study of this topic, the Manhattan Institute report actually concedes that other variables, things like population density, economic cycles, housing prices and even inadequate government spending on transportation, can motivate people to leave one state for another.  But while the Institute doesn’t claim that every ex-Californian left because of taxes, regulations, and unions, it does, predictably, assign these factors an outsized role. But their “analysis” of the impact of taxes spans just six paragraphs and is, in essence, nothing more than an evidence-free assertion that low taxes are the reason some former Californians favor states like Texas, Nevada, Arizona – even, oddly, Oregon, where income tax rates are similar to California’s.

Obviously, the guys looking at the actual tax returns have a better idea of what’s actually going on, and state lawmakers need to listen.