Monday, April 27, 2009

Chart of the Day

Jim Lindgren at the Volokh Conspiracy looked at differences between states with high and low unemployment. Here's my chart of the results:

NOfP table via Volokh

Lindgren explains:
In the six states with the highest unemployment rates, the average top state income tax bracket is 8.05%. All but Michigan have marginal tax rates of at least 7% (and Michigan has a very high unionization rate).

On the other hand, the average top tax bracket for the six states with the lowest unemployment is only 4.4%, with 4 of the 6 states having a top marginal rate of 5.54% or less.

Further, union representation averages 14.1% in the six high unemployment states, with a median of 17.4%. All but the Carolinas are among the most unionized states in the nation (and the Carolinas have relatively high marginal income tax rates of 7% and 7.75%).

Putting this together, 3 of the 6 states with the highest unemployment (California, Oregon, and Rhode Island) have both high marginal income tax rates and high union representation. Michigan has high unionization but moderate marginal income tax rates, and the Carolinas have high marginal income taxes, but low unionization rates.

Among the 6 states with the lowest jobless rates, 4 have low unionization rates and no state income tax or modest marginal rates and a fifth (Nebraska) has average income tax rates and low unionization. The exception is Iowa, which has average unionization rates (13%) and high marginal income taxes (8.98%).
Also, check out Carpe Diem's analysis of another common indicator of state economic outlook.


Frank said...

I wonder why he only compares the top 6 and the bottom 6? Why not the top 7 and bottom 7? Is it because Nevada, the state with the 7th highest unemployment rate, has NO INCOME TAX, and would therefore mess up the conclusions the author would like us to draw?

Wry Mouth said...

Rats.... my state government (CA) has been patiently trying to explain to me that raising all sorts of taxes will save our foundering, disintegrating state!

How confusing!

Carl said...

Frank--that's one reason I used median rather than average. Have you tried to calculate the difference had Nevada been included?