Monday, May 03, 2010

How Would Californians React to Economic Austerity...?

My previous post entitled Greece: What Economic Austerity Looks Like, has inspired a new question: How would Californians react if the same economic austerities were imposed upon them by the US as part of a Federal bailout plan...?

State Flag of California

If the "Greek plan" was thrust upon California, the economic austerity measures would include:
  • Reducing effective wages for state workers by 5-15%.
  • Banning pay increases for state workers for at least 3 years.
  • Raising the state sales tax by 2%.
  • Raising taxes on fuel, alcohol, and tobacco by 10%.
Reactions...?

Related Posts:

How Would New Yorkers React to Economic Austerity...?

10 comments:

Uri said...

1) Unless California government workers' wages are cut in half now, our state will soon be totally ruined. The cuts will save money for something useful, but most important, they will cause stampede of the the selfish and dangerous officials. Theory and practice prove: those who wish and can work will remain and work.

2) The ban should be extended to 10 years. After that any raise should be subject to public scrutiny and approval.

3) No sales tax increase in California! The money shall be promptly collected from rich environmentalists, Hollywood, and other do-gooders. They wish to give it anyway.

4) Russian Feb. 1917 revolution was unleashed after severe restrictions on drinks by the ostensibly caring government. Do we want a repetition?


P.S. If my points seem extreme, wait for a couple of years. I will seek political asylum in Fiji.

swirl said...

Uri does not appear to understand the state's budget. The 2009-10 state budget is $109.7 billion. Of this, $25.1 billion lies in “special funds,” mostly dedicated to transportation especially highways/freeways.

Within the general fund, which includes most state employee wages, the budget is $84.6 billion this year. That’s down about 17% from two years ago.

Health programs account for $16.1B, social services $8.9B and criminal justice (courts and prisons) $9.0B. K-12 education is $33.8B and higher education is $10.5B. $6.3B fund all other aspects of government including all government employees, state parks, pesticide regulation, pest prevention, water and air quality, forestry, waste management, energy, utlilities, fire protection. Eliminate half of all state employees and there would still be a deficit, as most of the state budget is spent on school and prisons, followed by providing health care for the indigent, working poor, and elderly poor.

The state already collects proportionally more from the wealthiest individuals in terms of income tax.

Anonymous said...

Closing the tax loopholes for Silicon Valley info tech companies will be enough. No need to bring state's essential programs under the axe.

Anonymous said...

The top 400 families in America pay 16.6% income tax, because the large portion of their average $750 million in income is capital gains. There are also numerous tax dodges and tax credits available to the uber rich, which are not available to average Americans paying average 35% income tax.

Warren Buffett made the same observation, that he is taxed less than his secretary. Of course there is a large tier of people who pay very low taxes because they have very low reportable income. And another large tier who pay no taxes because they work under the table or are on welfare, or both. Wouldn't you?

NAFTA and MFN China guaranteed that Americans would be forced into business for themselves, and from there, it's not a far reach to work for cash under the table, and take advantage of every welfare opportunity you can get.

With 14 million American homeless, and 42 million unemployed with no UEI insurance, and still millions of R/E resets and evictions to go, America has the largest internally displaced refugee population on earth, AND at the same time, the most obese population as well!

We are the champions! Eat dirt, EU!

Richard Rider, Chair, San Diego Tax Fighters said...

Californians already pay too much in taxes. All cute must come from the spending side -- and that consists primarily of excessive public employee compensation.

Consider:

Breaking Bad: California vs. the Other States
by Richard Rider, Chairman, San Diego Tax Fighters
Version 1.68 Revised 21 May, 2010
Updated version online at: www.RiderBlog.NotLong.com

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 (I keep updating this fact sheet):

California has the 3rd worst state income tax in the nation. 9.55% tax bracket at $46,349 for people filing as individuals. 10.55% at $1,000,000 http://www.taxfoundation.org/files/bp59_es.pdf

By far the highest state sales tax rate in the nation. 8.25%. 7% is next highest (does not include local sales taxes)
http://www.taxfoundation.org/files/bp59.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 9th highest nationwide.

Richard Rider, Chair, San Diego Tax Fighters said...

2010 Business Tax Climate ranks 48th in the nation. http://www.taxfoundation.org/files/bp59_es.pdf

Fourth highest capital gains tax 9.55% http://www.thereibrain.com/realestate-blog/capital-gains-tax-rates-state-by-state/109/

Highest gasoline tax (averaging 67.0 cents/gallon) in the nation, 3.5 cents above second place Hawaii (April, 2010). When gas hits $3.00/gallon, we are numero uno – because unlike many states, we charge sales tax on gasoline purchases (built into the price). http://www.api.org/statistics/fueltaxes/ (also highest diesel tax)

California is ranked 27th worst in per capita property taxes (including commercial) – the only area where we are not in the worst ten states. But CA property taxes per home were the 10th highest in the nation in 2008.
http://www.taxfoundation.org/taxdata/show/251.html and http://www.taxfoundation.org/taxdata/show/1913.html

One of the highest state vehicle license car taxes. 1.15% per year on value of vehicle, up from 0.65% in 2008.
http://tinyurl.com/lrvmtd

Richard Rider, Chair, San Diego Tax Fighters said...

California’s 2010 “Tax Freedom Day” (the day the average taxpayer stops working for government and starts working for oneself) is the 7th worst date in the nation – up from 28th worst in 1994, but down from 4th worst last year CA “improved” only because of our state’s soaring unemployment rate – the new tax dodge! http://www.taxfoundation.org/research/show/387.html

In 2009, 24 states raised their taxes at least 1% to collect $28.6 billion. California’s taxes went up over $12 billion – thus we were responsible for about 42% of all the state tax increases in the nation. http://tinyurl.com/2009CA-Tax

Third highest unemployment rate in the nation. (April, 2010) 12.6%. National unemployment rate 9.9%.
http://www.bls.gov/news.release/laus.nr0.htm

California 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

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

Los Angeles Unified School District spends over $25,000 a year per student. http://tinyurl.com/LAUnified-25K

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

Richard Rider, Chair, San Diego Tax Fighters said...

California residential electricity costs an average of 37.2% more than the national average (far higher in San Diego County). For industrial use, CA electricity is 44.6% higher than the national average (December, 2009).
http://www.eia.doe.gov/cneaf/electricity/epm/table5_6_a.html

It costs 38% more to build solar panels in California than in Tennessee – which is why European corporations have invested $2.3 billion in two Tennessee manufacturing plants to build solar panels for our state. http://tinyurl.com/llussb

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 departures slowed in 2008 only because people couldn’t sell their homes. http://www.mdp.state.md.us/msdc/Pop_estimate/Estimate_08/table5.pdf
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. The irony is that a disproportionate number of these 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.

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: If you would like to receive more of this type of information and analysis, just drop me an email at RRider@san.rr.com. To see the latest version of this “Breaking Bad” column, plus other taxpayer items of interest, go to my blog at www.RiderBlog.NotLong.com. There is an “RSS Feed” button to have the blog updates sent to you automatically.

Richard Rider, Chair, San Diego Tax Fighters said...

California, a destitute state, still gives away college education at fire sale prices. Our community college tuition is by far the lowest in the nation. How low? Nationwide, the average community college tuition is almost four times higher than California CC’s. 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 tuition at all – 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 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 $70K income. Moreover, Pell Grants and federal tuition tax credits cover the total 2009-10 fee increases for nearly 3/4 of all undergraduates with household incomes below $180K. http://www.universityofcalifornia.edu/blueandgold/ and www.universityofcalifornia.edu/news/article/22415

Richard Rider, Chair, San Diego Tax Fighters said...

CA public school teachers the 2nd highest paid in the nation after NY. The average 2008-09 CA educator salary was $69,093 – 7.25% higher than the previous year’s $64,424 average. http://www.nea.org/assets/docs/010rankings.pdf Page 21, table C-18

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

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

As of 2008, California ranks 46th worst in “lawsuit climate.” http://tinyurl.com/CA-44th-lawsuits

America’s top 600 CEO’s rank California “the worst place in which to do business” for the fifth straight year (3/2010). But here’s the interesting part – they think California is a great state to live (primarily for the great climate) – they just won’t bring their businesses here because of the oppressive tax and regulatory climate.
Consider this quote from the survey (a conclusion reflected in the rankings of the characteristics of the state): “California has huge advantages with its size, quality of work force, particularly in high tech, as well as the quality of life and climate advantages of the state. However, it is an absolute regulatory and tax disaster.” http://tinyurl.com/CEO-states-rank-2010

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