High taxes, debt, deficit spending, welfare excesses, declining population; those are descriptors that we often associate with Democrat-led states like California, Illinois, New Jersey and New York. The Wall Street Journal recently published a simple comparative chart with a few figures representing Florida and New York that speaks volumes about Democrat vs Republican governance. The figures from the Wall Street Journal are in bold, the discussion and conclusions are mine.
POPULATION:
Ten years ago, the population of New York state (19.6 million) and Florida (19.5 million) were obviously very similar. But the mass migration from the Northeast in general and New York in particular has resulted in Florida with 22.3 million, a 2.7 million edge over the population of New York with 19.6 million. Florida is the fastest growing state in the America.
But there is more to the story than just numbers of people. It is not the poor folks who are moving to Florida, it’s a “wealth migration.” More wealth is moving into Florida than any other state by far. In 2020 taxpayers with a net total of $23.7 billion in adjusted gross income migrated to Florida; Texas was a distant second, gaining $6.3 billion. Correspondingly, IRS data tells us that New York tax revenue shrank by $19.5 billion and those losses pile up on top of each other year after year.
TOP STATE INCOME TAX RATE in Florida 0%; New York 10.9%.
TOP INCOME TAX RATE in Miami 0%; New York City 14.8%.
STATE SALES TAX RATE in Florida 6%; New York 4% (but the combined NY state and city sales tax is 8.9%).
STATE UNEMPLOYMENT RATE (December 2022) in Florida 2.5%; New York 4.35%.
LATEST ANNUAL STATE BUDGET:
This is amazing; Governor Hochul’s state budget this year is $227 billion while Governor DeSantis’ is $114 billion; about half of that in New York but with 2.7 million more citizens. Florida budgets for $5,112 per person while New York’s is $11,581 per person.
The current NY budget contains a $310 million deficit which is expected to balloon to $6.2 billion by 2027 under the current rate of spending and reduced revenue. New York is a classic Democrat tax-and-spend economy and people are speaking out with their U-Hauls as they head down interstate 95. Meanwhile Florida is projecting a surplus of $13-15 billion per year through 2026.
TAX CUTS AND TAX INCREASES:
Here is an example of New York planning: County budgets in NY are of course already set for this year. On February 17th 2023 Governor Hochul announced that on April 1st she plans to keep part of the federal funding the state relays to counties to help pay their massive Medicaid costs. She will withhold $626 million that the counties would otherwise get this year. County officials say they will certainly raise property taxes to cover the loss.
Two years ago, New York City raised its top marginal income tax rate to 52% on ultra-high earners; the highest personal income tax hit in the U.S. This year Hochul’s plan is to increase the top payroll tax from .34% to .50% on employers and self-employed individuals in New York City and seven suburban counties to generate $800 million revenue per year. Additionally, she proposes to increase the rate imposed on the net earnings of a self-employed business owner to .42% this year and to .50% in 2024. And so it goes in New York, tax and spend with no relief in sight.
Meanwhile, a May 2021 headline: Governor DeSantis Signs Florida Tax Cut Package designed to provide savings for families and businesses.
Followed in May 2022; Governor DeSantis signed into law a $1.2 billion package of tax breaks, including the elimination of the state sales tax on diapers for a year, along with four sales tax holidays lasting one or two weeks each.
February, 2023 DeSantis unveiled a $1.2 billion sales tax reduction focused mainly on eliminating sales taxes on household items under $25 to provide families relief from inflation. And, so it goes in Florida with relief already legislated and more relief in sight.
MEDICADE SPENDING FY 2021:
Florida: $8.95 billion (total $28.76 billion with federal share).
New York: $26.47 billion (total $73.27 billion with federal share).
MEDICAID RECIEPIENTS in December 2022, 5.6 million in Florida (25% of the population) and 7.8 million in New York (38.6% of the population).
OK, why are 1 out of 4 Floridians getting Medicaid while in New York it is 1 out of every 2.5? Are New Yorkers less healthy? No, it’s the New York welfare-state mentality. They have constructed the eligibility requirements to get a larger number of citizens dependent on the program.
For Florida seniors to receive nursing home Medicaid in 2023, they must have income under $2,742 per month and have assets under$2,000.
For New York seniors to receive nursing home Medicaid in 2023, they must have income under $1,563 and have assets under $28,133. The point here is that the number of individuals in New York with assets under $28,133 is massive and allows the Medicaid eligibility to be unreasonably high. Medicaid recipients are another Democrat identity group who will faithfully and consistently vote Democrat.
GDP GROWTH (2016-2021) Florida 17%; New York 8%. That is an important statistic because it brings us to a discussion of Econ 101.
There is one simple equation in the very complex world of economics that the Democrats just will not abide by as they pursue their tax-and-spend programs that are putting this nation in serious financial jeopardy. Econ 101 goes like this:
Cut taxes across the board and:
- Individual discretionary spending goes up.
- Business discretionary spending goes up; business expansion, create jobs, increase wages.
- When spending goes up manufacturing goes up.
- Suppliers and transporters have more business; more jobs, higher wages.
- More jobs are created.
- Unemployment goes down.
- Wages, salaries, bonuses and dividends go up.
- The overall Gross Domestic Product goes up.
- As gross income goes up; greater income tax.
- Federal and state tax revenue increases.
It’s not rocket science; this formula worked when President Trump cut taxes in 2017 (which was criticized by every Democrat as a tax cut for the rich) and by 2019 U.S. tax revenue was the highest in history. Republican Econ 101.
Republican economics, if you want to spend more grow the economy more; 2017 -2020.
Democrat economics, if you want to spend more, tax more; 2009-2016, 2021-2022. Case in point; during the Obama/Biden administration the economy grew more slowly than was projected in 2009. New legislation cost $5 trillion. Obama/Biden left behind a budget with higher entitlement spending, higher taxes and lower discretionary spending. You can Google up the full list of 21 Obama/Biden tax hikes while the national debt doubled. Democrat Econ 101.
Historically GDP growth has averaged 3% annually; Obama/Biden average was 1.59% and in their last year in office it was 1.7%.
Wall Street Journal Editorial Board conclusions concerning Florida and New York economics. The comparative statistics don’t tell the whole story but they do show that better Governance yields better fiscal and economic results. And these results in turn attract more people, which contributes to faster growth and more tax revenue without an income tax. We don’t expect the denizens of Albany to care, but they should.
Let’s move the discussion of governance from Florida/New York to the federal level.
BIDEN’S DREAM GOVERNANCE SCENARIO:
- Amnesty for tens of millions of illegal migrants thus giving them access to all 83 federal welfare programs. A huge vote-buying identity group initiative.
- Child tax credit: $3600 per year for children under age 6 and $3000 per child age 6-17. Families will get full credit if they make up to $150,000 per couple or $112,000 for a single parent. Sounds good but let’s do the math on this one (round numbers for ease in understanding).
-There are 74 million children in the U.S. age 0-17.
-There are about 132 million households, (single-parent and two-parent).
-80% of the households have income less than $150,000.
-So, there are about 106 million households that qualify for a child credit and about 59 million kids in those households.
– The average credit per child is $3,176 per year for 17 years.
-The child credit program would cost the taxpayers $3,176 times 59 million kids equals about $187 billion paid out to 106 million qualifying households per year.
Bottom line for child credit is that it makes sense as a safety net for low-income households. But for damned sure a couple making $149,999 a year does not need a government safety net to raise their kids. This is pure Democrat vote buying to regain some political traction in the middle class.
- Wealth tax: This is not an income tax; it is a tax on households worth more than $100 million in accumulated assets. Biden’s proposal is that the wealth tax would claim a minimum of 20% from high earners. When it comes time to pay your wealth tax, in all probability one would have to sell assets to have the cash to pay the IRS. At some future point you are no longer wealthy. This proposed tax is a gift to the far-left socialists, the likes of Elizabeth Warren and Bernie Sanders. President Biden explains this to the American people as, the wealthy paying their fair share, never having to explain what fair share actually means.
- Unrealized capital gains tax: If your assets rise in value during a year, you will pay taxes on that increase even if you realized no actual gains through a sale. If you lack the ready cash you might have to sell assets to pay the tax bill. Conversely, if your assets fall in value, you would not be authorized to deduct the full loss from your income.
- Corporate stock buyback tax: This year there is a new 1% tax on corporate stock buybacks. Biden’s intent is to quadruple that tax rate to 4%.
Why all of these new taxes? Biden needs more revenue because he’s also proposing trillions of dollars in new social spending. Fortunately, the Republican-controlled House can prevent this from happening now but it is what Biden plans to campaign on for the 2024 election.
This deranged economic thinking began with Obama’s intent for the nation which he revealed on a hot-mike during the 2008 campaign; “wealth transfer.” It didn’t make economic sense then and it does not make sense today.
CONCLUSIONS:
Does anyone see a pattern here? The larger Democrat goal is more political control over you, over business, over everything. Big centralized government. Massive uncontrolled bureaucracies. Out of control spending and debt.
Democrat welfare has nothing to do with safety nets for those unable to care for themselves. Democrat welfare is all about building dependency, aka buying votes of multiple identity groups to the point they will never have to contend with a Republican House or Senate again. Clearly the emphasis is on Party over we-the- people.
Welfare needs a do-over. Democrat welfare promotes disincentivization to work. We need to go back to the Bill Clinton/ Newt Gingrich Welfare-to-Work program. It was very successful and millions came off the welfare rolls until Obama/Biden changed a few rules in order to go full-bore on their wealth transfer philosophy.
BOTTOM LINE: “Governance” is a soft sounding seemingly harmless word. But when it comes to running a state or the nation, governance is a deadly serious endeavor as illustrated by the Wall Street Journal with a small chart of a few comparative numbers.
Comparative governance is another good subject for the Republicans to campaign on for the 2024 election.
Numbers are meaningful because, as Mark Twain so eloquently explained to us, “Figures don’t lie but liars do figure.”
Marvin L. Covault, Lt Gen US Army, retired, is the author of VISION TO EXECUTION, a book for leaders, and a new book May 2022, FIX THE SYSTEMS, TRANSFORM AMERICA as well as the author of a blog WeThePeopleSpeaking.com.