Quote from waggie945:
I'm done with you.
Calling me a Nazi and a Saddam Hussein sympathizer is the last straw.
Your Arrogance and Ego obviously keep you from thinking with what God gave you.
In the meantime, I will very much enjoy our lovely weather out here in the Golden State - - - looking forward to a high of 66 degrees mid-week.
The State of Taxes
The Wall Street Journal
September 2, 2003
No matter how California's recall turns out, the state's voters have already benefited from one healthy byproduct: a long-overdue public debate about the Golden State's tax climate, which is the opposite of its weather.
While Arnold Schwarzenegger complains that Californians are taxed from the moment they flush their toilets in the morning, Democrats and media liberals insist they're not taxed enough. Lieutenant Governor Cruz Bustamante is proposing as part of his campaign to squeeze an additional $8 billion a year in what he calls "tough love" levies out of taxpayers to repair his and Governor Gray Davis's record budget deficit.
Before they let Mr. Bustamante and the Los Angeles Times raid their wallets even further, however, Californians may want to consult a recent study of state tax climates by the Washington, D.C.-based Tax Foundation. The study found that California boasts the second most onerous tax system for business among the 50 states, second only to that great role model of Mississippi. With the exception of property taxes, which voters limited through Proposition 13, just about every tax Sacramento levies ranks among the highest or most burdensome in America.
Start with the individual income tax, which has six brackets and is steeply progressive. Its top marginal rate of 9.3% is among the nation's highest but, worse, it kicks in at just $38,000 of income. This means that the likes of nurses and janitors already pay to the state a dime of every $1 in higher salary they receive; of course in return they get Mr. Bustamante's "love."
It's just as bad if you form a business, with most small business owners paying at the onerous individual rate. As for bigger business, the state's 8.8% corporate tax rate is the highest in the West and the 10th highest in the country. Some states will make up for high income-tax rates with lower sales taxes, but not California. Voracious Sacramento hits consumers with a state and local sales tax rate that peaks at 8.75% -- again, among the nation's highest.
There's also a complex and expensive tax compliance arrangement that involves determining what's subject to double- and alternative minimum taxation. Add it all up, say Tax Foundation analysts, and "statistically speaking, every aspect of California's tax system is antagonistic to business development and economic growth."
No wonder employment in California has lagged the rest of the country in recent years. High tax rates discourage entrepreneurship and make it difficult, particularly for small businesses, to obtain the capital necessary to expand operations and create more jobs. As the nearby chart shows, California seems to have a structural jobless rate that is at least half a percentage point higher than the national average. Even during the Internet-tech boom of the late 1990s, the state couldn't close that jobless gap.
The problem is exacerbated by the state's tax-friendlier neighbors. At $3,670 per capita, California's state and local tax burden is sixth-highest in the nation. That's far higher than neighboring Nevada ($2,742), Arizona ($2,677) and Oregon ($2,682 and no sales tax). Among Western states, Texas, Utah and New Mexico are even better bargains.
Not only are California's people leaving for these other shores -- the years between 1995 and 2000 saw an exodus of more than 600,000 -- but so is its industry. And apparently no relief is in sight. In a recent California Business Roundtable survey of 400 companies, 20% of them said they were planning to move or expand out of state. As the Journal's Steven Vames pointed out in a story last month, even far-off Indiana, having eliminated its corporate income tax and cut property taxes by 23%, is making a play for disgruntled business owners on the left coast.
The higher taxes being pushed by California Democrats today will do no more to reverse these dismal trends than they did the last time they were tried by California Republicans -- which wasn't that long ago. In 1991 then-Governor Pete Wilson signed off on a $7.3 billion tax package designed to close a budget gap. Temporary 10% and 11% income tax brackets (historic highs) were instituted. The state sales tax was increased by more than a penny and expanded to include snack foods and newspapers.
The result, as GOP candidate Tom McClintock likes to remind voters, is that the tax hike produced less than half the revenue projected, the state's general revenue fund dropped by $1 billion and retail sales fell off a cliff. Over the next three years, personal incomes in the state fell by more than 5%, even while the rest of the nation was enjoying a recovery. In sharp contrast, when these temporary tax brackets expired in 1995, California's general fund revenue grew by 80% over the next six years.
Mr. Bustamante apparently thinks Californians are lemmings, ready to follow him off the tax cliff one more time. If they do, look for another increase in property values -- in Nevada, Oregon, Arizona and Idaho.
