Many folks are loyal to California like they are to New York City....they'll put up with incredibly high taxes, begrudgingly, in order to live in their favorite environment. They've been paying outrageous amounts for property and regulations for years as well.
Simply question: If you owned a business, would you rather pay high taxes or low taxes? If your business was struggling through a recession, would you find a tax cut a welcome relief that could put much needed money back into your business? If you were considering shutting your doors or were on the verge of laying employees off, could the tax relief be an incentive to not do that?
There is also the argument that tax changes impact economic behavior. However, aside from pointing out that cuts from very high rate e.g., 90% to 60% have a greater marginal impact than those from low rates, say 30% to 20%, and that such a marginal impact diminishes as one makes cuts from lower rates, such changes are not very well measured. The same applies broadly to general efforts to forecast highly complex behavioral-related phenomena, including economics (the recent large miss by the consensus forecast on the level of job creation for March is one example).
Last edited by donsutherland1; 04-06-13 at 07:41 AM.
AUSTAN GOOLSBEE: I think the world vests too much power, certainly in the president, probably in Washington in general for its influence on the economy, because most all of the economy has nothing to do with the government.
http://www.nytimes.com/2011/03/23/us/23detroit.html), a lack of diversified economic base, bad public policy, etc. The last element is part of the reason I believe that the State's emergency measures should also have included removing all of Detroit's elected officials. They have been part of the problem and they could well undermine the turnaround effort.
"The steady decline of the LFPR since its peak at the turn of the
century is also related largely to demographic factors. The primary factor behind this decline is the rising share of older workers in the population as the baby-boom generation ages and life expediencies increase.
The rising share of older workers pulls down the LFPR because older
workers have lower participation rates than prime-age workers. A second factor behind the gradual decline of the LFPR has been a steady reduction in labor force participation among young people over the
last decade, resulting in large part from rising school enrollment"
Men do what they have to when they want to, Great men do what they have to, even when they don't want to.