TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

A Member of the Law Professor Blogs Network

Thursday, December 31, 2009

WSJ: Are Taxes the Root of Unhappiness?

Wall Street Journal op-ed, Are Taxes the Root of Unhappiness? States with the Highest Taxes Also Rank as the Unhappiest, by Allysia Finley (Assistant Editor, opinionjournal.com):

Does living in a blue state make people blue? It seems so, according to a new study in Science magazine that ranks states according to their happiness. [Andrew J. Oswald (University of Warwick, Department of Economics) & Stephen Wu (Hamilton College, Department of Economics), Objective Confirmation of Subjective Measures of Human Well-Being: Evidence from the U.S.A., Science, Dec. 18, 2009.]  The study finds that New Yorkers are the unhappiest people in America and their neighbors in Connecticut come in a close second, followed by Michigan, Indiana, New Jersey, California, and Illinois. And the happiest states? Drum roll, please…Louisiana, Hawaii, Florida, Tennessee, and Arizona.

Eight of the ten happiest states lean right while eight of the ten unhappiest tilt left. While the study by no means proves that being liberal makes people unhappy, it does reflect some of the unfortunate implications of living in a blue state. ...

[H]igh taxes seem to be a big reason---ostensibly an even bigger reason than weather given that California is one of the unhappiest states and inclement Louisiana is the happiest. ...  According to the Tax Foundation 2008 analysis, three of the top five unhappiest states—New York, Connecticut and New Jersey—have the highest state-local tax burdens. On the other hand, four of the top five happiest states—Louisiana, Florida, Tennessee and Arizona—are among the states with the lowest state-local tax burdens. True, correlation doesn't prove causation, and high taxes alone don't always make people miserable, but there's something going on here.

In states with high property, income, and sales taxes like New York, people have less money to spend on other things that make them happy. They have less money to spend on vacations, hobbies, home improvements, eating out and child care. Another problem may be that people receive a low return on their tax dollars. The study's authors note that people are least happy in states that impose high taxes but don't provide matching public benefits (e.g. good highways to relieve congestion and reduce commute times). It's in states where taxes disproportionately subsidize public employee pensions and entitlement programs, but don't much improve the general public's quality of life, that people are most unhappy.

This intuitively makes sense. If you're paying more than a third of your income in taxes, as many New Yorkers do, then you expect to realize the benefits from your hard-earned tax dollars. You expect quality schools, good roads, low crime rates, and quick commutes. You expect your local and state governments to be responsive to your needs, not to the cash flows of entrenched public employee unions and other special interests.

Here is a 50-state ranking (and the District of Columbia) of the happiest and least-taxed states, along with each state's vote in the 2008 presidential election (blue for Obama, red for McCain):

Happiness Rank

State

Tax Rank

1

Louisiana

2

2

Hawaii

37

3

Florida

24

4

Tennessee

15

5

Arizona

28

6

Mississippi

3

7

Montana

9

8

South Carolina

13

9

Alabama

7

10

Maine

18

11

Alaska

1

12

North Carolina

24

13

Wyoming

16

14

Idaho

33

15

South Dakota

4

16

Texas

19

17

Arkansas

14

18

Vermont

32

19

Georgia

34

20

Oklahoma

11

21

Colorado

35

22

Delaware

31

23

Utah

38

24

New Mexico

8

25

North Dakota

5

26

Minnesota

43

27

New Hampshire

29

28

Virginia

46

29

Wisconsin

39

30

Oregon

25

31

Iowa

12

32

Kansas

21

33

Nebraska

20

34

West Virginia

6

35

Kentucky

10

36

Washington

44

37

D.C.

40

38

Missouri

17

39

Nevada

22

40

Maryland

17

41

Pennsylvania

41

42

Rhode Island

42

43

Massachusetts

45

44

Ohio

30

45

Illinois

36

46

California

48

47

Indiana

23

48

Michigan

27

49

New Jersey

50

50

Connecticut

51

51

New York

49

http://taxprof.typepad.com/taxprof_blog/2009/12/wsj--2.html

News, Tax | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341c4eab53ef01287690fcbd970c

Listed below are links to weblogs that reference WSJ: Are Taxes the Root of Unhappiness?:

Comments

This is an interesting read, but I think there is a problem with using the data in this way. The states that pay the most tax are the ones with a lot of high-income residents. So the numbers used to calculate the tax rank are heavily biased toward the wealthy. Unless the happiness survey was weighted according to tax bracket, I think this is an apples-to-oranges comparison.

Posted by: Frank Gerratana | Jan 1, 2010 3:09:43 PM

The study is a pre-publication draft in Science Express (not Science magazine itself), so is not freely available online. However, the backup material is, and it suggests that *wealth*, not taxes, is what makes people unhappy. See Figure S2, "The Inverse Correlation Between Fully Adjusted Life Satisfaction and Median Household Income across 51 States of the USA." So throw away your Wall Street Journals, folks. You'll be happy you did.
'Gwailo
http://0-www.sciencemag.org.opac.sfsu.edu/cgi/data/science.1180606/DC1/2

Posted by: Gwailo | Jan 2, 2010 10:21:59 PM