Why State Tax Rates Don’t Guarantee Good Services

When I moved from Tennessee to Illinois, I was delighted by the higher quantity and quality of public services such as parks, libraries and education.

By Steven Malanga, a senior editor of City Journal. Excerpts:

"People in states with high taxes are more likely to say they are eager to move elsewhere, and polls show residents increasingly questioning whether they are getting value for government “investment.”

Seven of the eight states with the highest percentages of people who want to move elsewhere are solidly Democratic in party affiliation, according to Gallup polling. Most are high-tax environments. “Even after controlling for various demographic characteristics including age, gender, race and ethnicity, and education, there is still a strong relationship between total state tax burden and desire to leave one’s current state of residence,” Gallup concludes.

When Monmouth University’s poll asked New Jersey residents why they wanted to leave, 30% listed taxes. But 24% said the overall high cost of living soured them on the Garden State, and 28% listed quality-of-life issues, including corruption, traffic and lack of economic opportunity.

In most polls, infrastructure—roads, bridges and airports—ranks high among the basics that citizens and businesses expect government to provide. This should be an area in which rich, high-tax states vastly outperform their peers, but the opposite is true. In CNBC’s annual ranking of the best and worst states for business, seven high-tax states were among those ranked lowest in infrastructure quality—Connecticut, Hawaii, Maryland, Massachusetts, New Jersey, New York and Rhode Island.

Even more startling, Texas ranked as having the best infrastructure. Also scoring high were Tennessee, which has the third-lowest tax burden as a share of state personal income, and Florida, ranked fourth-lowest in taxes. There seems an almost inverse relationship between the resources that state governments take in and quality of infrastructure."

"A major driver of these failures is the alliance between left-leaning politicians (mostly, but not exclusively, Democrats) and public unions."

"Infrastructure building costs have become stratospheric thanks to union-friendly policies. While Europe and Japan typically build rail and subway tunnels for between $160 million and $480 million a mile, according to calculations by Israeli transit writer Alon Levy, New York’s Second Avenue subway line cost $2.8 billion a mile, and its No. 7 subway-line extension cost $2.1 billion a mile."

"Metro markets where residents are most dissatisfied with the availability of affordable housing are overwhelmingly high-tax Democratic locations, including Los Angeles, New York and San Francisco, according to demographer Wendell Cox. Blame regulations. “High prices have little to do with conventional models with a free market for land,” wrote Harvard economist Edward Glaeser and Wharton’s Joseph Gyourko in a 2002 paper. “Instead, our evidence suggests that zoning and other land use controls, play the dominant role in making housing expensive.”"

"High-tax Democratic states spend from 50% to nearly 100% above the national average per student in public schools."