Friday, October 5, 2018

SCOTT S. POWELL - THE WHIRLWIND IS ALREADY HERE.... The march to revolution speeds up!

The Whirlwind Is Already Here

In Judge Brett Kavanaugh's defense before the Senate Judiciary Committee, he charged the Democratic senators on the committee with sowing "the wind for decades to come[, and] the whole country will reap the whirlwind."
The whirlwind is already here.  To really grasp what's going on in the political tumult of contemporary times, it's necessary to go beyond the players, parties, and immediate issues and understand the sources of cultural transformation that set the stage for all modern politics to play out.  Politics is, after all, downstream from culture. 
For about the last two and a half generations, there has been a subtle but growing assault on most of the values that were previously the bedrock of American society.  Many older Americans scarcely recognize the country of their childhood.  While technological progress has proceeded at a rapid pace, providing convenience, efficiency, and higher standards of material living, the foundational institutions of American society – the family, educational institutions, manners and civility, respect for law and order, and merit-based outcomes – have been in concurrent decline. 
How is it that so many Americans have allowed institutions and norms to be undermined that were the basis for almost all our prior success?  And how could this happen after the United States stood decisively with the forces of good – helping the Allied powers to win two world wars and then playing the key role in winning the Cold War? 
It has happened because revolutionary ideological forces have been subtly at work to transform society from within – slowly and broadly, so as to be almost unnoticed.  Most assumed that winning the Cold War meant we also defeated the Marxist ideology backing the Soviet Union.  Yet a closer look at social history in 20th-century America shows that strains of neo-Marxism have proliferated and collectively provided the central transformative ideological force shaping American culture over the last several generations and into the present.
Antonio Gramsci was a leading 20th-century Marxist theoretician who argued that communists' power in developed, industrialized societies such as the United States would be best achieved through a "long march through the institutions."  This would be a gradual process of radicalization of the cultural institutions – "the superstructure" – of bourgeois society, a process that would in turn transform the values and morals of society.  Gramsci believed that as society's morals were softened, its political and economic foundation would be more easily undermined and restructured.
Cultural Marxism was also advanced by intellectuals of the "Frankfurt School," who were forced to flee Nazi Germany in the mid-1930s.  Resettling in the U.S., members of the Frankfurt School, such as Herbert Marcuse, Theodor Adorno, Max Horkeimer, Eric Fromm, and Wilhelm Reich, first set up shop at Columbia University and then later found their way into teaching positions at various elite universities such as Berkeley, Princeton, Harvard, the New School for Social Research, and Brandeis.  In the context of American culture, "the long march through the institutions" meant, in the words of Herbert Marcuse, "working against the established institutions while working in them."
While the Frankfurt School was neo-Marxist, many of its adherents were less interested in economics and redistribution of wealth than in remaking and transforming society through attitudinal and cultural change.  They incorporated Marxist class theory into sociology and psychology while also assimilating Freud's theories on sexuality.  Thus, Marx's theory of the dialectic of perpetual conflict was joined with Freud's neurotic ideas, creating a sort of Freudo-Marxism.  This amalgam provided a broad-based critique of social problems oriented toward transforming society as a whole – something they called Critical Theory. 
While the leaders of the Frankfurt School had limited influence, being somewhat ensconced in Berkeley, the New School, and Ivy League universities, their Critical Theory ideas were considered avant-garde and received a multiplier effect through other universities and particularly as they were embraced by the teachers' colleges across the country in the 1950s and 1960s.  What was perhaps unique about the cultural Marxists was their "street smarts" recognition that psychological conditioning was more effective than philosophical arguments to achieve the goal of transforming America's culture.
Essentially, the Frankfurt School held that as long as an individual believed that his reason and common sense could solve the problems facing society, then that society would never reach the state of hopelessness and alienation the Frankfurt adherents considered necessary to foment socialist revolution.  Their task, therefore, was to undermine both the Judeo-Christian legacy and the foundation for rational reasoning by creating a narrative of destructive criticism affecting every sphere and institution of life, resulting in a loss of any absolute truth or meaning.  This then would bring on mass hopelessness and destabilize society, setting the stage for bringing down what they saw as the "oppressive" order.  
The Critical Theory project emphasized and prioritized the demolition of Christianity and the nuclear family.  Its boosters also sought to exacerbate racial tensions and promote massive immigration to destroy national identity.  Additional focal points in their agenda included dependency on state benefits and the bending of the legal system to favor perpetrators of crime over victims.  Lastly, the agenda included dumbing down the media and undermining schools' and teachers' authority. 
An important part of the Critical Theory project of total transformation of society was to break down traditional relationships between men and women by promoting and legitimizing unhinged sexual permissiveness with no cultural or religious restraint.  Building on the Frankfurt School's Critical Theory, leaders of what came to be known as Postmodernism advanced the wrecking-ball cultural deconstruction project right through the turn of the 21st century
Postmodernists have had no use for tradition or any standards of normalcy, believing that all truth is contrived illusion rather than absolute.  Homosexuality and transgenderism are not only valid choices, but even preferable for advancing the destruction of the traditional family and society.  They also view the scientific method as useless, with facts too limiting to determine anything – making truth and error two side of the same coin.  Thus, fake news arose not out of reaction to Donald Trump, but more fundamentally as an extension of Postmodernism.  Postmodernists were the first advocates of open borders, which was also an extension of the project to destroy national identity and undermine the democratic electoral process.
What is obviously striking is the degree to which this agenda of breakdown and national transformation, promoted by a relatively small constituency of cultural Marxists associated with the Frankfurt School and Postmodernism, has been accepted and infused into the leadership and operating procedures of the Democratic Party.  Illustrative of this was Democratic presidential candidate and flag-bearer Hillary Clinton, wherein she proclaimed to the 2015 Women in the World Summit, not long before she launched her 2016 presidential campaign, that "deep-seated cultural codes, religious beliefs, and structural biases have to be changed."
Since the 2016 election, this breakdown has now erupted in a new civil war.  On the one side, we have those who have been shaped both overtly and subliminally by cultural Marxist ideology, and on the other side, we have those who find grounding and purpose in transcendent values – predominantly associated with Judaism and Christianity.
While Postmodernists may have held the commanding heights in the culture that includes Hollywood, the media, and schools for some time, they recently have stumbled badly for all to see through corruption, intolerance, and visceral hatred.  Exhibit A right now is the ambush of Supreme Court nominee Judge Brett Kavanaugh, an eminently qualified and likeable candidate, now in the cross-hairs of destruction for purely ideological reasons by accusers who have, in true Postmodernist tradition, turned the Constitution and due process on their heads with a ginned up media presumption of guilt based on salacious hearsay rather than corroborating evidence.  Sounds like a repeat of the failed Steele dossier, intended to destroy Donald Trump.
As fortune would have it, the moderate Supreme Court justice Anthony Kennedy – whose retirement provides the opening for candidate Brett Kavanaugh – found himself speaking before a Constitution Day celebration student group in Sacramento the day after the conflicting testimonies of Ford and Kavanaugh.  One 17-year-old student, Maya Steinhart, commented that ''Nobody's behaving like adults[.] ... It's absolute chaos and it makes no sense and it's terrifying and it's not working.''  Kennedy replied, ''In the first part of this century we're seeing the death and decline of democracy."  Yes, the whirlwind is already here.
T.S. Eliot describes the right side in cultural civil wars as being with people with a "grounding in reality that comes from the power of the eternal source of truth."  Indeed, there is always hope for faithful Americans, who can take heart from Providence playing a key role today, as was the case in ancient Israel, when the Jewish prophet Jeremiah proclaimed that "my persecutors shall stumble, and they shall not prevail ... for they shall not prosper [and] they shall have everlasting confusion[.]"
Scott Powell is a senior fellow at Discovery Institute in Seattle and managing partner of RemingtonRand LLC, a recruiting consultancy.  Reach him at



"Cold War historian Paul Kengor goes deeply into Obama's communist background in an article in American Spectator, "Our First Red Diaper Baby President," and in an excellent Mark Levin interview.  Another Kengor article describes the Chicago communists whose younger generation include David Axelrod, Valerie Jarrett, and Barack Hussein Obama.  Add the openly Marxist, pro-communist Ayers, and you have many of the key players who put Obama into power." Karin McQuillan
"We know that Obama and his inner circle have set up a war room in his D.C.

home to plan and execute resistance to the Trump administration and his 

legislative agenda.  None of these people care about the American people, or

the fact that Trump won the election because millions of people voted for 

him."  Patricia McCarthy / AMERICAN


First, destroy Trump and put away Hillary.


“Obama would declare himself president for life with Soros really running the show, as he did for the entire Obama presidency.”

“Hillary was always small potatoes, a placeholder as it were. Her health was always suspect. And do you think the plotters would have let a doofus like Tim Kaine take office in the event that Hillary became disabled?”

“Obama has the totalitarian impulse. After all, he went around saying he didn't have Constitutional authority to legalize the illegals, and then he tried anyway. The courts stopped him.”

“The bottom line 2 is this: Barack Obama is a Communist. This was all an Obama operation. Why is anyone surprised that a communist (Obama) tried to subvert an election. That is what Communists do. It is Barack Obama and his people like Brennan and Clapper behaving to type. That's what Maduro does in Venezuela. That's what the Castro brothers did. That's what every communist and socialist nation does. THEY FIX ELECTIONS!!”

Hillary kept a secret server overflowing with national security info which, more than likely, was hacked. June 28, 2016, on a Phoenix tarmac, Bill Clinton met with Attorney General Loretta Lynch to seal a deal insuring Hillary would not be prosecuted.”

Obama, of course, covered up his own role, depicting his presidency as eight years of heroic efforts to repair the damage caused by the 2008 financial crash. At the end of those eight years, however, Wall Street and the financial oligarchy were fully recovered, enjoying record wealth, while working people were poorer than before, a widening social chasm that made possible the election of the billionaire con man and Demagogue in November 2016.”

David Bernstein & The Heritage Foundation - “Lawless: The Obama Administration’s Unprecedented Assault on the Constitution and the Rule of Law.”

“The Lawlessness of the Obama Administration: A never-ending story.” Michael Barone – American Historian – Washington Examiner


Verizon’s Board Members Push Armies of H-1B Outsourcing Workers into Many U.S. Companies

Drew Angerer/Getty Images

Verizon’s 13 board members outsourced many jobs at many other companies before launching their joint campaign to outsource 44,000 Verizon jobs, including at least 2,500 computer jobs to low-wage Indian visa-workers.

The Verison computer jobs are being outsourced to Infosys, an Indian company accused of undercutting American workers and discriminating against black and white Americans in favor of Indian nationals. Breitbart News reported:
Verizon executives claim the computer outsourcing will only impact 1,000 Verizon workers, but employees who spoke to Breitbart News say that the outsourcing will hit 5,000 workers eventually, as 44,000 jobs are shed.
Verizon spokesperson Rich Young told Breitbart News in a Tuesday statement that he does not know “where these numbers are coming from,” and called the estimate “nothing more than fake news.”
On Oct. 3, the Wall Street Journal confirmed the 44,000 figure, adding “a spokesman for the company confirmed the scope”:
Employees eligible for the severance packages were offered three weeks’ pay for each year of service up to 60 weeks.
The same day the offer was announced, Verizon notified many information technology employees that they were being transferred to Indian outsourcing giant Infosys Ltd. INFY -2.24%▲ as part of a $700 million outsourcing agreement.
Verizon is transferring about 2,500 employees in the U.S. and overseas to Infosys. Those employees aren’t eligible for severance payments and won’t receive their 2018 bonus if they are offered a job at Infosys and don’t accept it, according to materials given to the employees.
Verizon’s outsourcing strategy relies heavily on the many Indian outsourcing companies and their armies of H-1B and L-1 visa-workers.
These Indian companies work with American CEOs to transfer college-graduate jobs to low-wage visa-workers in the United States and then gradually move those the jobs back into India. Few of the outsourced American college-graduates are hired by the Indian firms, either as employees or subcontractors.
Overall, the H-1B program keeps a population of roughly 700,000 lower-wage foreign college-graduates in U.S. jobs. The H-1B visas last three years, but can be extended indefinitely once a company requests a green card for the H-1B worker. Each year, roughly 120,000 new H-1B workers are imported for U.S. jobs, and roughly 55,000 get green-cards to stay in the United States.
The board members of Verizon also work for many other companies which have used the H-1B visa program, according to federal data collected by MyVisaJobs.comand
Verizon board member Gregory Weaver is the former chairman and CEO of Deloitte, which has asked for 23,000 foreign visa-workers to replace American business-school and technology graduates since 2015.
Roughly one-third of the H-1B visa requests are approved by the autopilot provisions of the H-1B law. But each visa lasts for three years, so a request for 3,000 visas likely delivers 1,000 H-1B foreign workers for three years.
The data also how many foreign workers are being allowed by their employer to file for green cards. For example, from 2015 to 2017, Deloitte asked for 22,432 H-1B workers and sponsored 966 foreign workers for green cards so they can stay in the United States.
Lowell McAdam is the chairman of Verizon. His CEO, Hans Vestberg, was born in Sweden, according to the company data:
Before joining Verizon in April 2017, Vestberg served for six years as president and CEO of Ericsson, a multinational networking and telecommunications equipment and services company headquartered in Sweden that provides 35 percent of the world’s 2G, 3G and 4G mobile network infrastructures … Born in Hudiksvall, Sweden, Vestberg earned a Bachelor of Business Administration degree from the University of Uppsala, Sweden, in 1991.
According to, “Ericsson Inc. has filed 1797 labor condition applications for H1B visa and 583 labor certifications for green card from fiscal year 2015 to 2017.”
In June 2018, Vestberg attended a meeting of elite CEOs and investors, while wearing a shirt carrying the slogan “No Nationality.”
Board member Mark Bertolini is the chairman and CEO of Aetna Inc., which has already outsourced much work to Infosys, which is based in India.
Infosys reported:
Infosys has played a significant role in Aetna’s journey, working alongside Aetna during the last couple of years. As a strategic partner to Aetna, Infosys provides a wide range of services ranging from business consulting, application development, validation and testing services, systems integration, program management, requirements management, architecture services, maintenance, enterprise solutions services, and business process outsourcing.
Infosys has been the largest user of U.S.-based H-1B workers, many of whom also transfer other college-graduate jobs back to India.
When they ask for H-1B visas, companies are required to state how much they will pay their visa-workers. But there are many allegations — and some evidence — that many H-1Bs are paid far less than the promised wages:

Board member Kathryn Tesija is a former Vice President at Target Corp., which has tried to replace Americans workers with almost 400 H-1B visa-workers since 2014.

Board member Gregory Wasson is the former President and Chief Executive Officer of Walgreens Boots Alliance, Inc. That firm has tried to import 121 foreign graduates since 2014, including 74 pharmacists, according to

Board member Melanie Healey is a former group president of The Procter & Gamble Company. In 2003, the company transferred 1,850 company employees to an American outsourcing firm, Hewlett Packard. The company also outsourced more internal work to IBM and Accenture.
In turn, those three companies import many lower-cost H-1B visa-workers to do the outsourced work for many additional companies:

Verizon’s board also includes three bankers whose investments rise as U.S.-based companies cut their payroll costs by transferring work to visa-workers or foreign graduates. Verizon’s website reports:
Clarence Otis, Jr. Former Chairman and Chief Executive Officer of Darden Restaurants, Inc. … He has served as a director of The Travelers Companies, Inc. since August 2017 and VF Corporation since 2004.  He has also been a director of 138 funds within the MFS Mutual Funds complex since March 2017.
Richard CarriĆ³n is Executive Chairman of Popular, Inc., a diversified bank holding company.

Verizon is already using several hundred foreign workers who were imported via the H-1B program:
Board member Rodney Slater is a former cabinet secretary in President Bill Clinton’s administration. He now is a partner at Squire Patton Boggs LLP, a D.C.-based lobbying firm.
Verizon spokesman Young declined to answer questions from Breitbart News.
Four million young Americans will join the workforce this year, but the federal government will also import 1.1 million legal immigrants, and allow an army of at least 2 million white-collar and blue-collar visa-workers to work U.S. jobs, alongside additional asylum-claiming migrants and at least 8 million illegal migrants.
Overall, the Washington-imposed economic policy of economic growth via immigration shifts wealth from young people towards older people by flooding the market with cheap white-collar and blue-collar foreign labor.
That flood of outside labor spikes profits and Wall Street values by cutting salaries for manual and skilled labor offered by blue-collar and white-collar employees. The policy also drives up real estate priceswidens wealth-gaps, reduces high-tech investment, increases state and local tax burdens, hurts kids’ schools and college education, pushes Americans away from high-tech careers, and sidelines at least 5 million marginalized Americans and their families, including many who are now struggling with opioid addictions.
Immigration also pulls investment and wealth away from heartland states because investment flows towards the large immigrant populations living in the coastal states.


Adios, Sanctuary La Raza Welfare State of California 
A fifth-generation Californian laments his state’s ongoing economic collapse.
By Steve Baldwin
American Spectator, October 19, 2017
What’s clear is that the producers are leaving the state and the takers are coming in. Many of the takers are illegal aliens, now estimated to number over 2.6 million. 
The Federation for American Immigration Reform estimates that California spends $22 billion on government services for illegal aliens, including welfare, education, Medicaid, and criminal justice system costs. 

Liberals claim they more than make that up with taxes paid, but that’s simply not true. It’s not even close. FAIR estimates illegal aliens in California contribute only $1.21 billion in tax revenue, which means they cost California $20.6 billion, or at least $1,800 per household.

Nonetheless, open border advocates, such as Facebook Chairman Mark Zuckerberg, claim illegal aliens are a net benefit to California with little evidence to support such an assertion. As the Center for Immigration Studies has documented, the vast majority of illegals are poor, uneducated, and with few skills. How does accepting millions of illegal aliens and then granting them access to dozens of welfare programs benefit California’s economy? If illegal aliens were contributing to the economy in any meaningful way, California, with its 2.6 million illegal aliens, would be booming.
Furthermore, the complexion of illegal aliens has changed with far more on welfare and committing crimes than those who entered the country in the 1980s. 
Heather Mac Donald of the Manhattan Institute has testified before a Congressional committee that in 2004, 95% of all outstanding warrants for murder in Los Angeles were for illegal aliens; in 2000, 23% of all Los Angeles County jail inmates were illegal aliens and that in 1995, 60% of Los Angeles’s largest street gang, the 18th Street gang, were illegal aliens. Granted, those statistics are old, but if you talk to any California law enforcement officer, they will tell you it’s much worse today. The problem is that the Brown administration will not release any statewide data on illegal alien crimes. That would be insensitive. And now that California has declared itself a “sanctuary state,” there is little doubt this sends a message south of the border that will further escalate illegal immigration into the state.
"If the racist "Sensenbrenner Legislation" passes the US Senate, there is no doubt that a massive civil disobedience movement will emerge. Eventually labor union power can merge with the immigrant civil rights and "Immigrant Sanctuary" movements to enable us to either form a new political party or to do heavy duty reforming of the existing Democratic Party. The next and final steps would follow and that is to elect our own governors of all the states within Aztlan." 
Indeed, California goes out of its way to attract illegal aliens. The state has even created government programs that cater exclusively to illegal aliens. For example, the State Department of Motor Vehicles has offices that only process driver licenses for illegal aliens. With over a million illegal aliens now driving in California, the state felt compelled to help them avoid the long lines the rest of us must endure at the DMV. 
And just recently, the state-funded University of California system announced it will spend $27 million on financial aid for illegal aliens. They’ve even taken out radio spots on stations all along the border, just to make sure other potential illegal border crossers hear about this program. I can’t afford college education for all my four sons, but my taxes will pay for illegals to get a college education.

If Immigration Creates Wealth, Why Is California America's Poverty Capital?

California used to be home to America's largest and most affluent middle class.  Today, it is America's poverty capital.  What went wrong?  In a word: immigration.
According to the U.S. Census Bureau's Official Poverty Measure, California's poverty rate hovers around 15 percent.  But this figure is misleading: the Census Bureau measures poverty relative to a uniform national standard, which doesn't account for differences in living costs between states – the cost of taxes, housing, and health care are higher in California than in Oklahoma, for example.  Accounting for these differences reveals that California's real poverty rate is 20.6 percent – the highest in America, and nearly twice the national average of 12.7 percent.

Likewise, income inequality in California is the second-highest in America, behind only New York.  In fact, if California were an independent country, it would be the 17th most unequal country on Earth, nestled comfortably between Honduras and Guatemala.  Mexico is slightly more egalitarian.  California is far more unequal than the "social democracies" it emulates: Canada is the 111th most unequal nation, while Norway is far down the list at number 153 (out of 176 countries).  In terms of income inequality, California has more in common with banana republics than other "social democracies."

More Government, More Poverty
High taxes, excessive regulations, and a lavish welfare state – these are the standard explanations for California's poverty epidemic.  They have some merit.  For example, California has both the highest personal income tax rate and the highest sales tax in America, according to Politifact.

Not only are California's taxes high, but successive "progressive" governments have swamped the state in a sea of red tape.  Onerous regulations cripple small businesses and retard economic growth.  Kerry Jackson, a fellow with the Pacific Research Institute, gives a few specific examples of how excessive government regulation hurts California's poor.  He writes in a recent op-ed for the Los Angeles Times:
Extensive environmental regulations aimed at reducing carbon dioxide emissions make energy more expensive, also hurting the poor.  By some estimates, California energy costs are as much as 50% higher than the national average.  Jonathan A. Lesser of Continental Economics ... found that "in 2012, nearly 1 million California households faced ... energy expenditures exceeding 10% of household income."
Some government regulation is necessary and desirable, but most of California's is not.  There is virtue in governing with a "light touch."
Finally, California's welfare state is, perhaps paradoxically, a source of poverty in the state.  The Orange Country Register reports that California's social safety net is comparable in scale to those found in Europe:
In California a mother with two children under the age of 5 who participates in these major welfare programs – Temporary Assistance for Needy Families, Supplemental Nutrition Assistance Program (food stamps), housing assistance, home energy assistance, Special Supplemental Nutrition Program for Women, Infants and Children – would receive a benefits package worth $30,828 per year.
... [Similar] benefits in Europe ranged from $38,588 per year in Denmark to just $1,112 in Romania.  The California benefits package is higher than in well-known welfare states as France ($17,324), Germany ($23,257) and even Sweden ($22,111).
Although welfare states ideally help the poor, reality is messy.  There are three main problems with the welfare state.  First, it incentivizes poverty by rewardingthe poor with government handouts that are often far more valuable than a job.  This can be ameliorated to some degree by imposing work requirements on welfare recipients, but in practice, such requirements are rarely imposed.  Second, welfare states are expensive.  This means higher taxes and therefore slower economic growth and fewer job opportunities for everyone – including the poor.
Finally, welfare states are magnets for the poor.  Whether through domestic migration or foreign immigration, poor people flock to places with generous welfare states.  This is logical from the immigrant's perspective, but it makes little sense from the taxpayer's.  This fact is why socialism and open borders arefundamentally incompatible.

Why Big Government?
Since 1960, California's population exploded from 15.9 to 39 million people.  The growth was almost entirely due to immigration – many people came from other states, but the majority came from abroad.  The Public Policy Institute of California estimates that 10 million immigrants currently reside in California.  This works out to 26 percent of the state's population.

This figure includes 2.4 million illegal aliens, although a recent study from Yale University suggests that the true number of aliens is at least double that.  Modifying the initial figure implies that nearly one in three Californians is an immigrant.  This is not to disparage California's immigrant population, but it is madness to deny that such a large influx of people has changed California's society and economy.

Importantly, immigrants vote Democrat by a ratio higher than 2:1, according to a report from the Center for Immigration Studies.  In California, immigration has increased the pool of likely Democrat voters by nearly 5 million people, compared to just 2.4 million additional likely Republican voters.  Not only does this almost guarantee Democratic victories, but it also shifts California's political midpoint to the left.  This means that to remain competitive in elections, the Republicans must abandon or soften many conservative positions so as to cater to the center.
California became a Democratic stronghold not because Californians became socialists, but because millions of socialists moved there.  Immigration turned California blue, and immigration is ultimately to blame for California's high poverty level.

The Mass Exodus From High-Tax States

The Mass Exodus From High-Tax States

Back in April, I chatted with Stuart Varney about how some states were in deep trouble because they were being squeezed by having to finance huge unfunded liabilities for bureaucrats, yet they were constrained by the fact that taxpayers have the freedom to movewhen tax burdens become excessive. 
I now have a reason to share the interview because Chris Edwards described this phenomenon of tax-driven migration in a new column for the Daily Caller.
New Jersey’s richest person, David Tepper, moved with his hedge fund business to Florida in 2016. That single move cost the state of New Jersey up to $100 million a year in lost income taxes. Yet, this year, New Jersey’s Democratic governor Phil Murphy hiked the top income tax rate from 8.97 to 10.75 percent. Murphy wanted to raise revenue, but the hike won’t do if it prompts more of the rich to leave. The top 1 percent in New Jersey pay 37 percent of the state’s income taxes. Connecticut is also losing its wealthiest residents after tax hikes by Democratic governor Dan Malloy. In recent years, the state has lost stock trading entrepreneur Thomas Peterffy (worth $20 billion), executive C. Dean Metropoulos ($2 billion), and hedge fund managers Paul Tudor Jones ($4 billion) and Edward Lampert ($3 billion). Those folks all fled to Florida, which has no income tax or estate tax. …High taxes are driving the wealthy out of California. Ken Fisher moved Fisher Investments from California to Washington state, which also has no income tax. The billionaire said he wanted a lower-tax location for his 2,000 employees. Mark Spitznagel moved his Universal Investments from California to Florida, saying that “Florida’s business-friendly policies, which are so different from California’s, offer the perfect environment for this.” The “tax freedom exodus” will accelerate in the wake of the 2017 federal tax law. The law capped the deduction for state and local taxes, which subjected 25 million mainly higher-income households to the full tax burden imposed in high-tax states.
It’s important to ask, though, whether these moves are a trend or just random.
In a more detailed study he produced, Chris crunched that national data and found there is a relationship between tax burdens and migration patterns.
It’s not a perfect relationship, of course, since there are many factors that might lead households to move across state lines.
But tax is definitely part of the equation, especially since high-tax states no longer receive a big indirect subsidy from Uncle Sam.
column in the Wall Street Journal explores this aspect of the issue.
…real-estate professionals say they are beginning to see early signs of an exodus to low-tax states. “I’ve seen a huge increase in the number of clients who want to purchase in Palm Beach to establish residency in Florida,” says Chris Leavitt, director of luxury sales at Douglas Elliman Real Estate in Palm Beach. …Real-estate developer David Hutchinson, president of Ketchum, Idaho-based VP Cos., is touting the tax advantages of living in Nevada on his company website… The border between California and Nevada bisects Lake Tahoe. Californians to the west can pay a state income-tax rate of up to 13.3%, while Nevada residents just 30 minutes to the east pay no state income taxes.
A Democratic political consultant warns that his party could be hurt.
With state deductions now capped at $10,000, the cost of living in states such as California and New York – where state taxes are notoriously high – is increasing substantially. This has the potential to lead both middle-class families, and even the wealthy, to begin questioning whether it is time to move to a more tax-friendly state. …In one high-profile example of the impact of high taxes, professional golfer Phil Mickelson recently slammed California’s taxes and threated to leave the state. “If you add up all the federal and you look at the disability and the unemployment and the Social Security and the state, my tax rate’s 62, 63 percent,” Mickelson said. …New York Gov. Andrew Cuomo – seeking re-election this year and a potential 2020 Democratic presidential contender – recognizes the threat that tax migration may pose. “If you lose the taxpayers, you lose the revenue,” Cuomo said in December.
Though maybe it would be better for Governor Cuomo to say “lost the revenue.”
Here’s another chart from Chris Edwards’ study. The light-blue states are attracting the most new residents (i.e., taxpayers) while the bright-red states (like New York) are losing the most residents (former taxpayers).
Needless to say, the states with better tax policy tend to be net recipients of taxpayers, and taxable income.
In closing, it’s important to understand that tax-motivated migration also exists between countries.
Here are some excerpts from a column in the New York Times.
When a country begins to fall into economic and political difficulty, wealthy people are often the first to ship their money to safer havens abroad. The rich don’t always emigrate along with their money, but when they do, it is an even more telling sign of trouble. …In a global population of 15 million people each worth more than $1 million in net assets, nearly 100,000 changed their country of residence last year. …In 2017, the largest exoduses came out of Turkey (where a stunning 12 percent of the millionaire population emigrated) and Venezuela. As if on cue, the Turkish lira is now in a free fall. There were also significant migrations out of India under the tightening grip of its overzealous tax authorities… Millionaire migrations can be a positive sign for a nation’s economy. The losses for India, Russia and Turkey were gains for havens like Canada and Australia, joined lately by the United Arab Emirates. …Millionaires move money mainly out of self-interest, to find more rewarding or safer havens. There aren’t a lot of them, but they can tell us a great deal about what is going wrong — and right — in a country’s economic and political ecosystems. Leaders who create the right conditions to keep millionaires home will find that all of their residents — not just the wealthy ones — are richer for it.
I like footloose millionaires because – as discussed in the article – they act as canaries in the coal mine. When they start moving, that sends a helpful signal to the rest of us.
And I also cheer migrating millionaires since they can cause big Laffer-Curve effects. And that puts an external constraint on the greed of politicians.
Which helps ordinary taxpayers like you and me since politicians generally use higher tax burden on the rich as a softening-up tactic before grabbing more money from the masses.