Two economics professors recently developed and introduced a ranking of the 50 United States on their assessment of how “paternalistic” state tax policies are. In a policy article for the Mercatus Center at George Mason University, Russell Sobel (The Citadel) and Joshua Hall (West Virginia University) describe their analysis of state tax codes, and the degree to which they drive/distort individual choices, basically ranking states on how much the tax codes “leave the choices up to you.”
What do paternalistic states look like, in other ways, compared to non-paternalistic states?
Looking across the continental 48 states, using tools available at Truth in Accounting’s State Data Lab, the tendencies are:
- State Financial Condition: Paternalistic states tend to be in worse shape, financially.
- Purchasing Power. The more paternalistic a state is, the lower the buying power of $100 in that state.
- Union Power. States that are more paternalistic also tend to have higher unionization rates.
- Legal Environment. States that are more paternalistic tend to rank higher on lawyers per capita.
- Democrats vs. Republicans. States that are more paternalistic tend to have higher Democratic vote share.
- Trust in State Government. States that are more paternalistic tend to have lower trust in state government.
- Recent Migration Trends. IRS data indicate that states that are more paternalistic have been `losing more adjusted gross income to other states in recent years.
These are tendencies, not iron-clad relationships. Nor am I claiming what causes what. Just looking at the surface of the water.