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State Deficits - Wars
On NY's Spending
NY State’s new Governor Andy Cuomo came out with his 2011 budget. The
Gov. referred to it as an austerity budget. Amazing what austerity looks
like these days.
The total austerity spending in the plan comes to a tidy 133 billion. A
very big number these days. But really it is much worse for those long
suffering New Yorkers. They also have to pay city, town and county
taxes. The 2011 budgets for a few of the other big spenders:
NYC………..…$65b
Nassau county….$2.8
Westchester……..$1.8
Buffalo,
Syracuse,
Yonkers.
Rochester……….$2.0b
On top of this you have hundreds of other smaller cities, towns,
villages that also are collecting taxes and spending money. The numbers
I’ve provided for 2011 equal more than $205b. The total is at least
$225b.
The census put NYS GDP at 1.09 trillion in 2009. It will be higher than
that in 11’. Call it 1.2T (generous). The conclusion is that NY State’s aggregate public sector spending to GDP is 19%. But, of course, it's worse than that.
NY’s citizens also pay federal taxes and share in the federal budget.
What is NY’s share of that? Total federal spending will come in at
around 3.3 Trillion and GDP around 15T. Federal spending is 22% of total
GDP. Does this mean that the combined (state/federal) spending to GDP
is ~40%? No, there are some double counts as some federal money actually
goes back to NYS. But the number is certainly not less than 30%. It is
at least one-third of state GDP.
Unsustainable is the word that comes to mind. And this is an austerity plan.
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State Wars
The BLUE/RED state politics are interesting to watch. The Reds killed
the Blues over BABS. The impact on the Muni market has already been
felt. The Blues are at it again. The issue this time? Deductibility of
state income and local property taxes (“SALT”) for IRS calculations.
This is a big deal. It will hit those Blue states very hard. Total SALT
taxes were $700b in the last fiscal year. Using a federal rate of 25%
you get total deductions of federal taxes of $175B. Which state’s
residents will be whacked on the head with this plan? Blue states, of course.
State sales taxes can also offset IRS liabilities. They have fallen into
the category of “other taxes paid”. Therefore it would be “logical” to
eliminate the deductibility of sales taxes as well. It would be a huge
“stealth” tax increase. But we might not get a logical outcome. Once
again, the Reds are trying to screw the Blues. Congressman Kevin Brady
(R., the very Red State of Tx.) has proposed that the deduction for
state sales tax be made permanent.
Something along these lines is in the works. There will be limitations
on the deductibility of SALT. Sales taxes will be fully deductible. For
Texans who pay large sales taxes but pay no income taxes it results in a
big win over the poor slobs in NY, CA, and IL who will have to foot the
bill. In 2007 the 19 big blue states levied property taxes of $241b. This came to 65% of the US total. In 2011 both the raw numbers and the percentages are higher. Meaning a loss of property tax deductions hits the blue states disproportionately large.
So the Reds will “win” again. This is about politics, not sound tax policy. This is about the next election.
There is going to be a big conflict between Red and Blue states. There
already is the basis for a war. What the Reds keep forgetting is that a
substantial portion of federal revenue comes from the Blue states. So it
is really not clear who is holding the best cards. A possible outcome
could be that California, NY and Illinois band together and invade
Texas. Texas will prove to be the balance of power as the “beggar my neighbor’s state” policies unfold.
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The "Reds" are "screwing" the blues again....HAHAHAHAHAHAHAHAHAHAH
Well...if thats so, then maybe its just a little F!kn bit of payback for the Blues spending MY money how THEY see fit for the past 30 years.
And...remember...Blues dont like Guns....Reds do...choose your fights wisely or stay home and STFU! :-) LMAO. G'day.
Just thought i would check back in. Bruce your girlfriend down there thought i was kinda harsh about the munitions and the cuckoldry and what are probably your peacenik credentials. Actually that was a complement. and the next time you go back to switzerland will you bring me back one of those herbal headache pillows? About 5 pounds ought to do it. Thanks.
If Texas and a few other states really wanted to secede and was willing to go to war, then how would it be stopped? I just don't see a bunch of gangbangers from the Bronx, Chicago, and Compton willing to die to keep Texas in the union. I don't see a bunch of peaceniks from Berkeley, Ithaca, or Cambridge willing to take up arms and kill people.
A war with lawyers is probably a more likely outcome. But push come to shove, don't doubt how tough we yanks are....
tough, sure, but motivated?
i think the egos are too big out east to bet on them actually fighting, let alone begging TX to stay.
i could see y'all hiring blackstone to do the dirty work tho', paying them with benny-bux...
btw - i appreciate your contributions. breath of rationality most times, and always interesting. careful on those slippery roads.
Part of the problem with state deficits, is the way they finance their debt. Only the big dogs are allowed to play. I looked up several states' muni bonds, inlcuding my state of NC, with the sole purpose of buying some bonds that had a decent return, until I saw you need a minimum of $25,000 just to get in the door. I'm not tying that much money up into a state right off the bat. Maybe over time and accumulating different rates and maturities, but not all at once. When these states wake up and lower the minimum investment amount like the Treasury did a few years back, then they can raise some cash. Let the little guys play too. I guarantee you there would be huge interest from people if they could buy in for as little as $100 each month. I would settle for $1,000 minimum, but $25k a pop?? No thanks!!!
This is about politics, not sound tax policy. This is about the next election.
No, IMHO this is about MONEY and long term power shifts. Its possibility is a result of the last election.
It's telling that both with Clinton's all-Dem Congress and then this Prez's team, the public ran as quickly as possible to install a Repub House. The Dems know this and are, for now, back on their heels. So we will see.
I say from now on there will only be white states in the USA to prevent all wars. In addition it would be constitutionalised by the next president, may be the same, they be only inhabited by brownies. All others to be sent to reservations in Alaska with sarah Palin.That should solve the red blue war and a regression to dixie-yankee nostalgia. Alaska would become the all white man's ghetto where the polar bears would find their inferior human cousins to feed them on a diet of devalued US dollars. You never know the polar bears may be into reverse Benbarnification. Ten years later we could recreate a new USA with gold coins and copper cents as of old.
.
the word is spelled Lederhosen
If only your prediction of another War between the States were to prove accurate.
Maybe then we could bust up this ungovernable mishmash, this pastiche of 350,000,000 people into manageable pieces.
The notion of a United States was a temporary convenience right from the beginning. It served its purpose and now needs to be discarded along with all conglomerates be they business, academies, states with diverse cities, every single amalgamation that "concentrates" power needs disperse so that people who mismanage are able to be held accountable and thrown in jail.
The revolutions and riots in smaller countries like Egypt demonstrate the power that people who are treated like shit can wield when the tipping point is reached.
We should be so lucky to see Lord Blankfein, theBernank, Joe Cassano, Rubin, clinton, bush, Cheney, Dodd, Frank, Mozillo and so many others toppled from their seats of power and thrown into the midst of those angry crowds, then being beaten into a bloody pulp.
I for one am happy to see Texas secede. But before you go, I'd like to have my military bases, defense establishments, federal facilities, roads and bridges back. Oh yeah, and the Johnson Space Center.
After that, good luck and God speed.
You want them back then go get them. Send the crews to break down and remove all federal infrastructure. We will start charging you lease for the land use until it is completely removed. It'll only be 5 ounces of gold per acre per year.
Russia didn't demand all its stuff back when Ukraine seceded. Don't you think your claim is a bit excessive? And if they are YOUR bases, etc. when do you plan to start actually PAYING for them?
Do you have a plan concerning how those useless institutions will be moved out of Texas? BTW, some of the roads and bridges need maintenance. Could you send the crew please?
If Texas could get out of its share of the national debt this easy, it looks like a no-brainer.
yep, its called imminent domain, and when the sovereign becomes Texas, it will have the right to condemn all formerly federal property for "public use"... payback is a bitch :)
You say imminent, I say emminent. That's part of the reason Texas would lose such a war.
Texas would lose because one person misspelled a word? Your logic is infallible.
That's TWO misspelled words.
Emminent and Imminent
Eminent, as in Eminent Domain, is spelled Eminent.
I see NY advertizing:
"Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!"
It might help CA and IL if they did just that. I don't know what NY plans on doing with them.
When it comes to who has the advantage in an interstate war it will boil down who's got the most illegal alien cannon fodder.
I am a resident of none of these states, but I'll put my money on Texans in any actual dust-up. I might even go help. Bring it on!
"A possible outcome could be that California, NY and Illinois band together and invade Texas."
What exactly are those 3 anti-gun states going to do, send their hippies down here and gag us with petrulli oil?
Best of luck with that. :-/
Every budget is a byzantine, corrupt, highly intricate overt display of POWER.
As such it holds no valuable economic information whatsoever.
The Blue states are bankrupt because of their expensive socialist programs
The Blue states put their bankrupt ideas into the Federal government.
Now all Federal policies are being driven by our federal debt and they don't want to pay?
But the more the Blue states pay, the more "social justice" they'll be spreading around!
Time for the Blue states to lead by example and be good role models already. They're fault.
Pay up. Eat Crow Blue states.
People always forget to mention that these so called blue states (i.e. CA/NY) spend so much money bailing out the red states. For example CA gets about $0.78 of Federal Funding for every $1.00 paid while an Alabama will get $1.66 of Federal Funding for every $1.00 paid. NY gets $0.79 for every $1.00 paid. The author of this article probably used the healthiest red state in terms of Federal Funds Paid/Federal Funds Received.
What people also forget to mention is how much money the red states spent to bail out Wall Street. Did NY really receive only $.79 for every dollar paid? How many trillions were spent to bail out Goldman, AIG, Merrill, JPM etc?
Have to check the dates before commenting, but TARP has been paid back, no? :)
Seriously, TARP was a financial coup d'etat. The beginning of the end for this country I fear.
Shhh! I want to keep this our little secret. For shits and giggles, is'nt Alaska at $1.57? Isn't it great to be an alledged bastion of individual freedom while sucking hard at the gubbmint teat? Scary when you think of the monies that flow because of the oil.
Why didn't you mention the two biggest welfare states, Maryland and Virginia, which both voted for Obama. How about the biggest welfare state of 2008-2009, New York, which trook in over $1 trillion in funds from TARP POMO etc.
Real estate taxes are deductible. Texas is luring California companies in droves. This mornings paper has a story about CKE or Carl's being wooed by the governor to move to Texas. When Jerry gets through balancing the budget, I10 and I20 may become one way turnpikes.
All eastbound lanes, bitchez!
Bruce, its just a big misunderstanding according to the Center for Budget and Policy Priorities (http://www.cbpp.org/cms/index.cfm?fa=view&id=3372)
You see, "While these deficits have caused severe problems and states and localities are struggling to maintain needed services, this is a cyclical problem that ultimately will ease as the economy recovers." (italics added by me)
Texas is already at war with a Narco States. Mexico and Washington
This is about politics, not sound tax policy. This is about the next election.
Brucie Baby
When you say Texas "wins" are you looking from a State tax raising perspective ....you've got to realise your audience here, if Texas stays at raising only $10bn taxes while New York and California loses $6bn in the change the taxpayer "wins" $6bn. That's a win-win isn't it?
its illegal for new yorkers to carry guns.....that could make for an unfair civil war
Good 'ole NY.
It's legal to purchase long-arm hunting rifles/shotguns without a permit.
Handguns, pistols? That's a whole 'nother story.
Legal to purchase only with a pistol permit. Pistol permit takes at least 8-12 months (or more) to get approved. Wanna carry that handgun in public? Then you need a carry license which means you have to explain to a Judge why you need it and the judge can deny it for no reason stated. (you look too much like a John Wayne-type)
You basically spelled out why the "blue" states claim to be anti-gun. It's not that they really care, they just want to tax the shit out of thier citizens to keep the ponzi going.
Take handguns as one example. You pay for a permit. You pay for a license. And if the government gets a national registry, they will tax you for owning them every year.
This chart shown leaves off property taxes, which are high in Texas to offset the zero income tax. We pay 2.5% property/ad valorem tax in my county, and 8.5% sales tax.
Multiplying our 24.5 million people by the $1400 per capita property tax reported by taxfoundation.org gives over $34 billion in property tax, which dwarfs the whole 2007 tax chart shown.
Texans pays big sales tax, but no income tax correct? So if state income taxes are eliminated as a deduction there would be no change for Texas, yes? On the other hand if you were in NY and Cali you would lose, yes?
On the property tax side of this I repeat:
the 19 big blue states levied property taxes of $241b 65% of total.
Yes, Texans pay big taxes. But the proposed changes would help them and hurt blue states. Yes?
Most of the time I oppose ZIRP but if it hurts little scrubs like you who haven't been as bullish on palladium and gold as you should have been, that I'm fine with it.
I think this chart is a great way to look at the who's who for your thesis here bruce.
http://taxprof.typepad.com/taxprof_blog/2009/10/state-local.html
I would also note that Texas has a balanced budget amendment. "Conservatives" won a significant majority in the last election cycle, however politicians are just that and its not clear how the balancing will happen.
Cooter
> the proposed changes would help them and hurt blue states. Yes?
Not exactly. The law this guy proposed simply keeps sales taxes deductible along with other state and local taxes.
Texas pay more in property taxes (that this change doesn't help) than most states pay in income taxes.
I'm questioning the original story's analysis... it leaves out one of the largest sources of state tax income.
No it doesn't. That's the point. The proposed law would makes SALES taxes permanently deductable. It wouldn't mean that the deductions for property and income taxes would be included. This bill is very narrowly focused on sales taxes.
If you're talking about State Senator Dan Patrick, he has a local radio program AM700 KSEV.
We pay through the nose in property taxes, especially in really good school districts. They aren't doing much to bring those taxes down. I heard Senator Patrick mention raising the sales tax to offset reductions in property taxes. Paul "the taxman" Bettancourt would know for sure.
________
If you guys are thinking of invading Texas, don't bother with the armies. Just join the caravan of everyone else moving here from New York, New Jersey, Pennsylvania and everywhere else.
Bring along that northeastern brand of liberalism to Texas and see how far that flies.
:D
So the good news is that the more RE prices drop -- the less taxes you pay!
In your dreams.
The property tax is a wealth destroyer as the life of the parasite(municipal government) becomes more dear than the life of the host.
We have to learn some things over and over.
good point. I don't do my own taxes but aren't real estate taxes deductible on my federal return?
Yes, send your property tax payment receipts/checks/statements to your accountant!
Another addition to state debt are the stimulus programs which should be added to the debt accumulation equation and yes this money has to be paid back with interest--..
http://projects.propublica.org/recovery
Great chart... the punchline is that per capita stimulus funds are $8,754 for DC and $1,400 nationwide.
It's not Red vs Blue states: it's government vs taxpayers.
Hey Bruce! This isn't fair! Pton is out trolling me! Make him stop!