Doing Business in Expensive Cities

" Right here's something that is captain obvious to everybody who lives in Massachusetts New Jersey New York California Florida. Living in big cities on the coast is expensive. So expensive that a rich person and a small town might not even make it a place like New York or Chicago but don't take our word fort. Let's talk about this would be given out -- University of Michigan assistant economics professor. Because David thanks for coming on the show this solving -- hammering a while back on a blog on fox business dot com and it's about the idea that if you make more than two -- thousand dollars a year that you are considered rich. If you make a buck fifty -- of the 2000 dollars a year in Kansas City. You probably live -- a lot better than somebody bring home 250000. Dollars a year in Connecticut or New York right. That's pretty much true. There's we could actually adjust our taxes for the people who are in -- more expensive cities. -- get a bit of a bigger break -- of people on Kansas City. It'll Malcolm Gladwell that your -- he's obviously bestselling author he talked about the the best kept secret American politics is that. Taxing expensive states more because they are theoretically rich. Doesn't just not add anything it detracts from growth and wealth and property values."

" Well there it is that middle class families on the coasts. Are any better off the middle class families in the middle of the country and yet they're still making more but that's just compensate them for the higher cost of living and now the best jobs seem to be on the coast than what the federal government is doing that effectively taxed the people. For taking those high paying highly productive jobs on the -- and that it sort of compressing the country the kind of spread people out and keep them. In in the American -- and while that might have some benefits it does keep our GDP growing at a faster rate."

" And hit more on that last point because the national bureau of economic research grants available at -- the summary on their website talked about just this -- when you saw that. Which is basically your point that people leave these jobs say like a pharmaceutical company in New Jersey where there. You know producing you know high profitability items and -- electro property patents et cetera. Because they're sick of high taxes and then moving to areas where there may be producing but not producing to the amount that will continue to lift the GDP in the United States. "

" But what's happening is that when when you when you didn't raise a family it's very hard to maintain -- lifestyle. And some place like the San Francisco Bay Area -- the New York metropolitan area. And as you need for housing goes and you need to find schools if this doesn't become not affordable especially after taxes. To afford these places and that is true also report families because they don't qualify. For the same kind of benefits and these big cities that they would in the small town. Now what a lot of the -- with who want to do fill that they'd like to move to a small rural town take a job at Wal-Mart get underneath the poverty line. And collect benefits like Medicaid and other benefits. That would that would actually help them make their ends -- so it's not just something that affects. The -- and also affects the middle class and --"

" You know and I went and made my blog I compared an incoming Massachusetts based on -- house -- found real for not commented saving -- simulating from Kansas City started getting on my case you know saying they listen if you live in Boston and or San Francisco you've got access to museums a lot of the cultural aspects. That may -- they don't have as much in plenty in the middle the country so there's the balance. We get targeted cultural side all day but the reality of it is the data is then right at me. The the high wages don't balance absolve outwit the high taxes -- the net loser proposition is and it."

" Yeah -- the whole quality of life aspect museums and stuff like that but doesn't show up in wages that shows up and higher housing prices. Though if you or if you're living in Honolulu and it's extremely expensive you don't deserve a tax break for that. But if you're living in Chicago or living in New York and you're being paid a lot of money that's mainly for the cost of living on the -- does have some pretty special thing going -- But as far as. If you're making more money by moving to you know one of these high powered cities you actually should get a tax break from now that I think coming from congress -- anytime soon they've got to be representatives from Wyoming South Dakota. And Kansas the make anything like this ever politically feasible but it would still be a probably good idea and."

" Am I guess I'm just politically naive did you look at the map of the voting and on all the blue states and high tax agents theoretically your voting for an increase in taxes on themselves. You'll think the political map should be flip flopped but. I guess I'm just naive. Well that's that's the question somebody brought up and you know what's what's the matter with Kansas they think would be paying last. But yet they can be complaining more thought I actually haven't quite figured that out myself it -- that perhaps. There are wealthier people who live on the coast and they might be more willing. Two chip then then people who live in the middle who arguably are making as much from it and it got bigger families. And so there they're looking to make and yet in another way all right -- we listen we got to producers here Joe Werner. And Catherine -- from Kansas City I'm going to put them on our special what's the matter with Kansas that's going to be our series next week. And they're going to do it that's Internet and city Missouri did get the point David are you write us week actually a very doubt if this beautiful art museums good -- and we would thank you very much David."