Breaking Bad: California vs. the Other States

by Richard Rider, Chairman, San Diego Tax Fighters

Version 1.836 Revised: 10 November, 2012

Regular issues blog online at: www.RiderRants.blogspot.com/

Email: RRider92131@GMail.com NEW!

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 (at least twice a month, I update crucial data on this fact sheet):

Prior to Prop 30 passing, CA already had the 2^nd worst state income tax rate in the nation. Our 9.3% tax bracket starts at $48,029 for people filing as individuals.  Now our retroactive “millionaires’ tax” rate is 13.3% – including capital gains.  Increased taxes now start at $250K. CA now has by far the nation’s highest state income tax rate.  We are 21% higher than the 2^nd highest state (Hawaii), 34% higher than the 3^rd highest state (Oregon), and a heck of a lot higher than all the rest – including 7 states with zero state income tax. CA is so bad, we also have the 2^nd highest state income tax bracket.  AND the 3^rd.  Plus the 5^th and 7^th.

http://taxfoundation.org/sites/taxfoundation.org/files/docs/ff2012.pdf Tables #11 & 13  and

http://www.twitpic.com/9g2pka/full

CA has the highest state sales tax rate in the nation.  7.25% (does not include local sales taxes). 7.50% starting next year.

http://taxfoundation.org/article/state-and-local-sales-tax-rates-january-1-2012

CA corporate income tax rate (8.84%) is the highest west of the Mississippi (our economic competitors) except for Alaska.

http://taxfoundation.org/article/2013-state-business-tax-climate-index Table #1   – we are 6^th highest nationwide.

CA has the 2^nd highest gas tax in the nation at 68.9 cents/gallon (October, 2012).  National average is 49.3 cents.

http://www.api.org/statistics/fueltaxes/ (also CA has the nation’s 2^nd highest diesel tax – 77.1 cents/gallon. National average 54.5 cents)

California in 2009 ranked 15^th 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 10^th highest in the nation in 2009.

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

http://www.taxfoundation.org/taxdata/show/1913.html (2009 latest year available)

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

New Tax Foundation study ranks CA as the 4^th worst taxed state. But if counting ONLY in-state and local taxes, we are arguably the 2^nd highest.

http://riderrants.blogspot.com/2012/10/new-study-verifies-ca-residents.html

CA has the 3^rd highest state unemployment rate.  (September, 2012) – 10.2%.  National unemployment rate 7.8%.   National unemployment rate not including CA is only 7.5%, making the CA unemployment rate 36.5% higher than the average of the other 49 states.

http://www.bls.gov/web/laus/laumstrk.htm
Using the more accurate U-6 measure of unemployment (includes involuntary part-time workers), CA is the 2^nd worst at 20.3% vs. national 15.3%.  National U-6 not including CA is 14.6%, making CA’s U-6 38.9% higher than the other 49 states.

http://www.bls.gov/lau/stalt.htm

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 2013 “business tax climate” still ranks 3^rd worst in the nation – behind New Jersey and New York state.

http://taxfoundation.org/article/2013-state-business-tax-climate-index

CA public school teachers the highest paid in the nation.  CA students rank 48^th in math achievement, 49^th 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 33% 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://www.utsandiego.com/news/2012/jul/28/welfare-capital-of-the-us/?print&page=all

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 2^nd lowest bond rating of any state – Basket case Illinois just beat us out for the lowest spot.  We didn’t improve our rating – Illinois just got worse.    http://www.calwhine.com/great-news-california-no-longer-has-worst-credit-rating/1554/

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

But the U.S. Chamber of Commerce ranks CA higher – “only” the 4th worst state (unfortunately, up from 7th worst in 2008).

http://www.instituteforlegalreform.com/states/california

CA tickets are incredibly high. Red-light camera ticket $480. Next highest state is $250.  Most are around $100.

http://reason.org/blog/show/red-light-cameras-and-the-enigmatic

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 anti-small business $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

California small businesses failed in 2011 at a rate 69% higher than the national average — the worst state in the nation.

http://money.cnn.com/2011/05/19/smallbusiness/small_business_state_failure_rates/index.htm (based on Dunn & Bradstreet study)

America’s top 650 CEO’s rank California “the worst state in which to do business” for the 8^th straight year (May, 2012).

http://chiefexecutive.net/best-worst-states-for-business-2012 (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 almost three times higher than California CC’s.

http://trends.collegeboard.org/college_pricing/report_findings/indicator/911#f9005 Table 5b

This ridiculously low tuition devalues education to students – often 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, about 1,000 classes for everything from baking pastries to ballroom dancing are offered mostly if not totally at taxpayer expense.

http://www.sdce.edu

Protests about increased UC student fees too often ignore one crucial point – all poor and many 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 36.6% more than the national average. CA commercial rates are 51.4% higher.   For industrial use, CA electricity is 69.1% higher than the national average (August, 2012).

http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_06_a

A 2011 survey of home water bills for the 20 largest U.S. cities found that for 200 gallons a day usage, San Diego was the highest cost.  At 400 gal/day, San Diego was third highest. http://www.circleofblue.org/waternews/wp-content/uploads/2011/05/allstats590.jpg

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 2^nd 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 2000 through 2009, California lost a NET 1.5 million people. Net departures slowed in 2008 only because people couldn’t sell their homes.  But more people still leave each year — in 2011 we lost 66,000 net people to domestic out-migration.   Again, note that this is NET loss.

http://www.newgeography.com/content/002585-new-census-data-reaffirms-dominance-south

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 “race to the bottom” must stop NOW.

NOTE: To see the latest version of this “Breaking Bad” column, go to my blog at www.RiderRants.blogspot.com, or my more active Facebook page www.Facebook.com/Richard.Rider. The latest two-page fact sheet Word file is available free upon request.

San Diego Tax Fighters June Ballot Voter Recommendations

Contact:  Richard Rider, Chairman

Phone: 858-530-3027

LOCAL PROPOSITIONS (with “!” for extra importance or emphasis)

• Proposition A – City of San Diego Fair & Open Competition Ordinance. Amends Municipal Code: YES!!
• Proposition B – City of San Diego Comprehensive Pension Reform Initiative. Amends City Charter: YES!!!
• Proposition C – City of Chula Vista Charter Amendment. Limit Authority, Compensation and Establish Term Limits for Elected City Attorney. Establish Office of Legislative Counsel: NO
• Proposition D – City of El Cajon Charter Adoption. Change from General Law to Charter City: YES!
• Proposition E – City of Oceanside Ordinance. Phase Out Mobile Home Park Rent Control: YES!
• Proposition F – City of Oceanside Charter Amendment. Numbered Council Seats: YES!
• Proposition G – Mt. Empire Unified School District $30.8 million School Bond Measure: NO
• Proposition H – Alpine Union School District $12 million School Bond Measure: NO!

STATE PROPOSITIONS

• Proposition 28 – Limits on Legislator’s Terms in Office. Initiative Constitutional Amendment.: NO POSITION
• Proposition 29 – Imposes Additional Tax on Cigarettes for Cancer Research. Initiative Statute.: NO!

CANDIDATES:

SAN DIEGO
Mayor Carl DeMaio

City Council
District 1 Ray Ellis
District 7 Scott Sherman
District 5 Mark Kersey

STATE SENATE
District 39 — George Plescia

STATE ASSEMBLY
District 77 — Dustin Steiner

SAN DIEGO COMMUNITY COLLEGE
District B Scott Hasson

SAN DIEGO UNIFIED SCHOOL DISTRICT
District A Mark Powell

OCEANSIDE
Mayor Jerry Kern

Phil stuck me as a classic entrepreneurial guy who just wants to run an honest business, but is frustrated that politicians’ failure to make tougher choices results in his customers’ tab increasing.

If you have a chance to visit Phil’s restaurant, please do.  Good food and it goes into the pocket of a true tax fighter!

Prop      Subject     Recommendations
19    Marijuana         YES
20    Elections         YES
21    Taxes             NO
22    State spending    NO
23    Environment       YES
24    Taxes             NO
25    State spending    NO
26    Taxes             YES
27    Elections         NO

Prop		Recommended	Description
A		YES		Ban on County Project Labor [Union] Agreements
B		No Position     San Diego City Attorney Office hiring practices
C		No Position     Development of Pacific Highlands Ranch
D		NO		San Diego City Sales Tax increase
G		YES		Carlsbad — Require citizen vote to raise pensions
H		NO		Chula Vista — Raise phone taxes
J		NO		SD Unified School District — Impose parcel tax
K		NO		San Marclos School District Bond
L		NO		Julian High School Bond
M		NO		Dehesa School District Bond
O		NO		South Bay Union School Parcel Tax
P		NO		Encinitas Union School Bond