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November 28, 2013

BOHANON: The middle class in red and blue states

(Continued)

No state has a more clean-energy mandates than California. The state is a bastion of blue-state progressive politics with a public sector that raises revenue from a highly graduated income tax, tightly regulates business enterprise and offers the Left’s dream of government programs to help those in need.

The middle class and poor are said to need California-like policies to deliver economic “justice” — except that facts have a funny way of getting in the way of rhetoric. California’s middle-class household numbers declined by 72,000 while its upper-income households increased by 115,000 and lower-income households increased by 234,000. More rich folks, a lot more poor folks and a decline in those in the middle: Isn’t this what progressives hate?

Compare this with the biggest, reddest, most gun-toting, execution-driven, regulation-averse, low-tax, redneck state of Texas. The Lone Star state saw an increase of poor households of 57,000 along with an increase of middle-income households of 144,000 and an increase of 256,000 upper-income households. It seems the middle class thrives in a state where policies are ever so unenlightened.

Of course, state-level public policy is not the only factor that influences the growth or decline of households of particular income levels. But the anecdotal pattern is clear: The blue-state concern is less of a problem in the red states. Maybe limited government, low taxes and low-cost carbon-based-energy increase economic growth and lead to a more equitable distribution of income.

Cecil Bohanon, Ph.D., an adjunct scholar with the Indiana Policy Review Foundation, is a professor of economics at Ball State University.

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