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Wednesday, October 20, 2021

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Why Do the Red States Prosper While the Blue States Stagnate?

Nevada, Colorado, Florida, Arizona, Texas.  These are states with rapidly growing job markets.  They’re also red states.  Illinois, New York, New Jersey, job stagnation and lagging behind the country in recovery.  Blue states all.  As a resident of Illinois, I can say that the state is still trying to recover from the recession and 9/11 double-punch.  That said, I want to go into detail as to what the reasons are.  Liberals will tell you that the only reason that these states have job growth is the "warm climate."  I beg to differ.

"The workers and entrepreneurs, the people with the real productivity in this country, are moving to the Red states."

Florida has successfully migrated from a left-wing blue state to a conservative, freedom-loving, red state.  This happened as workers from other areas fled the oppressive taxes and job blight.  The workers and entrepreneurs, the people with the real productivity in this country, are moving to the Red states.  Why?  Climate?  It takes a lot more than a warm winter to cause people to distance themselves from family and friends to the tune of hundreds or even thousands of miles.  Taxes?  Well, Texas has no income tax, and their property and sales taxes are both reasonable.  Nevada has no income tax.  Neither does Florida.  Is it any wonder that Las Vegas is the fastest-growing job market in America?

The blue state officials, being liberal and thus at least somewhat anti-liberty, respond to the drop in populace, and the resulting revenue shortfalls for their pet dependence programs, by raising tax rates and fees.  They say "revenue enhancement," but what they do kicks the law of supply and demand squarely in the face.  If you raise tax rates or fees, you drive business away.  You drive workers away. You in essence increase all of the revenue the problems you are having.  Look at Chicago.  The mayor announced today that he supported raising parking fees at O’Hare and Midway airports, and in the Millennium Park garage in the heart of the city.  Will that cause people to increase the use of these facilities?  No!  It will drive air travelers to Rockford, Gary and Milwaukee.  It will cause people to carpool and commute, or seek work outside Chicago

Some of Chicago’s largest downtown employers fled the dreaded "head tax" on employees years ago.  Sears moved to Hoffman Estates, a northwest suburb, in the late 1980’s and early 1990’s leaving the landmark Sears Tower half empty.  It took well over a decade for a new building owner to rent that vacant space.  Aon Corporation bought the old Zenith Electronics building in Glenview, another suburb, and will over time evacuate the original Combined Insurance building at 5050 N. Broadway in the city.

Even trade shows, cash cows for these cities, are viciously penalized.  You cannot plug in a lamp in Chicago’s McCormick place, you have to pay a union electrician about $75 to do it.  No wonder that trade shows that have been Chicago fixtures are fleeing Chicago and New York.

So how to the Red states respond?  Their governments open wide, welcoming arms, and offer people the lower taxes as well as the hospitable climate.  Workers flock to these places where the state does not put its hand into the income of its citizens.  Are these states in the dire financial straits of the Blue states with their high taxes?  Of course not.  Are there the choking "consumer protection laws" and ultra-liberal anti-business judges of California which, when combined with the state’s horrendous taxes, make for an openly hostile business environment?  Of course not.

"The Blue States could learn some lessons from their red counterparts.  If they implement some changes, they will see results.  Not instantly, but rapidly."

The Blue States could learn some lessons from their red counterparts.  If they implement some changes, they will see results.  Not instantly, but rapidly.  Our beloved president’s tax cut helped a lot of people, and the benefits are coming in.  In fact, the ten year deficit projection has been reduced by $1 trillion because of enhanced revenues.  There are more taxes coming in because of lower rates stimulating growth.  The same formula will work for the states.  Here are my suggestions:

  1. Slash Tax Rates:  Cut Income tax rates in half.  If the state’s legislators have real cajones, eliminate the income tax altogether.  Rely instead on sales taxes and reasonable property taxes.
  2. Eliminate lots of programs:  It is not the responsibility of the state government to do anything other than protect people from crime, educate children and promote business and investment in the state.  Other programs foster dependence and the abandonment of personal responsibility and are ultimately self-destructive.
  3. Make a Truly Friendly Business Climate:  Enact laws that make your state a haven for businesses.  Cut the taxes that businesses pay.  Eliminate taxes that punish businesses for choosing your state.  Merely setting up some sort of a marketing office to schmooze business leaders will rarely work to attract any real amount of business.
    Some laws that would help the business climate:
    • Restrict outlandish damages awards
    • Repeal or relax "consumer protection" laws that result in consumer paydays when the business has acted in good faith
    • Set up "safe haven" laws that immunize companies from civil liability if they act in good faith, and make judgments from other states that would not be obtainable in your state unenforceable.

The Red states do similar things.  In 2010, Florida will have a larger congressional delegation than New York.  Chicago’s O’Hare is no longer the busiest airport in the world, Hartsfield in Atlanta is.  Texas is growing fast enough to have a good shot as being more populous than California by 2010.  From where do those congressmen come?  Blue States like Illinois, New Jersey, California and New York.

The leaders in the Blue states are shortsighted to say the least.  Their aggressive taxing is driving away the business and telant they so desperately need to keep.  Unless they act to reverse themselves, they will reap what they sow, and the Blue states will become blight zones.