New study compares economic policies in Texas and California | KLBK | KAMC

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AUSTIN (KXAN) – The wave of companies, and in turn people, leaving California for Texas has caught the attention of researchers at two of the nation’s top academic institutions.

Professors at the University of Texas at Austin have teamed up with their Stanford counterparts to determine how the two states’ economic policies stack up and which state works best.

Their conclusion – it’s not so black and white.

The study points out that some may speculate that Texas’ approach of cutting taxes and limiting government works better than California’s model of higher taxes and tighter regulations when it comes to fostering growth. economic.

At the same time, California remains the dominant destination for venture capital funding, and Texas’ decline in spending on social programs has its drawbacks.

Government size

The study noted that Texas and California differ significantly in the size of their state and local governments.

While state and local governments in California spent $ 16,145 per capita in 2019, Texas only spent $ 10,024 per capita.

Using these numbers, the researchers concluded that government is over 60% more important in the Golden State than in the Lone Star State.

Taxes

California has the highest marginal personal income tax rate in the country, while Texas has none.

As a result, per capita tax revenue in California was $ 7,326 per capita, compared to $ 4,709 in Texas.

The researchers say that this difference is entirely explained by income taxes.

On the other hand, property tax revenues in Texas are higher than in California ($ 2,098 versus $ 1,840). What makes this difference all the more striking is that the median home value in California is almost three times as high as in Texas, according to the researchers.

Health policy

One in three Californians gets their health insurance through the state’s Medicaid program, while only one in six Texans gets their state insurance.

While California chose to expand its Medicaid program under the Affordable Care Act, Texas was one of 11 states that did not.

As a result, 18.4% of Texans do not have health insurance, compared to just 7.7% of Californians.

“This is one of those areas where, in the study, it is quite unequivocal in terms of access to insurance, access to health care, especially among low-income people,” said Shelia Olmstead, professor at the University of Texas. “California is doing better than Texas on this front. “

Education

With a total of 11.7 million students, the public education systems in California and Texas are two of the largest in the country.

The two also share a similar number of “English learners”, around 19%.

Despite these similarities, California spends over $ 3,000 more per student than Texas, according to data for the 2017-18 school year.

However, California also has the highest student-teacher ratio of any state, at 23: 1, compared to 15: 1 in Texas.

In this case, Texas appears to outperform California with 90 percent of students graduating from high school, compared to 85 percent in California.

“Just looking at this raw data, it doesn’t appear that California on average offers better quality education for its public school students,” Olmstead said.

Energy and environment

California has much stricter rules for protecting the environment, including stricter rules on new motor vehicle emissions.

However, these rules arose due to the state’s severe air pollution prior to the Clean Air Act of 1970. Although air quality has improved, California still struggles with d other states, including Texas, according to the study.

“It would actually be a lot worse in California if they didn’t have these stricter regulations,” Olmstead said.

The authors also found that both states have poor reliability of the power grid. Between 2000 and 2016, Texas electricity customers suffered 127 major power outages. Only one other state had more, California, with 201 major outages.

What is better?

The authors of the study conclude that both states have reason to be celebratory, especially for their economic success.

While Texas experienced a population boom, California experienced an increase in per capita income and GDP.

“When you think of states as laboratories for democracy, California and Texas are wonderful examples,” Olmstead said. “They have such different approaches, and yet they’re both so big, and their influence is so strong in the United States as a whole and both have had really brilliant years in terms of income and jobs, etc. . Interestingly, the two models can work in different ways, but they both have their limitations.


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