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Do people really not see the connection?
Alabama Boasts Lowest Taxes in the Nation
and
Alabama is 44th Most Livable State
Not to mention this Alabama 48th for Kids, or this Alabama 45th “Smartest” or this Alabama 40th in Overall Health (and here)
Of course, we keep our taxes low to be friendly to business…but wait, Forbes said in 2006 Alabama was 40th most business friendly state. Hmmmm
Please don’t read me wrong…I understand that many Alabamians want their taxes as low as possible and that, in many of their minds, insures the government does less, but we have to understand that comes with a price and there is such a thing as TOO low. Now, I can hear you saying, but the most liveable state (according to the rankings linked above) is New Hampshire, which also happens to be one of two states with LOWER state local taxes as a percentage of income. Why?
First, because people in New Hampshire, on average, have higher incomes than people in Alabama, which means a couple of things: the need for government services is less and they can have a lower rate and bring in the same amount, or more revenue. They also have a little over a quarter of the people that Alabama has. Notice that while they are dead last in percentage of their income that goes to state and local taxes, they are not in the bottom five for revenue per person. The percentage of those in poverty is also much lower in New Hampshire (7.1% vs. 16.9% in Alabama). And more people in poverty equates to more need for services (TANF, SCHIP, Medicaid, transportation, etc.).
So, let’s take another look at the liveability rankings, specifically at the 10 LEAST liveable states: Mississippi, South Carolina, Kentucky, Tennessee, Arkansas, Louisiana, Alabama, West Virginia, and North Carolina. ALL of those states share rankings on the low end of the taxation spectrum.
Again, don’t read this as a statement that higher taxes will automatically solve problems, it’s not. Yes, we need to improve the efficiency of spending what revenue is collected (and I have explored and will continue to explore that issue here), but the “do more with less” philosophy only goes so far. The natural outcome of do more with less is eventually you are asking for everything to be done with nothing. And it’s fine to believe we should have the lowest taxes in the country, but then please don’t pay lip service to caring about these low rankings in other areas, because you can’t possibly be on both sides of that fence.
What I am arguing is that if you’re on the side of NEVER raising taxes (and candidates are asked to sign that pledge every election cycle), then you are also on the side of ALWAYS being among the least liveable states. If you recognize that there is such a thing as TOO low, particularly in a state with as many challenges to deal with as this one, then we can have a debate about what the appropriate level is, and as importantly, how to ensure that those funds are spent in an efficient and effective way.
As always your comments and thoughts are welcome below.
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I certainly agree that the reverse argument isn’t necessarily true. But my point remains, limited resources = limited results. Can we do better? Of course we can, but you can only go so far with the resources we have.
I’m also saying that if “starving the government” like so many folks seem to believe we should do is really effective, why isn’t Alabama better off? No state has lower taxes…so aren’t we the result of what happens when you cut taxes to the bare minimum (or below?)
And I don’t care which rankings you pick or how you weight them, have you ever seen any standard of living ranking that had Alabama out of the bottom 10? I certainly haven’t…
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The parameters and methodology of a ranking are always more important than the actual results. If I could cherry pick out of the 44 variables utilized here, I am relatively sure I could assemble a standard of living ranking that would put Alabama in the top 10. However being the sort that loves a challenge;
Steve Sailer’s iSteve Blog Standard of living- Alabam 26th
http://isteve.blogspot.com/2005/05/standard-of-living-by-state.html
Best State to live in(Morgan Quitno Press, 2005 )- Alabama 39th
http://www.statemaster.com/graph/lif_bes_sta_to_liv-lifestyle-best-states-to-live
Since we can agree that under-funding can limit progress and we have no evidence that greater resources necessarily lead to greater results, we need to first maximimize the resources available before we can ascertain the need for more.
There is also the fact that everything comes from a common pool. More taxes results in less economic activity and charitable donations. This in turn results in a greater demand for services from and reduction in revenues to the government.
I am unsure what the correct balance may be. Continued reduction of taxes will result in greater economic activity but eventually reduced revenues.
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“Why is ranking states ridiculous? Businesses and others compare states against each other all the time when they make decisions about where to locate.
What yardstick do you propose we use?”
Simply because states are so diverse, and areas within those states are likewise diverse. Apples and oranges.
NYC, for example, has a budget larger than a number of countries. The problems of poverty, high salaries, high rents, etc. make NYC, and thus NY state a very different place than, say, Helena MT.
Sure, businesses compare tax rates, cost of living when deciding where to locate. But there are so many other factors in the equation.
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Louie,
Did you notice both of your figures are 4 years old? In fact the second one you cite is PRECISELY the same resource I used for the citation that Alabama is 44th, I just used more recent numbers.
I don’t disagree we need to maximize the resources we have…but what is your metric for that? My point was that even with maximization you will only get so far…
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Jay,
Of course states are diverse, but is there NO way to compare across states? I simply don’t believe that.
I certainly will be investigating the diversity within the state with regards to tax rates and the impacts that has on other statistics as well, but shouldn’t state leaders be looking at some objective outcomes at a statewide level to determine whether what we are doing is making citizens’ lives better?
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Oh, and when I was searching for information on how business friendly we are, I did not get this result, but the latest survey from Site Selection magazine has Alabama falling from 3rd to 7th in the Business Climate Rankings. So there is some evidence that the lower taxes make us more friendly to business.
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