Tuesday, January 13, 2009

We Vote With Our Feet

This is a theme I have returned to many times over the years, because I myself have done it a few times.

I once lived in Cleveland and worked in suburban Parma, OH. Each city had a municipal income tax of 2%. When I finally gave up on my rough, decaying Cleveland neighborhood and moved to Parma, I gave myself a 2% raise. I got to thinking that I had to be an idiot to stay where the schools sucked, the crime rate was high, my auto and homeowners insurance rates were higher, and my commute was longer besides.

Later, I moved to Indianapolis. The Indiana tate income tax was lower than Ohio's, 3.1% to 7%; the sales tax was lower, then 6% to 8%; the property taxes were then about a third of what Ohio's were. Again, I thought what an idiot I would have to be choose Ohio.

Then we moved to Fishers. Again, the schools are better, the crime lower, the property taxes lower, the county income taxes lower, the insurance rates lower. Yet again, the thought of what kind of idiot I would have to be to choose Indy over Fishers came to mind, and continues to every time I learn of a violent crime in our previous neighborhood.

I expect to see a lot of migration in the next few years, as high tax jurisdictions are exposed for their empty rewards. From an AP report:
The number of people leaving California for another state outstripped the number moving in from another state during the year ending on July 1, 2008. California lost a net total of 144,000 people during that period — more than any other state, according to census estimates. That is about equal to the population of Syracuse, N.Y.

The state with the next-highest net loss through migration between states was New York, which lost just over 126,000 residents.

Two high-tax states lose population- before the economy really began to tank! It isn't news to me. We're going to see a lot more of it. Just wait until the legacy costs of those states and their cities do to them what they've done to GM, Ford, and Chrysler.
Among other things: California's unemployment rate hit 8.4 percent in November, the third-highest in the nation, and it is expected to get worse. A record 236,000 foreclosures are projected for 2008, more than the prior nine years combined, according to research firm MDA DataQuick. Personal income was about flat last year.

With state government facing a $41.6 billion budget hole over 18 months, residents are bracing for higher taxes, cuts in education and postponed tax rebates. A multibillion-dollar plan to remake downtown Los Angeles has stalled, and office vacancy rates there and in San Diego and San Jose surpass the 10.2 percent national average.

What I observed first-hand about Cleveland seems to hold true anywhere: The combination of high taxes and lousy schools is lethal. People of means and high values flee. Cities become magnets for the poor and the stupid.

In 1950, Cleveland's population was a shade under 915,000. By 2006, Cleveland had lost more than half its population. Chart.

Cities don't learn. Rather than lowering the taxes so as to attract people of means, they are wed to the glories that are their 'services', so they raise taxes evermore in order to keep revenues up, thereby chasing evermore people from their jurisdiction. The population gets poorer and dumber.

There are exceptions. Places like New York can get away with it because of the incredible cultural offerings. But, Detroit? Cleveland? Indianapolis? I think when the legacy costs come home to roost, you will see an exodus from NYC as well.

Blame the highways. Blame 'white flight'- although blacks with means flee all the same. Blame anything, but unless you start looking at tax policy and ask people of means just how much they value the 'services' provided by government, you're going to miss the mark. Notice that people of means leave the places with the most services, and taxes. They prefer to leave what they built behind for others, starting completely new in another area, just to be left alone, away from the greedy hands that gobble taxes.

I will probably vote with my feet again, if Fishers continues to grow, and add services, and employees, and legacy costs. I don't want any of that stuff, but the Bigger Brains create it and fatten it, so I'll eventually flee it.

It should become an environmental cause to lower taxes. Hey- it would prevent sprawl!

(h/t: Duncan Adams, for the California article)

7 comments:

Doug said...

To some extent, however, aren't places like Fishers and Parma freeloading off of Indianapolis and Cleveland, respectively? The higher income individuals are able to make their high incomes, in many cases, because they or their companies have access to the high population densities of places like Indianapolis and Cleveland. If you moved the population of Fishers to, say, Winimac, I have to think the potential income of its residents would be severely limited.

The taxes and services, to some extent, make those high population densities possible.

varangianguard said...

Freeloading what?

Culture? Certainly. Have you ever been to Fishers?

Some Marxist idea of the means of production and exploitable labor? I dunno. Can't get enough people to work -in- Fishers. Try to get service at a restaurant. Meh.

Schools? Different tax base.

I like the implication that Mike would return to Indy, if the taxes came down enough and the schools improved. Not likely, but interesting.

Mike Kole said...

Freeloading, Doug? What is it that that suburbanites are getting for free from the cities? List a few things here.

As you may have caught, Fishers made the case for forced annexation of Geist on the basis that the unincorporated residents were freeloaders on Fishers' service. I found that argument to be utter bunk. They use the roads? Well, ok, but I use roads in 80 counties over four states with regularity. Should I be paying taxes to each jurisdiction? Or, don't my gasoline taxes do exactly that? If not, isn't that the beginning of a good argument for private toll roads?

But to your final statement, the chicken and egg isn't like that at all. People engaged in enterprise in locales first, and then governments came around to tax them. Even thinking of something as basic as sewers, it was the case with any city that the population arrived, and the sewer solution followed. Only in the most recent of years does infrastructure get built in such sophistication in a 'build it and they will come' manner.

VG- I would indeed move back to Indy if the whole bundle were improved, starting mainly with schools, but also very high on the list would be correcting the crime rate and subsequent insurance rates. The difference in county tax isn't that great, Marion to Hamilton. the property taxes aren't that different, either. However, I find the efficacy of the dollars in Marion County to be less than nil, and in Hamilton County there is some value to be found. In my judgment, as a matter of risk assessment, living in Indy is just a bad, stupid call.

But as a matter of preference, and perhaps as aesthetics as anything else, my wife would be tremendously happier in the city, and I would like more of the real neighborhood feel I had in the city and in an old suburb like Parma.

varangianguard said...

Like all too many Hamilton County-ites, you seem to think that you take your life in your hands when you cross the County line.

You don't really mean that, do you?

It's like overgeneralizing about IPS. Their system-wide scores are an average. There are schools that are more than adequate, then there are schools that aren't even close. It all depends on the neighborhoods one is talking about.

Same as criticizing teachers for results. Much easier to teach in Fishers where I'd posit that 90%+ of the parents care, over some IPS schools where you're lucky to get 30%+ who do. Poor teachers blend in better in a place like Fishers, because the students "carry" them. But, I'll bet they still have them.

It's difficult to delineate sometimes in a township & range platted city, but Indy is definitely still an aggregation of fairly distinct neighborhoods. Living in the city isn't all 42nd & Post Rd, ya know.

Mike Kole said...

Sure, it isn't all 42nd & Post... or any intersection of 38th St, but damned if the homeowners insurance and auto insurance doesn't treat the south side of 96th Street just as though it were 38th. And, property tax dollars go to funding IPS systemwide, even if you only go to your neighborhood school. I resent spending money that way, in the same way that I wouldn't live in even the most remote part of New York State because I would pay state taxes that float the lunacy in NYC.

You are spot-on, though, that the parents have much to do with the kids in the schools. There again, another reason not to be in much of Marion County. Not all, but much.

jomama said...

I left the country. Always have
loved voting with my feet.

The raise I got is almost incalculable.

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