The Continuing Exodus of Jobs – and Taxable Income – from California

Daniel J. Mitchell

12/29/2012 12:01:00 AM

 

Like most people, I’m a sucker for a heartwarming story around the holidays.

Sometimes, you get that nice feeling when good things happen to good people, like you find at the end of a classic movie like “It’s a Wonderful Life.”

But since I’m a bit of a curmudgeon, I also feel all warm and fuzzy when bad things happen to bad people.

That’s why I always smile when I read stories about taxpayers moving across borders, thus preventing greedy tax-hiking politicians from collecting more revenue.

“Where’s our tax revenue?!?”

I’m glad when that happens to French politicians. I’m glad when it happens to Italian politicians. I’m glad when it happens to Illinois politicians. And British politicians. And Spanish politicians. And Maryland politicians. I could continue, but I think you get the point.

I’m even glad when it happens to the politicians in Washington.

I smile because I envision the moment when some budget geek tells these sleazy politicians that projected revenues aren’t materializing and they don’t have more money to spend.

So I wish I could be a fly on the wall when this moment of truth happens to California politicians. They convinced voters in the state to enact Prop 30, a huge tax increase targeting those evil, awful, bad rich people.

Governor Brown and his fellow kleptocrats in Sacramento doubtlessly are salivating at the thought of more money to waste.

But notwithstanding a satirical suggestion from Walter Williams, there aren’t guard towers and barbed-wire fences surrounding the state. Productive people can leave, and that’s happening every day. And they take their taxable income with them.

Usually in ways that don’t attract attention. But sometimes a bunch of them leave at the same times, and that is newsworthy. Here’s an example of that happening, as reported by the San Francisco Chronicle.

Chevron Corp. will move up to 800 jobs – about a quarter of its current headquarters staff – from the Bay Area to Houston over the next two years but will remain based in San Ramon, the oil company told employees Thursday. …The company already employs far more people in Houston – about 9,000 full-time employees and contractors – than it does in San Ramon.

We don’t know a lot of details, but these were positions at the company’s headquarters and they were “technical positions dealing with information and advanced energy technologies…tied to Chevron’s worldwide oil exploration and production business.”

Let’s assume these highly skilled employees earn an average of $250,000. I imagine that’s a low-ball estimate, but this is just for purposes of a thought experiment. Now multiply that average salary by 800 workers and you get $200 million of income.

And every penny of that $200 million no longer will be subject to tax by the kleptocrats in the state’s capital.

In other words, we’re seeing the Laffer Curve in action.

Politicians can raise tax rates all day long, but that doesn’t automatically translate into more tax revenue. Politicians keep forgetting that taxable income is not a fixed variable.

What’s happening in a big way with Chevron is happening in small ways every single day with investors, entrepreneurs, small business owners, and other “rich’ people.

That’s good for the people escaping. And it also will warm my heart when California’s despicable politicians discover next year that there’s an “unexpected” revenue shortfall.

P.S. It’s just an anecdote that the Chevron jobs are going to Texas. But when you add together a bunch of anecdotes, you get data. And according to the data, Texas is kicking the you-know-what out of California. Maybe there’s a lesson to be learned?

The Bad Results and Unjust Consequences of the United Kingdom’s Gun Ban

I wrote yesterday about a silly proposal in the United Kingdom to ban long kitchen knives.

Some people objected because the story was from last decade, but that misses the point. Proponents of the Second Amendment are vigilant against encroachments in part because we’re worried about the slippery slope.

I predicted in yesterday’s piece that at some point the Brits would resort to banning long knives. I hope I’m wrong, but my prediction is based on what the U.K. government has done with gun control.

Ever since 1920, the government has made it more and more difficult for law-abiding people to possess weapons. And in a perverse example of Mitchell’s Law, the failure of one policy is then used to justify the next policy.

That’s how proposals that sound radical and foolish sometimes get implemented many years later.

We don’t know if this will lead to a knife ban at some point, but we can look at evidence showing that gun control in the U.K. was a precursor for a gun ban. And we also know such policies don’t reduce crime.

Professor Joyce Lee Malcolm of George Mason University has a column in the Wall Street Journal, looking at the impact of anti-gun policies in the United Kingdom.

…the Firearms Act of 1998…instituted a nearly complete ban on handguns. Owners of pistols were required to turn them in. The penalty for illegal possession of a pistol is up to 10 years in prison. The results have not been what proponents of the act wanted. Within a decade of the handgun ban and the confiscation of handguns from registered owners, crime with handguns had doubled according to British government crime reports. Gun crime, not a serious problem in the past, now is. Armed street gangs have some British police carrying guns for the first time.

By the way, it’s not just gun crime that has gone up. The U.K. has become a much more dangerous and violent society – almost surely in part because the thugs don’t have to worry about armed resistance.

Heck, if you are one of the few legal gun owners in the nation and you shoot a burglar, you get arrested instead of a pat on the back.

The U.K.’s draconian restrictions on individual liberty lead to some Orwellian consequences. Professor Malcolm offers up two examples.

Meanwhile, law-abiding citizens who have come into the possession of a firearm, even accidentally, have been harshly treated. In 2009 a former soldier, Paul Clarke, found a bag in his garden containing a shotgun. He brought it to the police station and was immediately handcuffed and charged with possession of the gun. At his trial the judge noted: “In law there is no dispute that Mr. Clarke has no defence to this charge. The intention of anybody possessing a firearm is irrelevant.” Mr. Clarke was sentenced to five years in prison. A public outcry eventually won his release. In November of this year, Danny Nightingale, member of a British special forces unit in Iraq and Afghanistan, was sentenced to 18 months in military prison for possession of a pistol and ammunition. Sgt. Nightingale was given the Glock pistol as a gift by Iraqi forces he had been training. It was packed up with his possessions and returned to him by colleagues in Iraq after he left the country to organize a funeral for two close friends killed in action. Mr. Nightingale pleaded guilty to avoid a five-year sentence and was in prison until an appeal and public outcry freed him on Nov. 29.

Amazing…and nauseating. I already had written about the unjust treatment of Mr. Clarke, but Mr. Nightingale’s legal nightmare is just as absurd.

Gun Control Cartoon Drug War

Gun control laws are utterly perverse. They don’t work, just like prohibition didn’t work in the 1920s, and just like today’s Drug War is an unmitigated failure.

Gun bans turn law-abiding people into criminals, while simultaneously making life easier for the low-life scum of society.

And as the welfare state begins to fall apart and civil unrest becomes more common, the deadly impact of these bad policies will become even more apparent.