

Why Texas is doing so much better economically than the rest of the nation - jfornear
http://www.slate.com/id/2250999/

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anguslong
Just celebrated my 1-year anniversary here in Austin, Texas. Took 8 years to
convince wife to make the move. Been fantastic so far. Article is right-on in
many regards:

Business/startup/tech climate is strong. (btw: norm is mucho less of the
douche than SXSW crowd)

Housing: we moved from Seattle. Home prices roughly half (in 'burbs, near
exceptional schools). Taxes are roughly double -- a big reason for low home
prices, besides all the cheap land.

Lifestyle: Austin's very similar in people-climate to Seattle. Active,
outdoor-loving, low-key, friendly folks.

Climate: summer unbelievably hot, rest of the year, pretty fantastic (for a
Seattle boy).

While I've seen a bit of the Red-State stereotype, personal freedom and a live
and let live attitude (personally, in government, and business) is much more
the norm -- and perhaps much of the reason for riding the recession a bit
smoother.

~~~
pjhyett
The first time I flew into Austin, I hopped into a cab at the airport. On the
way to the hotel, the cabbie asked if I had ever been to Austin before, to
which I responded that I had never been to Texas.

He turned around, looked directly at me, and said "Austin ain't Texas son."

~~~
procrastitron
I've lived in Texas for most of my life, imoving between Dallas and Austin,
and I can attest to the spirit of what the cab driver told you; Austin is
radically different from the rest of the state. Austin is a staunchly liberal
college town while the rest of the state is extremely right-wing.

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credo
See <http://www.nytimes.com/2010/04/12/opinion/12krugman.html> where Krugman
compares Georgia and Texas.

The two states have a lot in common, but Texas has strong consumer-protection
regulation, Georgia lacked these government regulations.

Krugman points out that the absence of these regulations landed Georgia in
their current disastrous situation.

For many people, comparing Georgia and Texas and highlighting the strong
consumer-protection regulations in Texas may not be as much fun as bashing
California, but this is worth a read

~~~
brown9-2
Agreed. It seems too simplistic to chalk thus up to just the energy sector
alone.

A good quote from the Krugman piece:

 _Why didn’t the same thing happen in Texas? The most likely answer,
surprisingly, is that Texas had strong consumer-protection regulation. In
particular, Texas law made it difficult for homeowners to treat their homes as
piggybanks, extracting cash by increasing the size of their mortgages. Georgia
lacked any similar protections (and the Bush administration blocked the
state’s efforts to restrict subprime lending directly). And Georgia suffered
from the difference._

~~~
gojomo
It wasn't just Bush people weakening the traditional "20% equity" threshold.
Lots of political and government efforts, including the government-sponsored
mortgage subsidizers Fannie and Freddie (deeply linked with Dem party
leadership), were bending longstanding practice to promote home ownership by
all and loans to previously "underserved" borrowers.

Like Texas, Canada also held fast to the traditional 20% homeowner equity
requirement and was similarly spared the same extreme housing bubble and
crash.

(Now, if some buckaroo lenders want to make risky no-money-down loans, that'd
be OK -- as long as public policy wasn't cheering them on, fraud on both sides
of the table was vigorously prosecuted, and the public treasury wasn't
insuring the transactions. When government and big business are all pulling in
the same feel-good, don't-ask-uncomfortable-questions direction, there's
danger.)

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lotharbot
What the article doesn't explain is why Texas is able to sustain 700,000 jobs
geared toward export manufacturing, or why Texas continues to attract
engineering talent.

At least part of it is Texas' business-friendly and employee-friendly tax
climate.

~~~
_delirium
To most employees, Texas's much lower property values and more stable property
market (as this article analyzes) have a lot bigger impact on the economics
than the taxes, which are only marginally lower than California's when you add
all the different taxes up (TX collects about $8k per resident in state&local,
while CA collects about $9.5k).

Employee-friendliness overall varies. I'd say the employment laws are
generally worse for employee freedom than California's, mainly because TX
courts are more willing to enforce noncompete clauses (though they aren't as
willing to as some states).

~~~
roboneal
Where are you getting your state & local tax numbers?

The numbers I found show total state & local tax collected per capita for
Texas is $3,580 vs. $5,028 for California. That's a 40% increase over Texas.
Nothing to sneeze at.

Texas: <http://www.taxfoundation.org/taxdata/show/482.html>

Cali: <http://www.taxfoundation.org/taxdata/show/443.html>

Even your numbers show a 20% penalty for living in Cali.

~~~
_delirium
I was going by total state+local govt revenues divided by population, which
ends up allocating as taxes things like vehicle registration fees, excise
taxes, alcohol taxes, corporate taxes, etc., probably even lottery revenues.
The Tax Foundation's method might be more meaningful, depending on what you're
comparing.

But either way it's not all that much of a difference in absolute terms, even
if it is in percentage terms. I mean, $1500 on average. Even if you make a lot
over the average, it still seems like Texas's biggest win will be the $300,000
difference in the price of a house, or $1000/mo difference in rent, not a few
$k savings in taxes.

~~~
roboneal
That's $1500 PER CAPITA (every man, woman & child). All things being equal -
$6K a year for a family of 4 is consequential.

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bengebre
Texas really did behave entirely differently during the recession (employment-
wise) than the rest of the country. Not only did the state start adding jobs
in the middle of last year, there are now more jobs today than before the
recession:

<http://www.deptofnumbers.com/unemployment/texas/#employment>

(Note: link is to a site I maintain)

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cmars232
If independence and economic autonomy work well at the state level, I wonder
what it could do at the local level in resilient communities.

~~~
kevinholesh
Or at the federal level.

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jeromec
_Unlike many of its neighbors, Texas has state laws that prohibited consumers
from using home-equity lines of credit to increase borrowing to more than 80
percent of the value of their homes_

This certainly would fight inflationary/bubbly pressures. Forced financial
responsibility. Nice. I wonder how many other states follow this model.

~~~
gojomo
For a long time, Texas prohibited second mortgages against a residence -- so
even this allowance was a liberalization.

I've also seen mentioned elsewhere that state banking regulation and
monitoring was tightened after the S&L crisis of the 80's, which helped
discourage the fast-and-loose real-estate loanmaking that drove the latest
bubble elsewhere.

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gojomo
Another point that could have been mentioned: the Texas legislature is part-
time, and only meets every other year(!). They're not the professional
busybodies of California's legislature, thinking up new "juice bills" year-
round.

~~~
guelo
Texas 2009: "The governor signed 1,656 bills and resolutions, vetoed 38 and
allowed 12 to become law without his signature "
<http://www.txddc.state.tx.us/public_policy/txlegis.asp>

California 2009: 675 signed, 257 vetoes <http://gov.ca.gov/bills/#all>

~~~
nathanieljones
That's like saying Amy's software project is better because it has fewer files
than Bob's. Bob may just be better at keeping code in separate, logical units
than Amy, who just crams everything into several large bills... I mean, files.

Anybody want to run a diff on the California and Texas legislation?

~~~
evanrmurphy
Tried but files were corrupted.

~~~
arch_hunter
California's or Texas's?

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00joe
One reason Texas avoided the housing bubble is the property taxes are very
high here. The tax rate is 4.5-5% of value. In California its 1%. Also,
interest rates are lower in California, a foreclosure can happen in as little
as 120 days which reduces the lenders risk and your interest rate. The result
is a lot of carrying costs for investing in residential real estate.

~~~
anamax
> The tax rate is 4.5-5% of value. In California its 1%.

Oh really? Then Santa Clara county owes me a bunch of money. (And no, this
isn't a "my house lost value" issue. My property taxes went up last year, just
like they did the year before, and the year before that.)

CA does have "non recourse" purchase mortgages. That means that the bank that
loaned you the money that you use to buy a house can't come after you after
foreclosure if they can't recover what you owe.

Note that I wrote "the money that you use to buy" - if you refinance, that
bank can come after you for any money that they can't recover in foreclosure.

~~~
00joe
yes really, its set by a 1979 amendment.

~~~
anamax
I'm looking at a "County of Santa Clara (CA) Secured Property Tax Bill." (I'm
putting it away with other 2009 records.)

Right under the line that says "1% Maximum Tax Levy" in the "Taxing Agency Tax
Rate" table, tha bill lists the percentages for several additional levies. The
subtotal labelled "Tot Assessed Val Rate" is more than 1% and there are
additional percentages below that, which aren't included in said "Tot". And
then there are several other "Special Assessments" which are listed by dollar
figure, not percentage.

In the "Tax Rate Per $100" column, it has both the >1% "Tot Assessed Val Rate"
figure and the total of the percentages listed below it in the "Agency/Rate"
table mentioned above. Both numbers are multiplied by corresponding numbers in
the "Assessed Value" column. The total of the special assessments in dollars
is added to those products.

I'm paying more than 1%. They may not call the amounts over 1% "property tax",
but Santa Clara County is collecting them on the "Secured Property Tax Bill",
just like the amount that they call property tax.

In the section

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aresant
Summary:

Energy is driving Texas economy. Suprisingly not from oil, but from natural
gas and wind power. Texas has has its own electricity grid which has allowed
it to embrace alternative energy technology with minimal hurdles. In addition,
exports are rising - almost 25% in Q1 vs 2009.

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cma
Are undocumented workers even counted in the unemployment rate? What
percentage of Texas' workers are undocumented?

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popschedule
Just moved my web development business to Texas from Los Angeles, no regrets.

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trevelyan
Oil at $80+ a barrel?

~~~
pxlpshr
Why does that surprise you? Your $1-2k laptop was built and shipped from China
thanks to it. The world depends on oil and gas, sorry to disappoint but won't
be moving away from our dependance anytime soon -- not in my lifetime.

~~~
eru
There can be gradual shifts in either direction. Complete independence from
oil won't come anytime soon, though.

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RyanMcGreal
tl;dr: oil is trading at $80 a barrel.

