Forget Kansas, look at South Dakota

There’s a lot of media attention on the “supply-side policies” of Governor Brownbeck in Kansas, which have not been successful.  But when you take a closer look, it’s actually South Dakota, not Kansas, which is the true supply-side story. Kansas cut its top income tax rate to 4.6%, but that’s only slightly below Massachusetts’s top rate.  Biotech firms are not going to relocate from Cambridge to Topeka.  In contrast, South Dakota has no state income tax.  I did a long post on this state a few months ago, and today Tyler Cowen linked to a WSJ story on the booming economy in Sioux Falls.  Nowhere does the WSJ mention the lack of a state income tax.

States with no state income tax tend to have faster population growth than their closest neighbors.  Not always, but most of the time.  Unfortunately, there aren’t many states with no income tax, and many of them are “unusual” in some way, such as Alaska, Nevada, Texas and Florida.  I put more weight on states like South Dakota and Tennessee, which are otherwise quite unremarkable.  They’ve also done relatively well.


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19 Responses to “Forget Kansas, look at South Dakota”

  1. Gravatar of Benjamin Cole Benjamin Cole
    19. March 2017 at 16:02

    The sentiments of this post are probably true.

    On the other hand, if California unzoned property, it would have a business and development boom that would last for a couple generations.

  2. Gravatar of d d
    19. March 2017 at 16:21

    yea, us Texans have that oil and gas bug. just means that we get tax money from oil and gas production. and the jobs boom here? seems to be because we have had a lot low wage jobs come in. higher wage jobs tend to go else where

  3. Gravatar of E. Harding E. Harding
    19. March 2017 at 17:49

    And Trump got the highest percentage of the vote in South Dakota since Ronald Reagan. Every single county in South Dakota swung toward this champion of the people, despite its lack of exposure to trade.

    Some important counties in Tennessee (those containing Knoxville, Memphis, and Nashville and its rich suburbs) did, however, swing away from Trump bigly.

  4. Gravatar of ssumner ssumner
    19. March 2017 at 17:59

    d, Yeah, I guess that’s why Louisiana and Oklahoma are also booming.

    BTW, California has far more poverty than Texas.

  5. Gravatar of ssumner ssumner
    19. March 2017 at 18:01

    Harding, I’ve made similar points. Trump loses Youngstown, Ohio (yes, by less than Romney) and wins areas that are massive beneficiaries of “trade deals”.

    Politics is complicated.

  6. Gravatar of d d
    20. March 2017 at 06:34

    oh and SD also has oil and gas. so that was making them a booming state or was until fracking slow down hit (just like Ok, Tx, and LA, oh and AK)

    and even CA. just not as big a part of their economy

  7. Gravatar of morgan warstler morgan warstler
    20. March 2017 at 06:43

    “Harding, I’ve made similar points. Trump loses Youngstown, Ohio (yes, by less than Romney) and wins areas that are massive beneficiaries of “trade deals”.

    Politics is complicated.”

    Scott, it’s not hard to grok politics – just remember relative status…

    You gotta do Economic Theory inside a ruleset that some people have a veto if your policies reduce their relative status vs others in the out group.

    THE THING IS, this isn’t hard! I know you find it super distasteful and it’s more fun to simply run your utility measures as you see fit…

    BUT political policy requires that you use the hegemony’s utility measures…

    But once you agree to that one tiny rule, you can INVENT GREAT POLICY! That’s why NGDPLT is great! It can be sold to Trump voters! Of course, you don’t like doing that… But it’s totes doable.

    It’s why #Uber4Welfare works too, but you get that….

  8. Gravatar of Randomize Randomize
    20. March 2017 at 07:43

    As mentioned above, the gas and shale oil boom sets South Dakota apart as much as their tax structure. Unsure of how to hold all else equal with trying to talk about the effects of income taxes.

  9. Gravatar of ssumner ssumner
    20. March 2017 at 09:36

    d and Randomize, You are confusing South Dakota with North Dakota (which has the fracking boom.) In any case, Sioux Falls has been booming for decades.

  10. Gravatar of Bill Ellis Bill Ellis
    20. March 2017 at 13:06

    Scott’s like…”Yeah !!!… South Dakota !!!”
    …..I’m like… Seriously?… WTF…
    Dude…!!!

    “South Dakota’s Economic Growth Continued to Decline in Second Quarter 2016
    While 41 states experienced an increase in gross domestic product (GDP) in the second quarter of 2016, South Dakota’s economy lagged, according to a recent release from the U.S. Bureau of Economic Analysis. South Dakota’s GDP declined by 1.0 percent in the second quarter, placing the state at No. 46 in the nation for economic growth.

    Regionally, South Dakota outperformed North Dakota and Wyoming, which experienced declines of 5.6 and 5.3 percent, respectively. Nebraska led the region in growth at 4.3 percent, while Minnesota experienced no growth and Iowa increased modestly at 1.3 percent.”

    LMAO….http://www.southdakotadashboard.org/south-dakota-s-economic-growth-continued-to-decline-in-second-quarter-2016

    South Dekotas top five industriies…
    AG..

  11. Gravatar of Bill Ellis Bill Ellis
    20. March 2017 at 13:10

    South Dakota had the fastest growing economy in the nation during the third quarter of 2016, according to the U.S. Bureau of Economic Analysis. The Rushmore State’s gross domestic product (GDP) increased by growth 7.1 percent during the third quarter, while New Mexico ranked last in the nation with a 0.1 percent decline.

    The third quarter is typically South Dakota’s strongest as agricultural producers make their biggest sales. In 2016, the agricultural sector grew by 2.01 percent in the third quarter and accounted for the largest share of the state’s robust economic growth.

    The finance and insurance sector grew 1.69 percent in South Dakota in the third quarter, compared to 9.0 percent nationally. In this sector, the Rushmore State trailed No. 1 Delaware, with 2.50 percent growth, but outpaced No. 3 Iowa, which had 1.38 percent growth.

    “The wholesale trade and government sectors grew 0.75 and 0.39 percent, respectively. Real estate, education, and non-durable goods posted negative growth.

    http://www.southdakotadashboard.org/agriculture-and-finance-industries-drive-south-dakota-to-no-1-gdp-growth

  12. Gravatar of Bill Ellis Bill Ellis
    20. March 2017 at 13:14

    It’s Cherry picking Time !!!…hey they are ripe NOW… if you wait..they will surely be gone… SO… WTFN? Pick them…???

    http://www.southdakotadashboard.org/economic-output-gdp#0-7131-g

    South Dakota has lagged the nation for growth of its gross domestic product (GDP) over the past four years. The economy actually shrunk between 2011 and 2012 as GDP declined -0.9 percent, according to the federal data in the chart above.

    Between 2012 and 2015, the Rushmore State did not keep up with national GDP growth, as the chart shows. Still, the state logged a record $40.7 billion GDP in 2015.

    The weakness in South Dakota’s economy in recent years follows a period of expansion before and during the Great Recession when the rate of growth for the state’s GDP exceeded that of the nation. For four years, between 2007 and 2009 and in 2011, South Dakota matched or bested national GDP growth. During the Great Recession between 2008 and 2009, when the US experienced a decline in GDP, South Dakota recorded 1 percent growth from 2008 to 2009. In 2011, as the economy recovered and corn prices rose, South Dakota recorded an eye-popping 5 percent increase in GDP growth. (The state’s recent high for GDP growth came in 2002 at 10.8 percent.)…

    South Dakota is a horrible model for extrapolating to the USA…

  13. Gravatar of Bill Ellis Bill Ellis
    20. March 2017 at 13:30

    South Dakota is like Texas… Texas is all about oil…SD is all about ag…

    Conservates love to point to Texas as a paragon of supply side virtues…but they always conflate the benefits of Texas’s oil economy worth their supply side policies… UNTIL…
    Oil is forcibly backed out of the equation by a drop in prices… THEN…Suddenly the “Texas” argument is hollow…

    Then…Suddenly Texas is ignored…

    Then..suddnly, a one-quarter blip in SD become the new “PROOF ”

    Texas gets to…in practice… tax …the rest of the USA…(and world) for supplying us with oil…

    While SD, does not get that benefit of passing on a tax for their natural resources like texas does… they are, however, bound up…in good time and bad… with a commodity they produce..(food )

  14. Gravatar of Bill Ellis Bill Ellis
    20. March 2017 at 15:10

    Supply side “sucess” stories are easy to come by when you can use minority rule to force others to pay for it… (thanks to a mistake by our founding fathers )

    Yep…California has a lot of poverty…but for every one dollar bill, we send to DC…we only get three stinking quarters back…

    Meanwhile …states like South Dakota… that are among America’s biggest welfare queens…get lauded by Cons…

    California is head and shoulds the biggest food producer in the USA…We produce almost all of the produce you eat fresh…we produce …big… if not the biggest chunks… of everything else America eats…
    Yet… we are Tenth on the list when it comes to ag subsidies from the FEDs…

    But… To keep prices low enuff for the rest of America not to punish us politically for it…we must pay poverty wages… and import sub-American wage labor on top of it… (that’s what they keep selling anyway…and it works )

    We also subsidize your “snack almonds” another way…The ag we produce is both labor and WATER intensive..(Not much dry farming in Cal.. )
    ….It’s not only that we get screwed by the feds and the rest of America on ag subsidies… Your fucking cheap salads are subsidized by the average Califriona joe like me…

    80 % of OUR (drought time, even) water ends up in the produce sections of your grocery store… And you and the Ag industry get that water at super discounts…

    Cal Households use …tops…2% of the water in California …But a lot the burden of “conserving” water is put on the shoulders of the average guy… it makes no sense. you can’t squeeze blood from a stone…

    But sense or not…we do subsidize ag and industry.. by paying some of the highest water/sewage rates in the nation…

    Ever get a 500.00 dollar water bill ? It’s not uncommon in my area at all… (three or four bath homes with large lots and pools )

    Yep…I pay a freaking 500.00 water bill.. so you can eat a cheap tangerine…

    OH..and our votes don’t count at all…or are deeply discounted to the point of worthlessness…
    …so there will be nothing to stop the rest of the USA from continuing to fuck and disrespect us…

    California is like America’s abused spouse… and like any abusive realtionship…the abuser won’t agree to a divorce…

    and worse… this time…the abuser is the judge too…

    So…No divorce…

    So..the abuse is not going to end…
    but do you have to keep being such big dicks about it America …???

    We don’t fucking need to do this for California’s benift…..ag is less than 2% of our economy…

    Don’t thank us…noooo… demean us for an ethic you believe leads to softness and laziness…As you suck at our teat… as we literally nourish you…

    When it come to California…America conservatives and red states are nothing but…ungrateful…malicious…welfare queens…

  15. Gravatar of Jason Smith Jason Smith
    20. March 2017 at 15:38

    I’m wondering why if SD is so “unremarkable” most of my credit card and loan statements come via SD?

  16. Gravatar of ssumner ssumner
    20. March 2017 at 17:18

    Bill, There’s so much misinformation there I won’t bother to respond.

    Jason. Maybe because it has no state income tax?

  17. Gravatar of Bill Ellis Bill Ellis
    21. March 2017 at 11:32

    Scott.. Almost all the ag we do in the central valley could be done Better in Mexico, the Caribbean or somewhere else in the new world…Even other areas of the US…
    Califiona is not employing the central valley to it’s highest use and it depends on sub- USA wages to make it possible… (local multipliers inevitably suffer …)

    When the coming debate on “guest workers” comes up…where are you gonna be ?

    Can you deny that “guest workers” devalue labor? I know you think labor is OVER valued….so you may think it’s a good thing… but can you deny the downward pressure it puts on labor ?

  18. Gravatar of ssumner ssumner
    21. March 2017 at 17:06

    Bill, You said:

    “I know you think . . . ”

    You know nothing about what I think. Just go away.

  19. Gravatar of Bill Ellis Bill Ellis
    22. March 2017 at 08:38

    Scott… when I first started posting on your threads I’m sure I told that if you ever wanted me to stop bothering you… all you had to do was ask and I would comply…

    So you have… and I will. Your threads…or anybody’s threads should be regarded as your home..your castle…

    So see you on the internet…

    In parting…I’d like to thank you for sparing with me and providing me with a strange and weirdly capable menagerie of sparring partners….
    I really respect you a great deal… I hope to keep seeing your name pop up…

    but mostly I disagree with you… and yep…I don’t know what you think…any more than I can know what any other human thinks…( But that never stops you …does it ? )

    But here is what I do think…That you totally understand healthcare and insurance economics… And you KNOW that what Krugman, Delong, Thoma, Reich, Yglesias, Kiff…And Clinton, and OBAMA …say about Insurance econ fundamentally FUCKING true…

    But the Truth don’t serve you… It doesn’t serve your “morality”…

    so you hide from it…!!!
    YOU ! who sprung forward…seeing the Fed tragically causing the great recession out of ignorance of NGDPLT ! …You! who pitched yourself into the great maw of establishment econ to save the world…!!!
    YOU !…a hero to some…
    ….Is a complete coward when it comes to facing the utilitarian and moral dilemma of healthcare…

    The Biggest story of the year is an econ story…and you can’t talk about it… Becuase you KNOW who is really right…

    ——————————————————————-

    For quite a while, I’ve been thinking of doing a portrait series…of economist I read… I’ve had a pretty consistent image in my head of how I would approach your portrait…
    Of the economist I read…yours is the most “tangible” in my head…

    (Krugman, who I have read and learned the most from, is always in flux (i don’t think I’ll every be able to do a good Krugman ) )

    I’m gonna finally start the series…
    I’ll send you a link when I’ve done yours…

    The image in my head reflects the parts of my perception of you I admire…
    If you don’t like what I do with your image, that’s cool..just know that I am not out to disrespect you… though I’m not about to embellish your faults in any way either…

    ——————————————————————

    ANd now…. the last sentiment I would leave on your threads…

    I sincerely hope for nothing but fulfillment and happiness for you and all the people you love…

    Bill Ellis…

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