Tuesday, March 10, 2015

The Most Misleading Article I've Ever Read

 At, no surprise, the Wall Street Journal:
The recession ended more than five years ago, but the financial squeeze left by the downturn lives on for a majority of states.
Government revenues have been slow to recover across the country as sales-tax collections fall prey to many of the same forces buffeting the broader economic expansion, from cautious consumers who have seen scant growth in wages to a downturn in home construction that has sapped sales of building materials and furnishings. At the same time, states are facing down a decades-long shift in the economy to services from goods, leaving them to collect taxes on a shrinking number of purchases.
Nationally, sales-tax receipts last year reclaimed levels—on an inflation-adjusted basis—seen in late 2007 as the recession arrived. So while a highly unequal national recovery has lifted federal tax revenues, thanks to an upswing in earnings among corporations and the rich, states—which rely not just on incomes, but also the spending of average citizens—continue to struggle.
There are 30 states still collecting less in taxes, adjusted for inflation, than when the recession hit, according to a Pew Charitable Trusts study that examined the data through September. Income-tax collections grew on a real basis by 7.1% since late 2008, while sales-tax receipts rose by 1%, according to an analysis by Nelson A. Rockefeller Institute of Government at the State University of New York.
States are left debating how to pay for schools, health care and public safety, and whether belt-tightening measures sparked by the recession will remain even as the economy shows signs of growing strength.
Read the whole thing.  Amazingly, the fact that most states run by Republicans slashed state income tax rates (and often raised sales taxes) doesn't get mentioned anywhere in the article (although the graph notes: "Data affected by changes states have made to sales and income tax rates").  I'm sure an economist will take down this article more fully, but until then, this is my quick swing at it.  The article should be about how Republican tax ideas don't work.An honest analysis of this data would highlight Kansas and Wisconsin on the graph, and analyze how California has higher revenues compared to pre-Recession levels than Ohio, even though California was hit much harder by the bursting of the housing bubble than Ohio was.  Even better, when I first read the article, the comments babbled on about Obama failing and Socialism not working.  I didn't know people could be that stupid. 

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