Saturday, 2 June 2012

To Boskin and Cogan: California does not attract non-taxpayers (earlier post corrected)


I was listening to an industry type give a speech on the woes facing California, and heard him state that a "Stanford study" show that while 10 million people had migrated here since 1985, only 150,000 people more paid taxes.  This made absolutely no sense to me, so when I got home, I did a little Googling, and found an ob-ed from Michael Boskin and John Cogan that said:

From the mid-1980s to 2005, California's population grew by 10 million, while Medicaid recipients soared by seven million; tax filers paying income taxes rose by just 150,000; and the prison population swelled by 115,000.
The 150,000 number made no sense to me, so I went to the IRS SOI tax stats page to see what was up.  The data there go back to 1997, and in any event, I am not sure what year the authors mean by "mid-1980s."

So here are the data (download the spreadsheets and go to line 94 for 1997 and 108 for 2009)--from 1997 until 2009, the number of individual tax returns with taxable income in California fell  from 10.8 million to 10.3 million, suggesting that California was a land attracting non-taxpayers.  But the number of individual tax returns with taxable income nationally fell from 98.5 million in 1997 to 91.0 million in 2009, or by more in percentage terms than California.  The reasons for these declines are the rise of the Earned Income Tax Credit (which is good) and a reduction in incomes at the bottom of the income distribution (which is bad).

I do need to figure out where to get data from the middle 1980s, but going back to the late 90s seems more relevant at this point.  In any event, context matters.



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