How Not to Balance a Budget

From the Wall Street Journal. No further comment necessary:

"Anyone who thinks the path to "fiscal discipline" is through higher taxes ought to look at the current budget spectacles in New York and California. The two liberal states have among the highest tax burdens in the country, yet both now find themselves with huge budget deficits and are debating still higher taxes to close the gap. . .

...Every time the politicians raise taxes, they merely lift their spending by as much or more, and then plead poverty and demand another tax hike during the next economic slowdown.

The "progressives" who dominate politics in these states target the rich on grounds that they have the ability to pay. They also have the ability to leave. From 1997-2006, New York State lost 409,000 people (not counting foreign immigrants). For every two people who move into the state, three flee. Maybe the problem for New York is merely bad weather, not high taxes.

Except that sunny California is experiencing a similar exodus. Over the past decade 1.32 million more native-born Americans left the Golden State than moved in -- despite beaches, mountains and 70-degree weather. Mostly the people who have fled are the successful, the talented and the rich.

If taxes don't matter, then maybe someone can explain the divergent economic paths of California and New York and America's two other most populous states, Florida and Texas. The latter two states have no personal income tax. Personal income has been growing about 50% faster in Florida and Texas than in California and New York. (See chart.) This year Texas became the No. 1 state for Fortune 500 corporate headquarters. About a dozen of those 58 corporations once called New York or California home, and taxes are one reason they departed.