Charles Tiebout's Chickens

When I first started my doctoral work I discovered an economic geographer named Charles Tiebout.  In 1956 he wrote an article called the "Pure Theory of Local Expenditures" which argued for an economic consideration in where people live based on ambience.   If I want good schools for my kids. I will search out an area based on price of housing and how good the schools are.   It was one of those little gems that got me to think about many things differently.   

But this week brought two issues where I rethought about Tiebout's brilliance.   The Internal Revenue Service published data on the migration by AGI (adjusted gross income) of taxpayers among the various states.  It turns out that Tiebout was right.   In the 2017 Tax Act one provision to find revenue and to make the tax system more equitable (so the rich would actually pay more taxes than middle and lower income taxpayers) the State and Local Tax Deduction was limited to $10,000.   That means that a huge subsidy which formerly went from middle and lower income taxpayers in low tax states to very high income taxpayers in high tax states was limited.   It should have been long ago.

SO after the limit was adopted, what happened?  As the chart above clearly shows lots of high income taxpayers migrated from high tax to low tax states.   California alone lost almost $18 billion in AGI.  And as I have discussed before the California revenue system is heavily dependent on having lots of very high income taxpayers.   If those high income taxpayers disappear, there will be less revenue for the state to spend on all the public services a state offers.   

The argument for reinstating the unlimited deduction for state and local taxes is a bit odd.  Some wizards claim that the SLOT prevents "double taxation" (yup they actually make that claim!).   But the distributional effects of the deduction are clear - almost 90% of the value of the deduction (either before it was capped or after) go to very high income taxpayers who live in high tax states.   SLOT is like asking a truck driver in Idaho to help subsidize a venture capitalist in California.

The disappearance of wealthy taxpayers from the California tax roles is explained by Tiebout's hypothesis.  What is a mystery is another disappearance, no less cataclysmic.  We live in the village of Fair Oaks.  It is an odd community - mixes of incomes and backgrounds.   Our honorary mayor attains office by who can raise the most money for some civic activity.   Most importantly, the village is famous for its feral chickens.  Often when I am walking Indiana in the morning, and on a phone call, the chickens will be squawking and one of the people on the call will wonder where I am.   The village has numerous chicken memorabilia on shop walls.   We even have an annual chicken festival (along with the St. Patrick's Dinner in the Community Clubhouse and the Fair Oaks Theater Festival in the summer (where the plays are occasionally interrupted by chicken accompaniment) which helps to define our community.  Those might be called our "Tiebout amenities" and for us that is pretty good.

But about two months ago the chicken population around the square (across from the Stockman's Bar - a classic saloon) our birds began disappearing.  I've asked around and no one seems to know why the chickens  disappeared.  When I walk in the morning some people have argued that they vanished because of a) attacks of coyotes (yes you do occasionally see coyotes and deer, but not in the square); b) the homeless population down by the river, or c) or some rare form of avian influenza.  But no one believes any of that.  The two Guinea Hens, which were interlopers into the brood, still are in the park and seem to be fine.

What has not been discussed to this point is whether their disappearance can be explained by Tiebout.   Were our chickens very high income and did they move to Florida?   Did some other locality offer better amenities than a free place to roam and plenty of chicken feed?

OF COURSE IT's TRUE EXCEPT FOR A COUPLE OF LIES (PROGRESS REPORT)

The book is with one final editor who is called a design editor.  I searched for someone who had good experience in getting the design elements right. Those are things like the cover photo and the internal organization of the book.  A friend, who has published three books, recommended an editor in Arizona and   I spoke to her.  I  also looked at her website and thought it was a good match.   She will produce a final manuscript which will be print ready for both an ebook and a paperback.   There is one unresolved issue - one of my editors suggested that we divide the book into three volumes (each of about 150 pages) - one on family, one on life and one on ideas/beliefs.   In the end my design editor may recommend to put it all in one volume.  That would make marketing simpler and at the same time it could increase the utility of the volume especially for pressing flowers!