Lots of data lately about the taker/producer ratios in the U.S. Nationally, there are 1.2 people working and paying taxes (or not) in the private sector for every welfare recipient and/or government employee. But some states, there are more FSA/government employees than actual workers in the private sector. Not surprisingly, these are considered “death spiral” states, because they are functionally, if not literally, insolvent. When takers extract more money than people pay in, the state is bankrupt.
I happen to live in one of these states. Terrifying to say the least. All this talk about “getting out of dodge”. If property taxes, and state taxes in general, are so high, people won’t/can’t buy your house or afford to relocate. No lifeboats for us people damned to living in a death spiral state.
The 11 “Death Spiral” States
Submitted by Tyler Durden on 12/04/2012
Eleven states made Forbes’ list of danger spots for investors including California, New York, Illinois, and Ohio. They warned (and with the cliff it is even more critical), if you have muni bonds in these states – clean up your portfolio; if your career takes you there – rent, don’t buy! Two factors determine their list of ‘fiscal hellholes’. The first is whether there are more takers (someone who draws money from the government) than makers (the gainfully employed). The second is a state credit-worthiness score (via Conning) based on large debts, uncompetitive business climates, weak home prices, and bad trends in employment. Conning rates North Dakota the safest state to lend money to, Connecticut the most hazardous. A state qualifies for the Forbes’ death spiral list if its taker/maker ratio exceeds 1.0 and it resides in the bottom half of Conning’s ranking. See below for the 11 states to avoid…no matter what Bob Toll, Larry Yun, Bob Pisani, or Alexandra Lebenthal tells you..
Number 11 – Ohio Taker ratio: 1.00
The battleground state has a fiscal standoff between takers (people collecting welfare, a government salary or a government pension) and makers (private sector employees).
Number 10 – Hawaii Taker ratio: 1.02
Dark clouds over Waikiki Beach: Hawaii has slightly more takers than makers.
Number 9 – Illinois Taker ratio: 1.03
Dubious ex-gov Rod Blagojevich personifies what’s wrong with this state: Too many goodies promised to insiders. Unfunded pensions contribute to the balance of 103 takers to every 100 makers.
Number 8 – Kentucky Taker ratio:1.05
Twilight in Lexington. People drawing from government slightly outnumber people chipping in with private-sector jobs.
Number 7 – South Carolina Taker ratio:1.06
Riptides on Folly Beach.
Number 6 – New York Taker ratio: 1.07
Blackout in the Flatiron district after the hurricane. Manhattan still has a vibrant financial sector. Manufacturing there is extinguished. Causes: taxes, unions, regulations and cheap apparel workers abroad.
Number 5 – Maine Taker ratio: 1.07
Casco Bay, Portland. This is a state with a beautiful coastline and a ratio of 107 drawers from the public fisc to every 100 contributors.
Number 4 – Alabama Taker ratio: 1.10
Second fattest state in the union have more takers than contributors.
Number 3 – California Taker ratio: 1.39
California is generous to a fault, at least to state employees and the needy. Union lifeguards make $125,000 per year. To private sector employees, who are outnumbered, it is not so hospitable.
Number 2 – Mississippi Taker ratio: 1.49
The fattest state in the union ranks second to worst on the list of states burdened by a high ratio of takers (welfare recipients and state employees) to makers (private sector workers).
And The Worst State to live in or lend to is…
Number 1 – New Mexico Taker ratio: 1.53
Wildfire near the Los Alamos Laboratory in June 2011. In our taker/maker ratio, federal employees are excluded from the taker count since their cost is not borne locally. That doesn’t save this state from having the worst ratio in the nation.
As Forbes advises:
To lend money to California, Illinois or the other nine states perched on the precipice requires a leap of faith. So does buying a house in those locales. Don’t count on a property tax limit to protect your home’s value. If other taxes are high enough, there won’t be any buyers.
http://www.zerohedge.com/news/2012-12-04/11-death-spiral-states
Stucky says:
Noo Joisey isn’t in the Top 11? Are you shittin’ me?
OK …. Chris Christie 2016 !!!!!
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4th December 2012 at 8:34 pm
Thunderbird says:
Communism seems alive and well in those States.
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4th December 2012 at 8:50 pm
IndenturedServant says:
Unions are listed as a cause for the end of manufacturing there. Fantastic!
A union lifeguard in CA makes $125,000? Fuck me! They should be exterminating dumbasses in CA, not……..oh wait, unions have become self-exterminating. Carry on!
We should encourage Walmart workers to unionize.
I_S
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4th December 2012 at 10:04 pm
SSS says:
Thanks, AWD. Good catch.
I sent this to a liberal acquaintance (I don’t have liberal friends; family doesn’t count because I can’t get rid of them) who summers in Maine and winters in South Carolina, both of which are on list. Heh. Can’t wait to hear his unhinged reply.
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4th December 2012 at 10:20 pm
ecliptix543 says:
I’m really surprised Florida isn’t on there.
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4th December 2012 at 11:19 pm
Sawgill says:
First post–long time reader from the beginning of the website. Serious distortion of info here.
Wikipedia (adequate as a source) Notes the net per capita contribution to the Fed. Gov’t on a state by state basis.
http://en.wikipedia.org/wiki/Federal_taxation_and_spending_by_state
SamplIng two states in which I have lived:
California. +$1466
South Carolina. -$3766
For the math challenged, a Cali res sends $ to the Fed gov and SC res receives $. This is a $5232 difference for each individual taxpayer. WHO’S THE LEACH???
Sawgill
Hot debate. What do you think?
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4th December 2012 at 11:26 pm
llpoh says:
Sawgill – Californians that work make a very high salary in comparison to those in SC – and so they pay much greater taxes. Also some very big corporate payers in California. If you are in the bottom 50% of US income earners you get subsidized and pay no taxes. Fact is the facts you are presenting are seriously distorted by the very high wages of California government workers and the high tech wages, etc. The “rich” of California are subsidizing lower income folks of California, and folks in SC as well.
Put it this way – Those taxes you are talking about are being paid by the top half of Californians. The bottom half are as big of leaches as the folks in SC, maybe even moreso. Median incomes in Calif. are around 15k higher than in SC.
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4th December 2012 at 11:55 pm
Stucky says:
Excellent math Sawgill !!
Please, do stay in California.
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4th December 2012 at 12:55 am
Buckhed says:
Sweet…S.C. is on the list. I told my girlfriend that when the SHTF I’d run for Governor….looks like that isn’t too far away ! How do you get lemmings to jump into the sea ?
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4th December 2012 at 5:33 am
Llpoh says:
I think it is “leeches”. Sawgill started it.
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4th December 2012 at 6:26 am
Mr. Happy says:
North Dakota. Great hard working people, natural resources etc. etc. I know I go on about this but a major reason for the success of that state is the Bank of ND. Of course it’s impossible to recreate same in states like Illinois, or California because big bank lobbies just won’t allow it. And so we’ll see these States sink while ND goes merrily on to greater and greater success. Think on this: If California or Oregon with all their resources had a state bank like ND, that bank would be rated AAA as is ND’s.
The obvious argument is a state like California would fuck op a state bank in no time. But maybe not, the Bank of ND has been in business since the creation of the US Fed…the later got all fucked up but ND did not. Look on the bright side.
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4th December 2012 at 6:53 am
Zara says:
Outside of the Los Angeles basin and the central valley, California would have to suck a 1000 times worse to motivate me to move to Sakerlina…and I don’t even live there. I have observed former Oregon Governor Tom MCall’s admonition in reverse as regards the Golden State, “Come visit, but for heaven’s sake, don’t come here to stay.”
Hot debate. What do you think?
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4th December 2012 at 7:09 am
harry p. says:
i am just surprised PA isn’t on the list.
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4th December 2012 at 7:50 am
Eddie says:
Interesting list. What sticks out for me is that we have a number of staes with fiscal problems, and they fall into different categories and likely may have far different outcomes.
Like Ohio and Illinois..those would seem to me to be the states to watch…lots of urban population, government employees and FSA….no possible means of recovery….lots of chance of social upheaval, riots, etc.
Maybe California might fit there too, but California is weird. They have the coastal strip which is one place…and the rest of the state that is another place entirely. The coast will always be the most expensive real estate and the productive area economically. Kind of unique. Coastal Cali could become it’s own state and they could move the capital to Santa Barbara. Presto, balanced budget. Fresno and Sacramento would burn.
Maine, South Carolina, Kentucky, Alabama, Mississippi, New mexico. Hard times in those places is nothing new. Enough rural land to support a return to a different style of living…like the Great Depression, but survivable. New Mexico might tbe unlivable due to drought. But it’s always been dry there, and they know how to do dry.
Hawaii is unique. They will be fine. Forget what the stats say. They can raise the hotel tax and people will pay it.
New York. Home of the elites. The elites will keep NY on life support for a long tiime. As in forever, until the last nickel is spent .
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4th December 2012 at 9:04 am
Eddie says:
And furthermore, despite the numbers, I’d say we have some other states, like Pennsylvania, New Jersey and Michigan that are at higher risk for eventual implosion than some of the states on that list.
We don’t have any states than can support the FSA forever. The government tit will be drying up everywhere…just not all at the same time or at the same pace.
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4th December 2012 at 9:22 am
Dorkus Maximus says:
One thing to keep in mind is that Kentucky and South Carolina (and probably AL and MS) have large barter economies (produce/gather much of their own food, repair their own cars, build their own structures) so that much of what they produce is off the books. Using the number of jobs is really just a proxy for value produced, so the reality is that these states probably do better than what the list indicates.
As far a California goes, that socialist state needs to walk the walk. They’ve used their massive political clout in DC for decades to push for high taxes and redistributionist policies, so fuck ‘em.
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4th December 2012 at 11:02 am
Stucky says:
State budget deficit —– Noo Joisey ranks 3rd in the nation.
California ————— $21,300 BILLION
Illinois ———————- 17,000
New Jersey ————— 10,500
Texas ———————– 10,000
New York —————— 8,200
Connecticut ——-=——- 3,800
Minnesota ———–=—– 3,800
North Carolina ———— 3,000
Ohio ————————- 3,000
Florida ———————- 2,500
Oregon ——————— 2,500
And then there’s this;
“(CNSNews.com) – Families in Hurricane Sandy-ravaged New Jersey will face the highest tax increase as a percentage of their income – 6.82% or about $6,933 more in taxes — if Congress does not reach an agreement on the fiscal cliff tax issues during the lame-duck session, according to an analysis by the Tax Foundation.”
We already couldn’t see our hose last summer because of property taxes. Would you be willing to pay $12,000 per year taxes on a home under 2,000 square feet? No, and apparently no one else either.
Now add ANOTHER fucking seven thousand dollars in fiscal cliff taxes? Stick a fork in this piece of shit state. We’re toast.
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4th December 2012 at 12:18 pm
Administrator says:
“See our hose” – Stucky
Freudian Slip?
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4th December 2012 at 12:28 pm
JohnG911 says:
South Carolina, Kentucky, Alabama, and Mississippi didn’t vote for Obama and he’s a vindictive communist… rut-row! This is chump change compared to our national debt. We’ve already gone over the fiscal cliff and the Coup de Grace was reelecting Obama. Kiss your savings and 401K’s good bye!
That’s all folks! .
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4th December 2012 at 2:12 pm
Stucky says:
:Freudian Slip?” ———– Admin
hahahaha!! Can’t believe what a shit typer I am.
But, no, not a Freudian slip …….. not only can I not sell “it” ….. I can’t even give “it” away.
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4th December 2012 at 2:23 pm
Mrs. Freud says:
Cannot get “it” up, either,
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4th December 2012 at 3:51 pm
SSS says:
“I sent this to a liberal acquaintance …… who summers in Maine and winters in South Carolina, both of which are on list. Heh. Can’t wait to hear his unhinged reply.”
—-SSS
The idiot replied and immediately teed off on, and blamed, the Republican governors of Maine and South Carolina. The fucking Democrats and Republicans who are so dogmatic in their political views are simply incapable of, and I’m gonna say two words I despise, critical thinking. They simply are incapable of getting out of their comfort zone, looking at cold, hard facts, and telling themselves that the whole fucking system is broken.
This shit leads me to believe that an eventual collapse of, at minimum, the nation’s economy is inevitable. But it won’t be immediate. It will be slow and painful. I wonder what event will trigger the shrug from Atlas.
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4th December 2012 at 7:24 pm
llpoh says:
SSS – I largely agree with you, except instead of “slow aand painful” I think it will be pretty fast and painful. It will not happen overnight (ie not immediately, as you say), but it will not take decades, either, in my opinion, anyway. Per the charts recently posted, the US GDP as a percentage of world population has dropped, what, 10% in a decade?
I expect that trend to continue, and then to stabilize around the 12 – 15% mark. Wages will continue to fall for most of the masses – the mases do not have the skill, education, work ethic to compete in a global market, and will have their asses kicked by the Asians, especially.
As a result, tax revenues will fall, and the demand for free shit will rise as people want their pre-eminent position standard of living maintained, and the temptation will be for the govt to raise taxes, esp. on the rich. The rich will flee to better climes. Rinse and repeat.
The poor will become restless. Govt will seek to quell the unrest by ever more draconian measures. Freedoms will be curtailed – further. Economy will slide. State governments will go bankrupt, or whatever is the equivalent. Inflation will really take off as the govt tries to inflate its way out of trouble.
The medicine required will be really bitter. And the fact is, what comes out the far side of the troubles may well be unrecognizable to what has been historically known as the US.
And I do not think it will take many years.
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4th December 2012 at 7:54 pm
SSS says:
llpoh
Thanks for the excellent comments. Decades (my opinion) or more rapidly (your opinion). Whatever. It will likely happen. I hope we are both wrong. For the sake of all of our children and grandchildren.
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4th December 2012 at 8:10 pm
llpoh says:
SSS – I seriously hope I am wrong. For my kids sake. For the sake of freedom and liberty. But trends do not look good.
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4th December 2012 at 8:13 pm
Mikey says:
@IIpoh – I have to agree with you. It’ll be slow, creeping, and deliberately hidden by those that do not wish to see it until it hits a critical point – then it’ll go up in smoke.
Your country has a history and a mental outlook (if one can say that about a country as a whole)that the very first thing that you do if something goes wrong is to start fighting. Doesn’t matter who. If there’s not “other” to blame, then you’ll fight amongst yourselves.
Of course your government is very good and finding an “other” to blame. It’s been doing that for generations after all – but one day it won’t be believed, or the “other” will give your country a bloody nose and then…..
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4th December 2012 at 8:20 pm
llpoh says:
“And I do not think it will take many years.”
Neither do I llpoh.
And it is because during my lifetime I have come to grips with the concepts of acceleration and deceleration. Both the theory and things that make your body hurt.
And right now we are past the point where the ice cream turns to cat shit.
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4th December 2012 at 8:31 pm
crazyivan says:
The above llpoh talking to him self was enlightening. It was I.
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4th December 2012 at 8:36 pm
llpoh says:
CI – I am old enough that I have begun to talk to myself.
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4th December 2012 at 8:57 pm
llpoh says:
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4th December 2012 at 9:00 pm
crazyivan says:
I agree.
Talking to yourself doesn’t require much etiquette. It does however require stealth. If you are going to spring one on yourself, sometimes you have to kind of sneak up on yourself.
Basically, it’s common sense applied to a common opposition.
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4th December 2012 at 9:42 pm