transcript

Speaker 1:
[00:03] You're used to hearing my voice on the world, bringing you interviews from around the globe. And you hear me reporting environment and climate news. I'm Carolyn Beeler.

Speaker 2:
[00:12] And I'm Marco Werman.

Speaker 1:
[00:13] We're now with you hosting the world together. More global journalism with a fresh new sound. Listen to the world on your local public radio station and wherever you find your podcasts.

Speaker 2:
[00:30] More professional every week.

Speaker 3:
[00:32] More professional every week in this unpaid internship that Robin and I gave ourselves mid-career.

Speaker 2:
[00:39] Exactly.

Speaker 3:
[00:46] Hello, and welcome to Optimist Economy. I'm economist Kathryn Anne Edwards.

Speaker 2:
[00:50] I'm editor Robin Rauzi.

Speaker 3:
[00:51] On this show, we believe the US economy can be better, and we talk about how to get there, one problem and solution at a time. Today, big old problem, taxes.

Speaker 2:
[01:10] It's our second tax episode of the tax season.

Speaker 3:
[01:13] We're playing to the home crowd in LA because we all know Robin loves the tax story.

Speaker 2:
[01:17] It's true, it's true.

Speaker 3:
[01:19] So this episode, we want to talk about who should pay income taxes, and will the spate of millionaire, billionaire, income, wealth taxes make them flee?

Speaker 2:
[01:30] Okay.

Speaker 3:
[01:31] Wherever the tax is coming from. As I should have, there's an end to that sentence of, flee the world, they all go off in a rocket that they built up into space, and that was the point of it all. No, do they flee a locality that taxes them, is the real question. But first, some announcements.

Speaker 2:
[01:50] We are nearing 800 ratings on Apple Podcasts and have 185 written reviews. So keep those coming. Two that I liked recently said, one said, whatever I was expecting out of an economics podcast, this isn't it. But it was a positive review. And the other one was, this is for people who are into solutions and not whining. Okay, over to you.

Speaker 3:
[02:13] Okay. Well, Optimist Economy is a registered 501c3 nonprofit, and we can take your contributions from Substack and from Buy Me a Coffee and Patreon. But we are also newly registered on Beneviti, which is a way that lets big employers make regular donations to nonprofits through your employer. Really important note here.

Speaker 2:
[02:35] It's like a paycheck deduction.

Speaker 3:
[02:37] Yeah, it's a paycheck deduction. I think your employer plus is up.

Speaker 2:
[02:41] I think it depends on the employer.

Speaker 3:
[02:43] The important thing is, is that we on the show believe the corporate income tax rate can be higher. And if you work for a corporation that's registered with Beneviti, you can make them help us by supporting the show. Starbucks employees have access to Beneviti, are a favorite of the podcast.

Speaker 2:
[03:00] Exactly. All right, next up is Retcon, where we reflect on stuff that we talked about previously. I was thinking about something that stemmed from our last two episodes that related to both moving and a question about occupational licensing from a person who worked at a state labor agency. One of the things that I found out that we didn't wind up talking about was that occupational licensing is also seen as a big barrier to moving. This might be most familiar to people because of the restrictions on nurses moving from state to state and working one state to the other that became an issue during the first year of the pandemic. About 22% of the workforce, including teachers, nurses, contractors, are all licensed by the state and it makes it hard for them to move to another state. There's a lot of progress on this. There are kind of strange workarounds. One is states having what they call like a universal recognition where they will recognize somebody else's license in good standing. And there are also compacts that are sort of multi-state licenses where like nurses in one state would all be recognized by all the other states in that compact. Anyway, state licensing is suspected to reduce moving by 7%, something like that. And occupational licensing reform is kind of an ongoing project on the state level.

Speaker 3:
[04:25] I mean, economists have studied occupational licensing and they're good jobs. Like they have good pay in part because the supply is being directly regulated by you cannot be, you know, a plumber unless you have a license to be a plumber. And that ensures that the quality is high and the supply can be somewhat regulated. And so the pay is good. But sometimes it makes sense for different states to have licenses and sometimes it doesn't. Like a law license, laws differ across states, makes sense. You know, plumbing, I don't know. Like nursing also, I mean, there are some health rules across states, but I mean, pretty much the same. So it's a real toss up because it is a, can be really popular within a state. Not much comes down federally. It's a lot of it is like from the state up. And license is not the same as apprenticed. So if you're an apprentice, you have a nationally recognized credential, which is like a step up from license in terms of quality. And it's a federal, the credential that you get on the federal level has to be recognized nationally. And then some apprenticeships are just state level apprenticeships is very confusing. Okay, so yours was a real one about economics. Mine is not.

Speaker 2:
[05:37] I know. I love it when I can look serious.

Speaker 3:
[05:41] Well, a few episodes back, I made references to star people and astrology. And it was pointed out to me by a long term listener that I sounded just a little bit smug when I referred to star people. And so as a response, I had to do my star chart so that I could explain to you all why the stars would say that I was too dismissive. And that is a sun, Gemini, moon, cancer, rising Scorpio thing to say. And if you understand astrology, there was a mic drop buried in there. It was the Scorpio, the rising Scorpio. I will say that I was reading my star chart and some parts of it were like chillingly accurate and other parts not so much. But there were a couple of things where I'm like, you don't know me, internet-free website for star charts. Don't say that. So I apologize to the star people.

Speaker 2:
[06:45] Terms and conditions.

Speaker 3:
[06:46] Terms and conditions. Did you look anything up this week?

Speaker 2:
[06:50] I mean, I looked up a lot of things, but not a term and condition because it was clear you were going to live in this chapter a bit.

Speaker 3:
[06:57] Well, I wanted to talk about progressive, which we apply to politics and to public policy and various things. There was a whole progressive era in the United States. It has its own feel and vibe. We have new progressives today. In tax terms, what we would think of as a graduated progressive income tax means that the rate increases with your income. That is what we mean by progressive in terms of the tax system.

Speaker 2:
[07:23] Are these related at all with the progressive era?

Speaker 3:
[07:26] Yeah, I mean, because it's the spirit of progressivism, of reform, of broad social movements meant to lift up people at the bottom, inclusion in society, all of that kind of went into the federal income tax being designed so that people who made the least paid the lowest rate and people who made the most paid the highest rate. So it was reflecting the progressive era, but progressive and regressive are technical terms to describe the tax system. So a regressive tax is one in which people who make the least pay the highest rate. And it's not a dollar amount, it's a rate. So if the poorest pay the highest rate, it's regressive. If the poorest pay the lowest rate, it's progressive. And the US is a combination of a progressive federal tax system for income taxes. And everything else is, like...

Speaker 2:
[08:16] Pretty regressive.

Speaker 3:
[08:17] Maybe progressive too, could be very regressive.

Speaker 2:
[08:21] Okay, we're going to take a quick break, and we will be right back with The Big Pilgrim.

Speaker 3:
[08:30] Okay, so we have a very special big pill crow today.

Speaker 2:
[08:34] I'm so excited.

Speaker 3:
[08:35] Because Robin loves a tax story, and we are literally swimming in them.

Speaker 2:
[08:38] Oh my God.

Speaker 3:
[08:40] There are so many bonkers proposals.

Speaker 2:
[08:42] So as listeners know, I live in California, and we have been all over the news with this proposal that has not even yet qualified to be on the ballot. That is called the California 2026 Billionaire Tax Act. And it would be a one-time, 5% wealth tax that will tax roughly 200 people. And the news has been all over the who's moving, who's moving out of state to avoid paying this tax. Is Sam Altman moving out of state? Is Steven Spielberg moving out of state? Even though it's supposed to be a one-time tax, I think everyone also realizes that temporary taxes do have a tendency to stick around. This particular tax, though, it was proposed by the SEIU, specifically the United Health Care Workers branch of the SEIU, which is the largest union in California. And so it's written so that of the revenue, it's all going to go to health coverage. Supposedly this is because it's sort of revenge for losing Medicaid funding from the federal government. Only 10% of the funding, if this thing goes through, only 10% would go to education or food assistance or other things that were impacted by the changes in the federal budget. It's been a mess. It's polling at about 52%. This particular union boss, Dave Regan, has put a lot of things on the ballot in California over the years. He tends to use a lot of these things to leverage, like when he can't get the legislature to do something, he threatens to put it on the ballot or does put it on the ballot. But this time, of course, he's tapped into this just general sentiment that we've got a real wealth inequality problem and it may make it on the ballot this time and who knows, could pass. And it would be a constitutional amendment. I mean, that's how things work here.

Speaker 3:
[10:40] Oh, man. That is... It's a little......high stakes.

Speaker 2:
[10:45] Yeah, it's kind of a one-two punch. It's like a change to the constitution. We put everything in the constitution here.

Speaker 3:
[10:51] Well, so we should explain to Optimist that California... I mean, the key part is that it's a wealth tax. So it's... And it's really about billionaires, not millionaires. It's not to be confused with two other progressive tax movements on the state level. One in Massachusetts, they added a quote-unquote, millionaires surtax, where it's a 4% tax on people who earned over a million dollars. They added that a couple years ago. Washington state does not have an income tax. They just passed an income tax, and the income tax is solely on people who make over a million dollars.

Speaker 2:
[11:25] And it's 9.9%.

Speaker 3:
[11:27] It's a lot. 10% for people making over a million. And then, I believe the tax that Mom Donnie wants, which he needs the New York State Legislature to pass, is based on basically both of these as some kind of millionaire surtax, where if you earn more than a million, you will pay some tax rate to the state government. So the Massachusetts, Washington, New York, they're adding on to their income tax system. In Washington's case, creating them, California's is a one-time billionaire tax. So like, I know. What is happening?

Speaker 2:
[11:58] And then, but then what's happening on the federal level, to me, like on the surface anyway, looks a lot like, it's like the Democratic proposals are trying to out-tax cut the party of tax cuts. So, there were two proposals, I don't think either have been introduced in Congress yet. They're just sort of floated out there. But both released in March. One was from Cory Booker, which he calls the Keep Your Pay Act. And this would more than double the standard deduction for all taxpayers. So for households filing jointly, the first $75,000 of income would be totally tax-free.

Speaker 3:
[12:36] That's wild.

Speaker 2:
[12:38] Yeah, he's claiming that the immediate American family would see their taxes cut by roughly 85%. Now, he says this is going to be paid for by closing loopholes used by the ultra wealthy, but there's been no sort of specifics on what the revenue, the exact revenue sources would be on that.

Speaker 3:
[12:56] Well, then there's the Working Americans Tax Cut Act by Chris Van Hollen, Senator from Maryland. And that one is... I don't know how to say this without sounding so mean, a disaster. It basically takes a very confusing tax system and then creates an alternative one that ends up operating as a cap so that the amount of money you pay in taxes is capped. So I think, again, similar question. What on earth is going on?

Speaker 2:
[13:24] I had to read that like four times to try to understand what was going on with this. And it's like, you calculate your taxes twice and then you pay the lesser of the two. This reminds me of when gay marriage was legal in California, but not at the national level. And we all had to, gay couples had to calculate their taxes twice to calculate it as if you were married on the federal level to file your California state taxes. And then you had to calculate what the federal government was actually going to make you pay because you weren't really married. We paid a lot for tax preparation in those years.

Speaker 3:
[13:59] Wins all around, y'all. There's two issues here. And I'm happy to talk about either because I think they're both interesting. One of them is that states want more money to do things the federal government has shown a complete lack of initiative, like childcare, education, health, these really important issues, foundational to the affordability of families that the federal government's not moving on. So they want more money. The tax base of a state is just orders of magnitude lower than the tax base of the federal government, so they have to go after more money. The article I read about Chris Von Hollen's Working Americans Tax WATCA, Working Americans Tax Cut Act, that one, he basically said no tax on tips was a really effective campaign strategy. And so they're trying to come up with something similar, which is like, not even that this is a good proposal, but we think it might sell well.

Speaker 2:
[14:47] Yeah, no, I mean, both of these seem like that to me, that they're not actual, seriously. I mean, the Tax Foundation analysis of the Cory Booker Keep Your Pay Act says that it would lose $6.7 trillion over the next 10 years.

Speaker 3:
[15:02] Well, they're a conservative-minded.

Speaker 2:
[15:05] Sure they are, but it's like, still.

Speaker 3:
[15:07] $6.7 trillion over 10 years, 50% larger than the tax plan that was just passed. So like the federal government just gives up on having money and we're not a country anymore because of debt. Yeah, I mean, the federal level, it seems like we're looking for, we're testing out messaging that could address affordability for like the working class. The states are legitimately looking for money, not clear that they're going to be able to do it as well as they want.

Speaker 2:
[15:31] Well, I think the states are also, they're seeking, I don't know, they're seeking to plug holes, right? It'd be nice if they were doing these things just to be able to add, but they're trying to plug holes from what the federal budget did to states in this last year. Yes.

Speaker 3:
[15:48] And that they got a lot of money in the pandemic.

Speaker 2:
[15:50] Yeah, that they also lost.

Speaker 3:
[15:51] That they liked spending on things.

Speaker 2:
[15:52] That was nice.

Speaker 3:
[15:53] It was really nice. It was kind of nice that the federal government gave them a lot of money to have childcare and they got to spend money to help families in their states and then it all went away. You're definitely seeing a hangover of people, you know, we like having nice things and now they're gone. I think if you take both the federal tax proposals and the state tax, you know, in one case signed the law and then the California proposal, I mean, it is a real populist shift from where we were 25 years ago.

Speaker 2:
[16:23] I think it's a populist shift from where we were 10 years ago. I mean, I think they're tapping into that same sentiment that was in that essay that we argued about, we didn't argue about, but we talked about early in the season about like, what's the true level of affordability for people and that that's the sort of the standard. So even the WATCA, the Working American Tax Cut Act, you know, it's basically talking about using $46,000 for single filers. It's just like, well, that's the cost of living. And so people shouldn't be taxed on the first $46,000, because that's just how much it costs to live. They're wrapping a lot of these things in the language of this discourse around affordability and how much things cost now.

Speaker 3:
[17:09] I'm taking deep breaths. I mean, like, you need your federal government to have money to fix affordability. Like, your life isn't unaffordable because of taxes. Or like, you won't have a fix to affordability issues if you just focus on taxes. I think this is the part that really drives me insane. It's like, the US tax system is incredibly progressive. And yet, as we've gotten richer as a country, we are collecting less in relative earnings.

Speaker 2:
[17:41] What do you mean, less in relative earnings?

Speaker 3:
[17:43] Alright, so, if I were to think about a progressive tax system in 1950, and say it collects 10% of GDP in terms of the amount of federal tax receipts we have, what should that 10% be in 70 years? If we have a federal tax system that is progressive and it collects higher rates from people who make more money, the more money we make, the more the federal government should be taking in. And in 2000, before we entered our tax cut era, we collected just under 20% of GDP in federal tax receipts.

Speaker 2:
[18:19] And that's all taxes.

Speaker 3:
[18:21] That's all taxes, not just income taxes. And it's now at 17. We talked about this in the corporate income tax episode. If you are collecting two points less of GDP, that's more than $600 billion a year you're not collecting. That's money that we need to do things like have a federal child care system. Or if we want socialized health care, y'all, we can't tax cut our way there. So I get really frustrated with these proposals that work through the tax system, when that tax system is not going to make health care affordable.

Speaker 2:
[18:52] Yeah, it's this idea that the only way that the federal government can affect affordability is, like, the only lever it has is taxes. And that's not the only lever it has. It has policies, our perfectly good lever that it could use, but you actually need money to implement those policies.

Speaker 3:
[19:11] Well, this is what I mean, too, about kind of this, like, poisonous populism of, like, well, we should restore tax rates for the top 10% of Americans, but that's only allowed if we cut taxes for people in the middle. You could just restore them at the top and, like, we move full steam ahead. Like, let's just bring the estate tax back up. We don't necessarily have to touch the bottom to have, you know, some throwing around money, some, like, childcare money. But it's, like, every everything that comes from the top, the bottom needs to have a little bit, too.

Speaker 2:
[19:39] Yeah.

Speaker 3:
[19:40] I've said before, like, we can't get to a solution if we don't diagnose the problem. And these tax proposals in some ways really highlight that for me because the problem isn't that someone making $40,000 a year paying too much in taxes, that person can't afford a whole host of necessary services and goods. The tax code isn't the problem. So the solution coming from the tax code or fixing the tax code doesn't seem to me to be applicable. But I do understand that people hate taxes. Like, I do get it. But we do live in a society, so, like, I don't know.

Speaker 2:
[20:17] Take your pick. I know. I mean, I'm sure there are people who agree with the sentiment that, well, if you just make it so that the government doesn't actually provide any services, then people get even more resentful about paying taxes. And if you are anti-tax, that becomes a self-perpetuating cycle. And it's hard to break people of, I think.

Speaker 3:
[20:39] I mean, aside from any of these, like, forget affordability. Like, forget elections, forget things that poll well. If you were to ask any reasonable tax expert what is the biggest problem for the US tax system, it would be that it is way too complicated and people don't feel like it's fair.

Speaker 2:
[20:56] Yeah.

Speaker 3:
[20:57] There's not a ton of evidence that there's a massive tax burden that is, like, drowning the middle class. You know, I was looking this up for, here's a fun fact. And what do we call these in my family? Like, a cocktail fact of, like, something to bring up at a cocktail party just to get conversation going where there's a real lull. If you were to look at every single item in the Consumer Price Index, all of them...

Speaker 2:
[21:22] Your cocktail parties are different than mine, okay. All right.

Speaker 3:
[21:28] So if you were at a boring-ass party with me, and we were talking about the Consumer Price Index, a little fun fact that I would point out to you is that of every line item in the Consumer Price Index, the fastest-growing price since 2000 is tax preparation. I mean, more than...

Speaker 2:
[21:48] Because your taxes have just gotten so hard to do.

Speaker 3:
[21:50] Your taxes have gotten so incredibly complicated that everyone has to pay, and at the same time, we have these massive for-profit companies that are moving into the filing space. And so, yeah, tax preparation is the fastest-growing price in our economy. And then you look at Chris Van Hollen's proposal of like, well, we're going to come up with a whole new tax system that has a minimum, and you pay the top of two. And I'm like, oh my god.

Speaker 2:
[22:11] I know. And I can tell you, again, it costs more when you have to calculate your taxes twice.

Speaker 3:
[22:18] Yeah, it costs a lot more when you have to calculate them twice, and you have some alternative minimum.

Speaker 2:
[22:23] Isn't there also a downside to basically pushing a bunch of people out of the tax system? Like, if all of a sudden a third of American workers don't even have to file a tax return, that's not great either.

Speaker 3:
[22:39] No, not in my mind. I think some people would say that's awesome. You know, let's not make workers pay. You know, when there's a recession, and you get a stimulus check, that goes through the tax system. I mean, the federal government knowing...

Speaker 2:
[22:55] It's the Treasury that knows where you are.

Speaker 3:
[22:58] Yeah, it's the IRS that knows, like, what your bank account is and where you live. Nobody else does. I mean, this was one of the big challenges in the pandemic was that we wanted to get money to people quickly. But it's really hard to get money to people who don't have an income tax return. Which included a lot of people on social security and a lot of retirees, a lot of people who were disabled, people who would really benefit in a health crisis from having additional funds. It was hard to get them money because they're not plugged into the tax system. So I think I could understand why a listener would say like, maybe this is like double speak on my behalf because I don't like benefits going through the tax system. And I've said that before. I think our tax system is too complex and it shouldn't be a reward mechanism. But at the same time, I want everyone to be connected to the tax system so that we can send out rewards. I can see why that would be very contradictory. The benefit of having people connected to the tax system isn't to accomplish some kind of social goal. The goal is just to be connected. So one way an economist explained this to me was just how much easier it would be to help after a natural disaster. Or if you had some type of delivery mechanism where you filed taxes in the city of Houston and it just had a massive hurricane, we can just push out $500 to everybody who filed whose address was within the primary hit zone of the hurricane. We don't have to do anything else. It's a way to build fairness. Since so much emergency relief goes to the tax system, you want everybody to be in it. But I could see why someone listening would be like, yeah, she's seeing a difference where there's not one. But in my mind, it's like a very clear difference of like, what are you trying to accomplish? What is the timeline? What is the delivery mechanism? What is the advantage?

Speaker 2:
[24:40] Yeah. Yeah. I forgot to say that amid all the income tax proposals, the president did suggest again at the State of the Union that tariffs are going to replace the income tax. And I think we should just point out that that's not really likely to be the case.

Speaker 3:
[24:58] Yeah. I would say almost expressing it as a likelihood gives it more credence. Like the idea that the likelihood would be over zero and positive, I think is a lie. It is dead wrong. Like there's nothing to support it. We don't consume enough goods from abroad to raise that type of money anyway. But we'd have to shift our consumption to have more money.

Speaker 2:
[25:20] We'd have to import more things? Yeah.

Speaker 3:
[25:22] We'd have to import more things in order to have tariffs raise enough money to replace the income tax, which is like kind of not his whole thing to begin with. So I read this really fascinating article when he became president about tariffs that were like at no point is any stated benefit of tariff compatible with each other. Like if the goal is to raise revenue, that means you have to consume from abroad. If the goal is domestic protection of industries, you shouldn't consume from abroad. So the idea that we'd have a manufacturing renaissance and incredible tax receipts to replace the income tax, like they can't happen at the same time, and that we wouldn't pay any more as consumers. Like all of it kind of falls apart on its own, none of them cohere together, and yet we find ourselves in the worst of both worlds, where we're giving the tariff money back and the manufacturing jobs have declined anyway. So, bully for you.

Speaker 2:
[26:16] So, do you find anything to like in any of these proposals?

Speaker 3:
[26:24] I mean, not really, not really.

Speaker 2:
[26:28] I mean, I had mixed feelings about Washington's being, I mean, you live in a no-income tax state. I had mixed feelings about it when I lived in Washington, because of what they tax and you get any revenue at all, because they have no income tax, right? Alcohol taxes are high, business taxes are high, real estate taxes are high. Sales tax is high.

Speaker 3:
[26:50] Yeah. I mean, in Washington, I can kind of, I see it as, you know, moving towards an income tax system would be helpful for the state, given that they have one of the most regressive tax structures in the US. It's like Florida and Washington. What's that joke that, it's a...

Speaker 2:
[27:06] There's a tax joke?

Speaker 3:
[27:08] It is, well, okay, so that just kind of primes people think it's not that funny. But it's something about the blue state spending with red state taxes, not sustainable. So Washington state, fix yourself. But I mean, I think moving towards more progressive tax structures for the state of Washington is great.

Speaker 2:
[27:27] But that's also the reason that the people are upset about being, in addition to the, does it conflict with what's in the Washington state constitution and all of those things is like, great, yeah, let's tax millionaires and no one else. But everybody also says, yeah, sooner or later, the income tax will come down to everybody else.

Speaker 3:
[27:45] Yeah, 100%. It's going to start with millionaires, but it won't end there. They'll have some type of broad system because that's the best way to generate revenue is to have a broad, simple system. Okay. So you asked me if there was anything I liked about these proposals. And I think there's things I distinctly dislike about both of them, states and federal. On the state side, what is happening? The richest states in our country are going after even more tax revenue to provide services only to the people in their state, which is richer than other states. And we are further entrenching the privilege of having to be born in a state that actually cares about its low-income population, which makes it more likely to care about its families and make those investments. I think a lot of states are feeling the just total lack of leadership on the federal level, and they're taking an initiative for their people, which is great. You know, we should help people for child care and have health insurance and good public education and all those things. But it's just such a dangerous game to make it state dependent because there are states that will always and just permanently be left behind. Because even if you were to have a millionaires tax in Mississippi, you would not get that much revenue. Not enough to pay for the things that California and Washington and Massachusetts will buy. And I don't like leaving parts of the country behind. To me, every state tax like this is fundamentally a reflection of the failure of leadership to act on the federal level. Then on the federal level, I don't think there's much controversy that the US tax system is too complicated and we need more money. So that's a pretty, I think to me is a pretty clear fix of like, make it simple, make it fair, everyone's going to have to pay a little bit more. And it's instead like further warping the tax system just makes everybody feel like a loser.

Speaker 2:
[29:41] Yeah. The other thing is that, I mean, I have feelings about the California billionaire tax. You know, no love lost between me and billionaires. I don't know any of these people, but like a tax that targets 200 people, there's 200 people who know exactly who they are. You know, are we just shooting ourselves in the foot as a state, trying to sort of, I don't know, get some kind of billionaire revenge, anti-billionaire revenge because of something that happened in Washington DC. I can't tell you how many people have asked me to sign this petition to put this on the ballot. I'm going to also tell you, I know people who work for this union. But this is bonkers. We've got a lot of problems with the variability in California's tax from year to year. This does not fix it. It's a disaster. I mean, at least, you know, Washington isn't trying to pretend that this is a temporary one year tax.

Speaker 3:
[30:43] You know, it's funny, too, because most of the complaints... Complaints. God, I sound like such a hick sometimes. You know, being back in Texas, it slips out of like, you know, most of the complaints here coming from Washington. Anyway, complaints. What you hear brought up about these taxes is that people will flee.

Speaker 2:
[31:02] The millionaire taxes.

Speaker 3:
[31:04] Yeah, like the billionaire tax or the millionaire tax is like, people will flee and they'll go to other low tax states. And then you'll have the same problem all over again, that the tax won't raise that much money. And to me, I'm like, that's kind of a specific complaint of like, the federal government is failing to enact policy that we desperately need and have needed for 25 years. And state governments are doing all they can with what they can, which is perpetuating inequality between states. But you know what the big problem is? Spielberg is going to move to the East Coast.

Speaker 2:
[31:34] That's not the problem.

Speaker 3:
[31:38] It just seems that people keep bringing up of like, they're going to flee, they're going to flee. I'm like, y'all, they kind of go wherever they want, whenever they want anyway.

Speaker 2:
[31:44] Especially billionaires. Yeah. There was this research paper where they looked at where people moved during the first years of the pandemic. And they looked at high-income earners to see where they moved and if they moved to low-income states and very few of them do. And then the argument against that research was he was looking specifically at, I can't, god, I wish I could remember if it was like top 10% of earners or something. But it is billionaires are just, they're just a group of their own like that. You can't extrapolate from what people who pull down a half million dollars a year do and extrapolate to billionaires.

Speaker 3:
[32:20] It's funny, the largest flow of people in the US in internal migration is California to Texas. And in most years, the second largest flow is Texas to California.

Speaker 2:
[32:29] Oh, yeah, exactly.

Speaker 3:
[32:30] Yeah, I think Florida was in there sometime. It depends like year to year, but like it's on net, it's a loss. But of course, California has more people. So it's like it's not a just a population, just the gross flows of people. It's just back and forth between our two states.

Speaker 2:
[32:47] There was a really great piece a few years ago that I read that was about how Texas and California are just essentially two sides of the same coin. And that one sort of is most in alignment with kind of what's happening on the national scene, and then the other is, and they just kind of, I don't know, maybe the two sides, they're sort of yin and yang, but they're like...

Speaker 3:
[33:05] We're not aliens, we're just Texans. It's like Californians and Texans, we're not like, so I think we come from like different planets, or that they're that different. I actually see the first time I went to LA, I thought this place is a lot like Austin. That was one of the first things I thought was like, the city is like a big, has an Austin feel.

Speaker 2:
[33:25] Big Austin. Yeah, which is why I think, despite all the talk about the Texanists, all the Californians moving there, they tended to move to Austin, right? They moved to cities, they didn't move to rural West Texas.

Speaker 3:
[33:41] Yeah, cities which have like separate tax structures that are also high tax, you know, what's funny is I remember the Texas Monthly was covering what happened to the Texanists, there's some amazing articles, but I think my favorite one was like a lot of them moved right before a devastating summer heat wave and then they were not there the next year.

Speaker 2:
[33:58] Yeah.

Speaker 3:
[34:00] It's real hot.

Speaker 2:
[34:02] Yeah, they didn't want cold, but they didn't want that.

Speaker 3:
[34:05] The humidity is like, no, no, but this goes back to taxes of like, what does it mean to flee taxes? Like, what does that genuinely accomplish and are we evaluating these things correctly? Like, is it really the case that like, Texas has unlocked some mystery to get people to come and it's just having low taxes or, or, you know, like, brace for impact. Like, they're not that different. The solutions for taxes and spending and affordability, we need to have the power of the federal government to do because these are national problems. They don't just affect one part of the country. It's not just Massachusetts and Washington and California that have high housing bills and high childcare bills and high medical bills. It's not as if they're isolated to those places that are tapping into resources. They're federal issues and the fundamental differences between states and the fleeing just seems like a straw man.

Speaker 2:
[34:59] Hey.

Speaker 3:
[35:01] Like it's pulling, hey, my god, the wheels are turning in real time, right? Because it's bringing up cultural differences between red states and blue states, which we don't talk about on the show, but cultural differences between different parts of the country as like what's really at stake for a billionaire's tax when like, in fact, you should be so mad that California has to deal with this at all.

Speaker 2:
[35:23] Nice. Yes. Yes.

Speaker 3:
[35:25] Yes.

Speaker 2:
[35:26] Really?

Speaker 3:
[35:26] Are you just saying that?

Speaker 2:
[35:28] No, I think, well, sorry. That's my editor brain going, yes, that's how you would write that piece. Take a note. Take a note. Okay.

Speaker 3:
[35:39] Oh my God.

Speaker 2:
[35:40] She's so happy now.

Speaker 3:
[35:42] I mean, we were talking about taxes before. I was already happy. All right. So the straw man is that we use the cultural differences between states that have historical GOP versus democratic leadership to criticize revenue raising bills like the millionaires billionaires taxes. And it's a distraction because that discussion would lead you to, here's why texas is better and more people move to texas or florida or.

Speaker 2:
[36:10] Oh my god. If I read one more story about that.

Speaker 3:
[36:12] They've been posting them since I was in college. I'm like, aren't you bored with this?

Speaker 2:
[36:16] Yes. Yes.

Speaker 3:
[36:18] Okay.

Speaker 2:
[36:18] I'm bored with it.

Speaker 3:
[36:19] Because it's a straw man because it's take, I'm sure that my readers don't need me to explain what a straw man is, but I do feel proud of myself every time I get there. It's a straw man because it leads you to like, what's a better place to live in and like, what does it say that people leave California when it's distracting you from the real problem, which is federal failure.

Speaker 2:
[36:38] Yeah. Okay.

Speaker 3:
[36:41] So, optimism?

Speaker 2:
[36:44] Yeah, I mean, my optimistic takeaway about this is that the notions about the gross problems of income inequality and wealth inequality has sunken. Like, it took 20 years, I would say, at least from the Occupy Wall Street moment to now, but that it's no longer debatable that income inequality is a problem, broadly politically understood, and that's why we're seeing these taxes. Yeah. That's my optimism. What's yours?

Speaker 3:
[37:14] I think that that's great, that we're just, it's not the same world it was in 2000, when we were basically voting for a massive tax cut with a surplus to now, it feels like every issue on the ballot is how to raise taxes on rich people.

Speaker 2:
[37:32] And I also think it also suggests that people feel like there's real appetite for tax reform. And tax reform, that isn't necessarily about carving out more exemptions for specific people and specific industries and specific businesses. I think that we're beginning to see through that, that making the tax code more complex is always about giving lower taxes to someone. And it makes the tax code less fair. And it doesn't mean we need a flat tax. But it just means that the complexity is the enemy of revenue.

Speaker 3:
[38:10] I think complexity is the enemy of fairness as well.

Speaker 2:
[38:13] Yeah.

Speaker 3:
[38:14] I just want like one person poised to be a federal leader, say, this has gotten too complicated and everybody feels like a loser. We're simplifying the tax code and we're going to start by getting rid of every deduction, every credit, every adjustment and start from there. Start from a simple tax code as opposed to starting from the one that we have.

Speaker 2:
[38:35] Yeah.

Speaker 3:
[38:37] And people, there is a salience for it. I don't think there was 25 years ago or even 15 years ago, but there's certainly a salience for it now because I think people are tired of not having solutions to these problems.

Speaker 2:
[38:50] All right, let's take a break.

Speaker 3:
[38:54] All right, we're back with Executive Orders, where we fix problems large and small, meaningful and petty in our society. Robin, what is your executive order?

Speaker 2:
[39:04] In the Republic of Rauzi, anyone who designs restaurant menus or theater programs must be forced to first read that program as they've designed it in the lighting of the theater or restaurant that where it will have to be red while wearing tinted sunglasses. I went to, this is going to sound pretentious, but I went to the opera last week, which was great by the way. But the type was like eight point type in like this thin type in reverse on top of an image. And there's 1950s lighting in the door of the Chandler Pavilion. I was like, I have progressive glasses. I cannot read a word of this.

Speaker 3:
[39:50] The Houston Symphony Orchestra sometimes does child shows. And that was like, I've never seen like the theater program that looked or a symphony program that looked like this. Like it was bright white. The font was huge. It had lots of pictures.

Speaker 2:
[40:02] For all of us.

Speaker 3:
[40:03] Like really, like every song had the exact amount of time that the song was and like massive font. So if you're like kid got upset, you could leave and then come back. And I was like, this is so helpful.

Speaker 2:
[40:14] So genius.

Speaker 3:
[40:17] Now, it also had a scavenger hunt in there, which I assume you might not need.

Speaker 2:
[40:22] I just want to be able to read what the ingredients are in the food I might be ordering because it might have cinnamon. Right?

Speaker 3:
[40:30] Long time outlaw in the Rauzi Republic. All right. In the Republic of Rauzi. Apologies. Okay. My executive order in the Edwards Republic is that if you complain about how much you pay in taxes, the federal government is going to send you a free shirt. And the shirt is going to say, we'll do an A-B test. So some of the shirts will say, I'm better than you on the front. And then on the back it says, because I pay taxes and no one else does. Or it'll say on the front, we live in a society. And then on the back it would say, but you wouldn't know it the way I complain about taxes. Just some kind of like super sarcastic t-shirt, a way for the federal government to express like, oh my God, 300 million people in this country, you have the worst and hardest through our publicly voted upon tax system. You sir, here's a t-shirt for your troubles.

Speaker 2:
[41:25] I mean, I think you need it on a hat, but okay.

Speaker 3:
[41:28] Yeah, or yeah, further AB testing could come on a hat, it could come on a sash, it could come on like a crown, like an actual crown. I just hit the microphone, I'm so excited. I think there's lots of ways to convey.

Speaker 2:
[41:40] You've already designed an I'm better than poor people sash, right?

Speaker 3:
[41:43] I do have an I'm better than poor people sash. So this is just, I'm better than poor people, I pay taxes. I mean, it's just like the beauty queen of people. And then in the end they all go, we all get the like, we live in a society. The brand is labeled, we live in a society. And it's just, that's my merch brand that I move into when I start my own home goods line.

Speaker 2:
[42:07] My sponsor civilization.

Speaker 3:
[42:09] We live in a society. Okay, this show does not have any paid sponsors, but we do have spiritual sponsors that get us through our day, our recording, our lives, our week, the afternoon, the outline for the podcast episode. Robin, who's your spiritual sponsor?

Speaker 2:
[42:29] So my spiritual sponsor this last week or so has been people who text me to tell me the dreams that they've had that I'm in. So I was apparently punching out a bully at somebody's wedding in a high school friend's dream recently, and I heard from a guy I have not been in contact with for 10 years. I used to freelance for him, and he had a dream I was swimming with alligators. I don't know what kind of life I'm living out in your dreams, but I actually love getting these messages. They're hilarious.

Speaker 3:
[43:03] Oh my God, Dream Robin.

Speaker 2:
[43:05] Yeah, Dream Robin.

Speaker 3:
[43:06] This is amazing.

Speaker 2:
[43:06] Dream Robin is tough.

Speaker 3:
[43:09] That's what I expect, Dream Robin, from someone who is a moon Aries rising Gemini. We're going deep into dream meanings. My spiritual sponsor this week is the WNBA's new contract.

Speaker 2:
[43:22] Oh, anything specific about it? You had some really great maternity clause?

Speaker 3:
[43:28] Yes. They're about to get a massive pay raise, incredible revenue sharing, the league minimum salary is going to go way up. Listeners may not know that the WNBA's new contract had a very important consultant, and that was Nobel laureate Claudia Golden, whose research is on gender wage inequality and just how much the lifetime earnings of women have been suppressed because of discrimination, how women's role in the economy has evolved, how they are or are not paid for it. She had a research team come, look at lifetime earnings tables of WNBA players, how long they were in the league, what they earned, and she apparently was real stoic. They described whenever there was panic in the WNBA negotiations, she'd be like, it's math, you need more. It's not really hard, they're going to come at you with some stuff, but this is what the math says, and just math in here. So my spiritual sponsor is a WNBA contract that lights out more pay for the players. And yeah, I just, I mean, you love to see it.

Speaker 2:
[44:39] I love that Claudia Golden did that. That's amazing. I have to go find that story.

Speaker 3:
[44:44] This is an economic show, not a women's sports show, but it will be soon.

Speaker 2:
[44:46] Sooner or later, they'll all come together. Okay, Sophie Lalonde edits the Optimist Economy podcast, and yes, it was even longer than this one, she started working. Our video excerpts are by Andy Robinson, and you can find and share those on YouTube, TikTok, Instagram, or LinkedIn. And if you're on Substack, we have transcripts of the show on Substack, and even free subscribers to our Substack can join the chat room, unless you're a billionaire, in which case there's a one-time fee of 0.1% of your wealth to fund our podcast.

Speaker 3:
[45:20] A fun chat in the Substack subscriber chat recently was whether or not I'm actually a capitalist, or if I'm a fact, a social democrat, which I was weighing in on too. And the Optimist Economy is supported by listeners like you. News from us is that if you have a donor-advised fund or an IRA distribution you don't know what to do with, we would love to help you with that problem. We absolutely and truly appreciate all of the contributions on any platform, but of course, we keep the largest share when you give at optimisteconomy.com. And now we need to snap out of the idea.