CPR: State Controller Betty Yee’s just-released July Cash Report shows state personal income tax revenue falling behind estimates by 6.9 percent, or $323 million lower than projections. While some will argue that one month does not make a trend, these figures are significant because they represent revenue in the first month of the new state budget, a budget that is based on much higher income estimates.
Should these below projection income tax revenues really be a surprise to anyone with even a minimal understanding of basic economics? Economists tell us that if you want less of something, tax it more, and California has the highest marginal income tax rates in all 50 states.
When upper income individuals were slammed with tax rates on steroids as a result of Proposition 30, approved by voters in 2012, they had little immediate choice but to pay, and the tax revenue poured in. (It should be noted that the tax, approved in November, was retroactive for the entirety of 2012 so there was an almost instantaneous infusion of cash into state coffers.) Still, many compelled to pay these higher taxes took some comfort in knowing the exorbitant tax rates were scheduled to end in 2018.
However, lawmakers viewed this extra revenue as the new normal and they partied on in Sacramento with ever higher state budgets — they have increased spending by 42 percent in the last five years and there is no end to the spending spree in sight. MORE
I sympathize with those in the know that are unable, for whatever reason, to escape the liberal bastion of California.
There are a lot of tax measures on the November ballot, as the ‘short-term’ measures led to increased spending for some really weird reason which I have no idea why that would have happened.
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Calif. liberals fail to grasp the economic facts of life shown by Ronald Reagan.
As taxes increase, gov’t income decreases; As Taxes decrease, gov’t income increases.
While he was gov. hundreds of millions of dollars flowed into state coffers, the same thing happened on the Fed level, except it was Billions of dollars.
I wish I could leave but I can’t. Real estate where I live in down. It hasn’t recovered since the ’08 bust. I’m in an area where there’s very high unemployment, no jobs, mostly white retired people. My sister who lives in the Bay Area east of San Francisco is moving to Texas. She’ll have no problem selling their house. She can leave, she has no ties here. For the most part, we go wherever we choose. A fire tax was stuck to us about 5 years ago. Everyone who lives rural here in California is paying for it – home and landowners. Now they’re asking for donations be made to those who lost their homes. No can do as we’ve already paid our tax towards this sort of thing happening. Even the illegals are hightailing it back to Mexico because they cannot afford to live here. Businesses are leaving by the hundreds each month. We’re just sitting back watching it all come crashing down. Jerry Brown just sold his house in the Oakland hills for 2.5 million dollars. He claims he has taken a loss on it. Booowhooo. Crash and burn, people will continue to leave. Bye, have a nice life! Oh, and don’t come back!
Lots of young people leaving as well. In Southern California, a $500,000 house is considered a starter home. Gas is $.50 to $1.00 per gallon higher than most other states. A lot of kids just out of college believe that there is little chance that they will be able to achieve the same standard of living as their parents.
Califoria is turning 3rd world – there are rich people, there are poor people, but there are less and less middle class people. Boomers who have done moderately well – and if you were able to buy a house and resisted serial refinancing over the years you did – are cashing out and moving elsewhere. Businesses are castigated, and there isn’t enough room on this website to categorize the regulatory horror stories.
All of this in a state with tremendous natural beauty, a great climate, and varied topography. California is an object lesson in why liberals should not be in charge of anything.
OT
Dan, and anybody else that live in Cali. Be sure and sign the petitions against the recent gun bills. We received petitions last week and the CalGuns.org and Gun Owner of California people are saying we are close on signatures. It would be more than cool if we could through these anti constitutional laws back in there face.
Hmmm. Wonder how many California’s have seen their incomes go up 42% in the past five years.
I don’t think I’d get my knickers in much of a twist if someone just dropped a bomb on the California State House.
They could always raise taxes to make up the shortfall.
Better not say that too loud; they’d probably try it.
Greetingsfromyonkers,
The people who have seen their incomes go up 42% are the ones who have left California for places like Arizona, Idaho, and Wyoming.