From the Daily Show – Revenue Crunch for States

Main St. Anytown U.S.A.

Most states (47 of 50) are out of money and looking for ways to generate revenue without increasing taxes or changing tax structures. The fear seems to be that if taxes are increased, businesses and people with higher incomes will leave the state and relocate to other states where taxes are lower. I think this argument is too simple. It’s impossible to have low taxes and a high standard of living. A high standard of living means good schools, affordable health care, transportation infrastructure, clean and safe neighborhoods. That has a cost.

It’s a dire situation. Guardian Angels to supplement police cutbacks in Camden, NJ? Stewart calls Camden “the place where people from Newark go to feel better about Newark.” Pennsylvania governor Ed “Fast Eddy” Rendell (former Philly mayor and ardent Eagles fan) has staked Pennsylvania’s revenue future on casinos. Rendell was the governor who complained about the “wussification” of America when an Eagles game was postponed due to an impending snowstorm. Wussification? He didn’t have enough guts, even as an outgoing second-term governor, to say, “we need to raise taxes.” He’s not alone though. Few politicians are willing to admit we need to adjust our tax structure and make some significant cuts. Most just keep passing the buck.

What’s ironic is that “low tax” states attracting business will find themselves in this same situation in 20 years, when they are losing businesses to a new surging economy (such as Mexico). Watch Stewart’s interview with Governor Rick Perry of Texas. Perry claims that Texas can attract businesses to relocate from the high-tax climate of California, because Texas is a low-tax state. But he’s recruiting the employees too, and within ten years, employees from high tech businesses are going to want California-quality schools in Texas, and that costs money. What I mean by “California quality schools” is teaching evolution instead of creationism, schools that provide lots of opportunities for extra-curricular engagement, and every AP course imaginable. But go on, Rick Perry, you can reap the whirlwind of recruiting thousands of highly educated liberal tech-sector workers to your state. I think you’ll be looking at a sea-change.

Rick Perry Pt. 2

If you are in state government, shop around for the types of businesses that are looking to settle down and establish roots, not the business that wants to the immediate tax break. Wait. It’s not the job of state governments to recruit businesses. Their job is to govern.

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