
The Real Value of $100 in Each US State - nreece
http://taxfoundation.org/blog/real-value-100-each-state-2016
======
grandalf
One other consequence of this is that a cleaning lady in San Francisco may
make $70K per year and be near the poverty line, yet be in the same tax
bracket as a professional living in Nebraska who is living well above the
poverty line.

It would be interesting to see an illustration of how regressive Federal tax
brackets are when you consider the state-by-state cost of living differences.
Some of the most populous states have the highest cost of living.

~~~
DougN7
My first thought was "why doesn't the cleaning lady move?" And that lead to a
thought experiment: what if everyone moved to Nebraska for a more comfortable
life. Prices would go up. The people would experience a Nebraska winter and be
willing to have less 'real' money and move back to California. And that's
right where we are in the real world. You can't balance just part of life
(taxes) when there are other imbalances (benefits of place) that can't be
balanced. If costs/life style were comparable in cost between CA and NE, there
would be a massive influx into CA. Economics is awesome - it explains so much!

~~~
morgante
The benefits of California are vastly overstated.

Almost nothing about the climate (I _like_ winter) or culture appeals to me,
yet I'm pulled towards there to succeed in a tech career. This is simply
network effects in action, except that unfortunately this network has been
built in one of the locales in the US with some of the most aggressively anti-
growth policies possible. Things would be much better if tech was centered
around somewhere like Chicago or even New York.

~~~
jasonkester
Thought experiment: Would developer salaries in general be as high as they are
today if we hadn't happened to choose an area with such high cost of living
area as our nexus, with the consequential requirement to pay so much to
attract talent?

That is, would a guy like me (or you) be able to pull in multi-six-figures a
year to telecommute to the Bay Area from out in the sticks if there weren't so
many poor souls physically there keeping rates up for the rest of us?

What would things look like if the tech hub were in Ft. Worth TX instead (or
Scott's Bluff, Nebraska), with hundreds of miles of flat empty cheap land in
all directions to keep housing prices down near zero.

~~~
eloisant
The cost of living follows salaries of the tech sector, not the other way
around.

Even the tech hub was not on a peninsula, you'd still have an expensive center
and poor people would have to suffer a long commute like East Bay people do in
the Bay Area.

Just look at London or Paris: it's not cheap despite not having the same
geographical problem. It's not as expensive as the Bay Area because there are
many people with various jobs, not just highly paid tech workers.

~~~
whack
It's a combination of demand and city-policies. San Francisco has a lower
population density than queens, but the same housing price levels as
Manhattan. If the city got its act together and built up a housing density
that's on par with Manhattan, cost of living would fall dramatically.

Good governance matters. It makes a huge difference in cost-of-living. The way
SF is run, it's almost as though people _want_ the cost-of-living to be as
high as possible.

~~~
softawre
> The way SF is run, it's almost as though people want the cost-of-living to
> be as high as possible.

Surely you're joking? Of course that's what they want. SF people, home owners,
are voting on SF policy. Do you want to lose half the value of your house?

~~~
dragonwriter
> SF people, home owners, are voting on SF policy. Do you want to lose half
> the value of your house?

Its more complex than that, as SF people voting on policy also include
renters, and even if rent control insulates them from directly paying for
price _increases_ , market price declines save them money (and both increases
and declines affect local costs of other goods, so they affect CoL even if
they don't directly affect existing renters rent payments.) But, renters are
largely people who have decided the trade-off of quality for cost at the
current price _does_ make sense, so they are less likely than outsiders who
might _want_ to move to SF if it was more affordable to make trade-offs that
impact the qualities that they prefer in SF for lower prices, even if it would
reduce their cost of living.

------
drewg123
There is a vast difference in the value of $100 within states too. For
example, western New York state (eg, Buffalo area) is far cheaper than NYC in
terms of median home prices, supermarket prices, etc. Similarly, Richmond VA
is far cheaper than the Northern Virginia / DC suburbs area.

~~~
cpastre2
Tax Foundation here. This is a great point and we have a county-by-county
breakdown in the works. We will publish that next week, so stay tuned!

~~~
startupdiscuss
You might also consider weighting the state average by population. Populations
tend to cluster in cities so I think you'll see the "experienced" cost go
higher.

~~~
RRider
Nope. Houston housing costs are less than California cities. Indeed, the
median home cost in the whole state of Texas is 1/3 of California.

------
doctorpangloss
The crazy thing isn't the real value of $100 spent on private goods and
services. It's the value of $100 spent in taxes.

Federal tax receipts in California, Illinois and New York subsidize Florida,
Texas and much of the south.[0] The hypocrisy of fiscal conservatism is that
it is enabled by giant high-tax Democratic states.

[0] [https://wallethub.com/edu/states-most-least-dependent-on-
the...](https://wallethub.com/edu/states-most-least-dependent-on-the-federal-
government/2700/)

~~~
bpodgursky
Other comments have good points, but the main thing IMO is that tax receipts
are low in the midwest / south is that what they produce (food) is incredibly
cheap now days.

The US produces a ridiculous surplus of food with a tiny portion of the
population because we're incredibly good at doing it cheaply. High volume and
low cost == low prices == low tax revenue. It doesn't mean low real-world
value or produced value.

You could "fix" it by trying to balance revenues by playing with tax rates,
but all you'll accomplish is making food expensive in CA/NY, shifting dollars
around, and making everything more complicated than it is now.

There are plenty of other reasons tax revenue registers in NY/CA; anyone --
from anywhere in the country -- with a retirement account is funneling it
through some NY mutual fund, and entertainment is still mostly produced in CA.
If NY didn't exist, it would be managed somewhere else; it's not that NY is
producing magical value nobody else understands. It's just most convenient.

If Hollywood stopped producing movies... we'd all be a bit more bored
temporarily, but it's again going to get bought from somewhere else.

~~~
dalore
You realise food is cheap because of taxes/subsidies. If we had to pay the
true cost of food it would be expensive. And the politician that did wouldn't
be liked much as well.

~~~
thowfaraway
Can you show the calculation where subsidies to food are greater than the cost
of regulation of food?

Sugar is particularly regulated, with the government strict quotas and tariffs
on imports, and domestic allotments to produces. If you produce more than your
allotment, it is illegal to sell in the US. The whole scheme is to hold prices
high to support famers (agribusiness really), not low.

~~~
dalore
Sugar is regulated and the price is kept high for farmers. But not for the
consumers which is my point. Farmers are given subsidies in all crops so they
can sell them in the global market at below market rates, not only for the
population, but to compete with out countries doing the same thing.

------
nether
How does this affect online pricing? Assuming something bought online has the
same price for all shipping locations, this would mean that people in
expensive states are more likely to save money by shopping online?

~~~
ryporter
Much of the difference is in land/home values, but, yes, it would mean that
people in states like Hawaii would save more by shopping online. (This of
course assumes that the online store doesn't pass along the increased
transportation cost in the form of higher shipping.)

~~~
ghaff
Alaska and Hawaii are pretty much outliers. Essentially everything is
expensive whether it's at a local store or because of shipping surcharges.
(Although Amazon Prime still covers both states--which I imagine is quite a
big win for residents of those states compared to historically.)

------
fma
I see that the tax foundation says Georgia is $108, but there is a huge
caveat. I've lived in Georgia the past 8 years. I've lived in both middle of
no where and currently live in Atlanta. The value of $100 is vastly different
between those two areas. Georgia is mostly rural, except for Atlanta. My old
apartment, 1 bedroom a bath, I can still rent for $575 a month. Lakeside view
with a pool, 10 minutes from work. Anyone reading this, most likely will be
moving to Atlanta. The COLA is still cheap, but understand the caveat.

Meanwhile, I grew up in Florida, where it says $100 is pretty much $100. There
are lots of major cities in Florida and cost of living is more distributed.

------
ryporter
I'd be more interested in the real value of $100 of _income_ in each state,
which would account for differences in state income tax. On such a map, WA
would look significantly better, and states such as CA and NY would look even
worse.

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enraged_camel
Nice! I would be interested in a more granular version of this to be able to
compare different cities.

~~~
netghost
Then you're in luck, because the article links to the original data, which
includes this. See the links in the right hand side bar.

[http://www.bea.gov/newsreleases/regional/rpp/rpp_newsrelease...](http://www.bea.gov/newsreleases/regional/rpp/rpp_newsrelease.htm)

------
camiller
I'm not suggesting a cause/effect relationship here, but there is an
interesting rough correlation between the map in the article and the red/blue
political map...

[https://en.wikipedia.org/wiki/Red_states_and_blue_states#/me...](https://en.wikipedia.org/wiki/Red_states_and_blue_states#/media/File:Red_state,_blue_state.svg)

~~~
mkstowegnv
Funny I saw a definite "you get what you pay for" correlation - with the
"highest dollar value" states tending to align with the states with the lowest
measures in health, education and other quality of life indicators.
[https://en.wikipedia.org/wiki/List_of_U.S._states_by_educati...](https://en.wikipedia.org/wiki/List_of_U.S._states_by_educational_attainment)
[https://en.wikipedia.org/wiki/List_of_U.S._states_by_life_ex...](https://en.wikipedia.org/wiki/List_of_U.S._states_by_life_expectancy)

~~~
micahbright
> Commiefornia: 80% High School Graduation Rate

Correlation not found

------
mkane848
Can someone please explain why NJ is such a fucked state? Is it just because
of the population density, is it the years of government corruption? I just
don't get how cost of living here is so nuts and how our economy feels
so..."poor"?

------
ecesena
It would be nice to compare cities to countries. For example, I think Nevada
vs Las Vegas would be radically different.

~~~
cptskippy
I was thinking the same thing and also on the cities to state level.

My though is that dense urban cities (e.g. New York, LA, San Francisco) are
going to have a lower value due to the high cost of real-estate and also rural
areas where a lack of population density leads to distribution inefficiencies
in material goods raising their cost. States like Ohio and Georgia with large
suburban areas have a balance of cheaper real-estate and high enough
population density lower the distribution costs of material goods.

------
Pamar
Does anybody know of a comparable study for Euro countries?

~~~
pibi
Not exactly the same but you can find comparative prices for 100€ in EU here:
[http://ec.europa.eu/eurostat/statistics-
explained/index.php/...](http://ec.europa.eu/eurostat/statistics-
explained/index.php/Comparative_price_levels_of_consumer_goods_and_services)

------
wodenokoto
Shouldn't one of the states act like a baseline? I couldn't find anywhere,
where $100 was worth $100. That seems kinda odd to me.

~~~
Confusion
$100 is worth $100 on average

~~~
imtringued
And the average person or state doesn't exist.

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sorokod
If I squint just a little this looks very similar to this:
[https://en.wikipedia.org/wiki/Political_party_strength_in_U....](https://en.wikipedia.org/wiki/Political_party_strength_in_U.S._states#/media/File:ElectoralCollege2012.svg)

------
RRider
This is a helpful graphic, but I think it’s incomplete -- and substantially
understates CA's COL. That’s because it measures what AFTER TAX dollars buy
(as I understand it). Hence income tax free states have an even bigger “bang
for the buck” advantage. I prefer to use the Missouri COL comparison of
states:
[https://www.missourieconomy.org/indicators/cost_of_living/](https://www.missourieconomy.org/indicators/cost_of_living/)

------
ArtDev
Oh look, all the places I will never move to.

Oregon is no longer the bargain it once was. Though I am sure I could move to
a cheaper area.

Living internationally is where its at. Numbeo.com gets down to the details
(thought their interface is due for an overhaul). [http://www.numbeo.com/cost-
of-living/compare_cities.jsp?coun...](http://www.numbeo.com/cost-of-
living/compare_cities.jsp?country1=Spain&country2=United+States&city1=Malaga&city2=Portland%2C+OR)

------
RangerScience
Note that DC is the most in the low direction, at ~$84.

~~~
cbr
Cities in general have higher costs, so it's not too surprising that the only
entry in the data that is just city is going to have the highest costs.

------
eslaught
I wonder what this would look like applied specifically to housing. I suspect
that people in expensive areas are paying significantly more (both absolute
and as a percentage) on housing. In some ways, this is just a side effect of
that phenomenon---housing prices eventually trickle down to everything else.

~~~
codeddesign
Relatively speaking. I live in the mountains of North Carolina and the housing
prices are double that of Charlotte. Everything is custom build, there aren't
prefab houses. Labor is relatively the same, but food and gas cost's more. You
can't really go by state. You'd have to go by county with multiple variables
to get a real picture.

------
munificent
Like others note, using states as your unit of granularity here because
nullifies any useful conclusions you could take from this.

This is basically just a map of "how many dense cities does each state have?"
and tells you nothing more interesting than that.

A per-county map would be much better.

------
pklausler
The correlation between their map and the 2012 electoral college map is
striking! The light-colored (expensive) states are the blue states and the
dark-colored (cheap) states are the red states, more or less.

------
MrMullen
They need to break the states up too. Southern California $100 is a lot
different than a Northern California $100. $100 living along the coast is a
lot different than $100 living inland.

~~~
djrogers
SoCal and NorCal aren't as different as you'd think - having lived in both
places and as one who spends a lot of time between them, I doubt there'd be
much noticeable at all.

Now Central Valley life can be a lot cheaper than coastal life - no doubt
about that. I have a vacation home in he Central Valley and _everything_ we do
here and for the home is cheaper. Painting, repair work, labor, gas, auto and
boat repairs, everything.

~~~
MrMullen
I have lived in both and along the coast and there is a difference between
North and South.

------
aacook
Now I'm curious about Puerto Rico and other territories. Anyone know the basis
of the research?

~~~
ArtDev
numbeo.com is quite good: [http://www.numbeo.com/cost-of-
living/country_result.jsp?coun...](http://www.numbeo.com/cost-of-
living/country_result.jsp?country=Puerto+Rico)

------
dredmorbius
Know your source. The Tax Foundation:

[http://www.sourcewatch.org/index.php/Tax_Foundation](http://www.sourcewatch.org/index.php/Tax_Foundation)

~~~
pc86
What are you implying? The article is basically a graphical representation of
some math done on publicly available figures. If the figures or math are
wrong, or if the graphical representations are disingenuous, explain why. But
to just say "yeah, well it's The Tax Foundation so whatever" is a cop out to
avoid actually discussing the point the article attempts to make.

~~~
dredmorbius
I'm implying that knowing the source of a study or policy paper is useful
context.

I'm not making further judgement.

I am highlighting SourceWatch (and similar resources) as useful and pointing
out their existence.

------
wnevets
so the places with low population densities tend to have lower cost of living.
Not really breaking news.

------
JoeAltmaier
How can most states be above average?

~~~
virtualSatai
I'm in no means an expert in this, but I think it's because of the relative
sizes of the economies in each state [1]. California and New York are very
large in terms of GDP/GSP and will therefore move this weighted average
accordingly.

[1]
[https://en.wikipedia.org/wiki/List_of_U.S._states_by_GDP](https://en.wikipedia.org/wiki/List_of_U.S._states_by_GDP)

------
rahelzer
This is kind of like saying why should you buy a $200 mechanical keyboard when
you can get a perfectly serviceable model for $15?

Its not even false.

------
pc86
> _In other words, by this measure, if you have $50,000 in after-tax income in
> Mississippi, you would have to have after-tax earnings of $68,000 in the
> District of Columbia just to afford the same overall standard of living._

I imagine it is much easier to earn $68k after taxes in DC than it is to earn
$50k after taxes in Mississippi.

~~~
yompers888
And that is why people move to cities (yes, I know that MS has cities). What
point are you trying to make?

~~~
pc86
Assuming the $68k in DC / $50k in MS is the benchmark, my point was that while
it's much cheaper to reach that benchmark in MS, you're probably much more
likely to reach it in DC. So a random person in DC is probably more likely to
earn $68k or more than a random person in MS is to earn $50k or more.

