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A Tale of Two States: California And Texas

by: Joe Deshotel

Wed Mar 19, 2014 at 03:00 PM CDT

The juxtaposition of California to Texas has been generally oversimplified by Conservatives as an example that the latter's state policies of low taxation, regulation and services equals more economic prosperity. The story is not so simple.

California does have a higher unemployment rate, but Texas' poor and middle class pay higher taxes, and are more likely to lack health insurance or work a minimum wage job. In Texas the effective tax rate for the bottom 20% is nearly 4 times higher than the 3.2% rate paid by the top 1%. California's top 1% pays almost 9%, while the bottom 20% pays 10.6%. As Mother Jones put it, "For the middle class, Texas isn't a low-tax/low-service state, and it's not a high-tax/high-service state either. It's the worst of all worlds: a high-tax/low-service state."

See more below the jump...

Texas is booming with oil and gas but like most booms it could be followed by a bust. Experts now believe the shale oil bonanza could peak soon because of the high cost and limited longevity of individual wells' productivity. The bottom line according to Bloomberg Businessweek is, "America needs 6,000 new wells a year, at a cost of $35 billion, to maintain current oil production." After seeing a 69% production decline of a major well after just one year, Art Berman, a petroleum geologist who runs Labyrinth Consulting Services, in Sugar Land, Texas told Bloomberg, "I look at shale as more of a retirement party than a revolution...It's the last gasp."

If this sounds like an omen from the business community that is probably because it is. The GOP in Texas has been happy to sit on the sidelines of the economy while the oil and gas industry fills our Rainy Day Fund with cash, but it is unclear if there is a plan to continue that boon of cash when the red hot industry cools off a bit. The economy on cruise control has allowed the GOP's right-wing to take over the dialogue with extremely divisive positions on social issues instead of focusing on ensuring that economic prosperity is shared by more Texans.

The business community is now showing concern over this trend in the GOP. A recent article in the Quorum Report reported, "Rumblings out of Houston grow louder that some in the business community have settled on an anyone-but-Patrick strategy in Lite Guv race." Rice University Political Science Chair Mark Jones told QR that business leaders were unnerved at Patrick's vote against the state budget. He said,

"They're really concerned about what kind of partner he would be on budgetary issues like infrastructure...It's not so much about whether Patrick is "conservative," but instead about whether he'll be an honest broker when it comes to funding the state's needs in a way that fosters continued economic growth."

That is precisely it. Texas has the lowest civic engagement of any state in the union meaning the most extreme members of their party choose candidates based on how anti-immigrant, anti-gay, and anti-women's choice they can be versus their willingness to invest in our state's infrastructure. That leaves big questions about the future of water, roads and education in one of the nation's fastest growing states.

Texas Governor Rick Perry has spent a lot of time in California poaching jobs to bring back to Texas because of lower taxes, but there is a reason so many of the jobs begin in California in the first place. California has 3 times as many Tier One research universities as Texas and 2 of Texas' 3 receive a large endowment from the "Permanent University Fund" stemming directly from oil and gas royalties. Even many of the companies that have relocated have done so because of state incentives from what is often referred to as the Governor's slush funds -- Texas Enterprise Fund and the Emerging Technology Fund. Furthermore most of the businesses not directly related to the oil and gas industry are relocating to the state's most progressive areas where well paying jobs and good infrastructure are concentrated like Austin, Houston, Dallas and San Antonio.

The voters of San Antonio recently passed a measure backed by Mayor Castro to pay for universal Pre-K because state leaders continue to avoid making the necessary investments to secure an educated workforce capable of fulfilling the jobs of the future. Texas' success is not about being Conservative, it is about being innovative, and we have the tools, resources, and population to continue that legacy.

Let's hope our citizens wake up and recognize that we deserve a government that will be an asset in that success and not just take credit for it by doing as little as possible.

You can follow me on Twitter at @joethepleb.

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Yet again (0.00 / 0)
If we suspend common sense 1+1 is not 2. Although there is no mention of tax rates just percentages of revenue it appears that low income Californians are not paying enough as CA is basically bankrupt.

Would you suggest Texans move to CA for lower taxes and better services?  

No... (0.00 / 0)
And it's ridiculous that the Governor suggested that exact thing. Saying if people wanted more services they could move to California. There is a 3rd option, it's called voting. I'll work on moving that one.

[ Parent ]
The moving to CA (0.00 / 0)
Will not work. They will not move to state that is bankrupt. They realize that services provide in a bankrupt state are not sustainable.  

State Senators arrested on felony charges 2014 (0.00 / 0)
CA: 3
TX: 0

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