San Diego Tax Fighters

Voice: (858) 530-3027

Email: RRider@san.rr.com

Tuesday, 13 December, 2011

Press Release – Authored by Richard Rider, Chairman

PPIC survey showing big support for Governor Jerry Brown’s proposed tax increases cleverly omits adverse effects of soaking the rich

AT LAST!  A workable progressive solution to California’s income inequality problem. Raise taxes big-time on the state’s millionaires, and drive the rich out of the Golden State.  Problem solved!

A new PPIC poll show that a comfortable majority of likely California voters support Governor Jerry Brown’s proposed tax increases. But the poll omitted crucial facts. Not surprising, since, in spite of its carefully cultivated image as an objective think tank, PPIC is clearly is a left of center organization.

BACKGROUND: Governor Brown is putting on the ballot (doubtless via a labor union funded petition drive) a proposition to raise the state sales tax another ½% while increasing taxes on the hated California millionaires by almost 20% (to 12.3%, BY FAR the highest in the nation).    CA ALREADY has the highest state sales tax. The tax will be voted on in November, 2012, but if passed, the income tax will be RETROACTIVE to January of 2012.

Here’s the actual PPIC polling question asked: “Governor Brown has proposed a plan to help close the state’s budget deficit over the next five years. The plan, which would be put before voters in November, would raise $7 billion annually through a temporary, four-year, half-cent sales tax increase and a temporary, five-year income tax increase on those earning more than $250,000. Do you favor or oppose this proposal?”

http://www.ppic.org/content/pubs/survey/S_1211MBS.pdf Page 13

No mention is made of the amount of the income tax increase, the retroactive nature of the tax, the rank of those two taxes compared to other states and – MOST IMPORTANT – the potential adverse consequences of such a punitive income tax increase on “the rich.”

Here’s an EXCELLENT up-to-date chart on the maximum income tax brackets of the 50 states. This is a MUST VIEW graphic:

http://www.twitpic.com/7qhjyb/full

The unstated (and patently false) assumption of proponents and this survey is that the rich will just grin and bear it. But while few people will leave the U.S. because of high taxes, they WILL leave a state.

And do. Just ask Tiger Woods, or the Williams sisters (the tennis greats) — former California residents who now live in income tax free Florida.

Ask Maryland about soaking the rich. After Maryland modestly raised their millionaires’ tax, the following year one out of eight state millionaires did not file a Maryland state income tax – most of the missing millionaires had shifted their domicile to another state.

Not only did Maryland collect less of the “millionaire’s tax” surcharge than projected — they lost the REST of the taxes that these departed millionaires used to pay in Maryland. Indeed, the state collected less income tax from millionaires as a group than they did the year before. And that’s not counting the other state taxes that these “whales” used to pay while residing in the state. Last I heard, prominent Democrats there were calling for a repeal of the tax. And note that the Maryland tax increase was FAR less than the one proposed for California.
http://open.salon.com/blog/richard_rider/2011/04/08/overtaxed_maryland_millionaires_go_missing_1

When the voters better understand this unintended adverse consequence of sticking it to the rich, perhaps the voting results will be quite different than this uninformative poll.

For those who still think we Californians are undertaxed, I include below my latest revised “Breaking Bad” fact sheet. Read it and weep.

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Breaking Bad: California vs. the Other States

by Richard Rider, Chairman, San Diego Tax Fighters

Version 1.793 Revised: 3 December, 2011

Updated version online at: http://open.salon.com/blog/Richard_Rider

Email: RRider@san.rr.com

Phone: 858-530-3027

Facebook blog page: www.Facebook.com/Richard.Rider

Here’s a depressing but documented comparison of California taxes and economic climate with the rest of the states. The news is breaking bad, and getting worse (twice a month, I update crucial data on this fact sheet):

REVISED: California has the 3rd worst state income tax in the nation. 9.3% tax bracket starts at $46,766 for people filing as individuals. 10.3% tax starts at $1,000,000. Governor Brown is putting on the ballot a prop to change the “millionaires’ tax” to 12.3%, starting at $500,000. If approved, CA will be #1 in income tax rates. http://www.taxfoundation.org/files/bp59_es.pdf

Highest state sales tax rate in the nation. 7.25% (as of 1 July, 2011 – does not include local sales taxes).

http://www.taxfoundation.org/files/bp60.pdf Table #15

California corporate income tax rate (8.84%) is the highest west of the Mississippi (our economic competitors) except for Alaska.
http://www.taxfoundation.org/files/bp59.pdf Table #8 – we are 8th highest nationwide.

Fourth highest capital gains tax 9.3%
http://www.thereibrain.com/realestate-blog/capital-gains-tax-rates-state-by-state/109/

UPDATE: CA has the 2nd highest gas tax (averaging 67.5 cents/gallon) in the nation (October, 2011). National average is 48.8 cents.
http://www.api.org/statistics/fueltaxes/ (also CA has the highest diesel tax – 76.5 cents/gallon. Nat’l average 53.9 cents)

California is ranked 14th highest in per capita property taxes (including commercial) – the only major tax where we are not in the worst ten states. But CA property taxes per owner-occupied home were the 10th highest in the nation in 2009.

http://www.taxfoundation.org/taxdata/show/251.html and
http://www.taxfoundation.org/taxdata/show/1913.html

CA has now instituted the highest “cap and trade” tax in the nation – indeed, the ONLY such U.S. tax. One study estimates the annual cost at $3,857 per household by 2020. Even proponents concede that it will have zero impact on global warming.
http://tinyurl.com/WSJ-CA-cap-and-trade

California’s 2011 “Tax Freedom Day” (the day the average taxpayer stops working for government and starts working for himself) is the 6th worst date in the nation – up from 28th worst in 1994, but down from 4th worst in 2009. CA “improved” only because of our state’s soaring unemployment rate – the new tax dodge!

http://www.taxfoundation.org/research/show/387.html

UPDATE: CA has the 2nd highest state unemployment rate. (October, 2011) – 11.7%. National unemployment rate 9.0%. National unemployment rate not including CA is only 8.63%, making the CA unemployment rate 35.6% higher than the other 49 states.
http://www.bls.gov/lau/

CA needlessly licenses more occupations than any state – 177. Second worst state is Connecticut at 155. The average for the states is 92.
http://cssrc.us/publications.aspx?id=7707

California’s 2011 Business Tax Climate ranks 2nd worst in the nation – close behind New York state.

http://www.taxfoundation.org/news/show/26806.html

For the 2007-08 school year, the Los Angeles Unified School District spent $29,780 per student. The district also has the country’s second lowest graduation rate of 40.6%.
http://www.calwatchdog.com/2010/08/20/lausd-spends-30k-per-student/

CA public school teachers the highest paid in the nation. CA students rank 48th in math achievement, 49th in reading.

http://www.lao.ca.gov/reports/2011/calfacts/calfacts_010511.aspx page 36

1 in 5 in Los Angeles County receiving public aid.
http://www.latimes.com/news/local/la-me-welfare22-2009feb22,0,4377048.story

California has 12% of the nation’s population, but 36% of the country’s TANF (“Temporary” Assistance for Needy Families) welfare recipients – more than the next 7 states combined. Unlike other states, this “temporary” assistance becomes much more permanent in CA.
http://weblog.signonsandiego.com/weblogs/afb/archives/034662.html

California prison guards highest paid in the nation.
http://www.caltax.org/caltaxletter/2008/101708_fraud1.htm

For every dollar California pays to D.C., we get back 78 cents. We rank 7th worst.
http://www.taxfoundation.org/research/show/266.html

California is the worst ranked state for tax administration – another anti-business factor.

http://www.sacbee.com/static/weblogs/capitolalertlatest/2010/03/cal-rated-worst.html

California now has the lowest bond ratings of any state, edging out Louisiana.
http://tinyurl.com/CA-worst-bond-rating

California has the 6th highest (worst) state per capita debt. Not counted is local government debt.
http://www.huffingtonpost.com/2011/10/24/states-debt-combined-may-exceed-4-trillion_n_1029162.html

The American Tort Reform Association ranks CA the worst state “judicial hellhole” – extremely anti-business.

http://tinyurl.com/CA-worst-judicial-state

California is tied with 3 other states (Hawaii, Texas(!) and Florida) for having by far the least competitive property & casualty insurance markets.
http://heartland.org/policy-documents/heartland-institute-releases-new-property-casualty-insurance-report-card

California has a nasty $800 minimum corporate income tax, even if no profit is earned, and even for many nonprofits. Next highest state is Oregon at $150. A few others under $100, with most at zero.
http://tinyurl.com/CA-800-tax

America’s top 500 CEO’s rank California “the worst state in which to do business” for the 7th straight year (May, 2011).

http://chiefexecutive.net/best-worst-states-for-business (It’s worth reading the short article, and especially the part about California.)

California, a destitute state, still gives away college education at fire sale prices. Our community college tuition is the lowest in the nation. How low? Nationwide, the average community college tuition is about three times higher than California CC’s.
http://www.hecb.wa.gov/research/issues/documents/TuitionandFees2009-10Report-Final.pdf Chart 5 on page 8

This ridiculously low tuition devalues education to students – resulting in a 30+% drop rate for class completion. In addition, 2/3 of California CC students pay no net tuition at all – either filling out a simple unverified “hardship” form that exempts them from any tuition payment, or receiving grants and tax credits for their full tuition.
http://tinyurl.com/ygqz9ls

On top of that, California offers thousands of absolutely free adult continuing education classes – a sop to the upper middle class. In San Diego, over 1,400 classes for everything from baking pastries to ballroom dancing are offered totally at taxpayer expense.
http://www.sdce.edu

Protests about increased UC student fees too often ignore one crucial point — all poor and most middle class students don’t pay the “fees” (our state’s euphemism for tuition). There are no fees for California families with under $80K income. Moreover, Pell Grants and federal tuition tax credits covered the total 2009-10 fee increases for nearly 3/4 of all undergraduates with household incomes below $180K.

http://www.universityofcalifornia.edu/blueandgold/ and
http://www.universityofcalifornia.edu/news/article/22415

California residential electricity costs an average of 32.4% more than the national average (far higher in San Diego County). For industrial use, CA electricity is 70.8% higher than the national average (May, 2011).

http://www.eia.doe.gov/cneaf/electricity/epm/table5_6_a.html

‎From 2007 through 2010, 10,763 industrial facilities were built or expanded across the country — but only 176 of those were in CA. So with roughly 12% of the nation’s population, CA got 1.6% of the built or expanded industrial facilities.
http://podcasts.odiogo.com/city-journal/podcasts-xml.php California Manufacturers and Technology Association podcast

California is now ranked as the 2nd worst state to retire in. Only basket-case Illinois is worse. We “beat” NY, RI and NJ.

http://www.topretirements.com/blog/great-towns/our-worst-states-to-retire-list.html/

Consider California’s net domestic migration (migration between states). From April, 2000 through June, 2008 (8 years, 2 months) California has lost a NET 1.4 million people. The cumulative net annual income lost from this 8 year out-migration comes to about $26 billion. Net departures slowed in 2008 only because people couldn’t sell their homes. In 2010 we lost “only” 72,000 net people to domestic migration. Again, note that this is NET loss.

http://www.mdp.state.md.us/msdc/Pop_estimate/Estimate_08/table5.pdf and

http://tinyurl.com/2010-CA-lost-72000 and

http://interactive.taxfoundation.org/migration/

These are not welfare kings and queens departing. They are the young, the educated, the productive, the ambitious, the wealthy (such as Tiger Woods) – and retirees seeking to make their pensions provide more bang for the buck. Too often these departing seniors are retired state and local government employees fleeing the state that provides them with their opulent pensions – in order to avoid the high taxes that these same employees pushed so hard through their unions. And once they move out of California, our state can no longer tax their California-paid pensions.

As taxes rise and jobs disappear, we lose our tax base, continuing California’s state and local fiscal death spiral. This downward spiral must stop NOW.

NOTE: To see the latest version of this “Breaking Bad” column, plus other taxpayer items of interest, go to my blog at http://open.salon.com/blog/Richard_Rider , or my more active Facebook www.Facebook.com/Richard.Rider. This fact sheet also is available free upon request as a 2 page Word file for printing.

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This entry was posted on Tuesday, December 13th, 2011 at 4:34 pm and is filed under Blog Posts.