Friday, January 16, 2009

Golden State? Fool's Gold

How pathetic is this?

State Controller John Chiang announced today that his office would suspend tax refunds, welfare checks, student grants and other payments owed to Californians starting Feb. 1, as a result of the state's cash crisis.

Chiang said he had no choice but to stop making some $3.7 billion in payments in the absence of action by the governor and lawmakers to close the state's nearly $42-billion budget deficit. More than half of those payments are tax refunds.

The controller said the suspended payments could be rolled into IOUs if California still lacked sufficient cash to pay its bills come March or April.

I have to pay my taxes on time, or people with firearms come take me to jail. But if the state owes me money, an IOU is considered acceptable.

There are somewhat over 30 million people in California. The deficit the controller is talking about amounts to about $1400 for every person in the state. That's egregious.

It's not that we're not taking in enough money, it's that we're spending far more than we're taking in. And the governor is proposing a "temporary" 1.5 cent sales tax increase, and the CTA is going to put an additional 1 cent sales tax increase on the ballot (with the money supposedly being earmarked for education).

And the nation is heading where California already is. From whence comes this belief that socialism works?

Update, 1/25/09: Here's more.
Maryland used to be in the middle of the pack of states with business-friendly environments. No more. The Tax Foundation now ranks Maryland as the sixth worst state in the nation in which to do business. Only Rhode Island, Ohio, California, New York, and New Jersey are more hostile to job- and revenue-producing enterprises. Maryland’s “remarkable drop” - from 24th in 2008 to 45th place this year – is attributed to last year’s passage of the largest tax hike in state history, coupled with other major tax policy changes that also put the Free State dead last in the personal income tax category.

Christopher Summers, president of the Maryland Public Policy Institute, summed up the real problem facing formerly free-spending states now suddenly face-to-face with billion-dollar deficits: “The debate has always been revenue, revenue, revenue – not spending priorities,” he told The Examiner. “We continue to promise more than we bring in. It’s a dereliction of fiduciary responsibility. Meanwhile, families and businesses are struggling to swim and the state throws them a cinder block.”

American companies already pay some of the highest federal corporate taxes in the industrialized world. When states like Maryland and California pile on even more taxes on top of that, business owners start looking at other states that are competing for their presence.


Ellen K said...

I keep telling you Darren, Texas needs math teachers. No state income taxes, there's still jobs. I have a SIL who bought a house for a cool million six years ago. She is sitting in a seaside ghost town as the not so rich and not so famous make their ways to Colorado and points east. And what is truly scary is that the same type of social/welfare state is exactly what Obama and his cabinet invision for our future nationally. Close the borders, stop issuing HB1 visas, implement oversight on offshoring of corporations and stop allowing foreign countries to come in and raid our companies. Read my blog if you want some insight on a personal level.

KauaiMark said...

"temporary tax"

No such animal, in my experience

Rhymes With Right said...

I'm with Ellen, Darren. We could use you down here.

allen (in Michigan) said...

What's envisioned and what's accomplished are generally pretty far apart in politics so I'm not as worried as Ellen is about a People's Republic of America being established under an Obama regime.

Not that I don't think there's room for, oh, bags of mischief under the presidency of President Sound Bite but some of the earlier moves, now that the inaugural is looming have angered his putative base. Iraq isn't going to provide a stage for a revival of the morality play beloved by progressives, "Vietnam: The Ignominious and Morally Appropriate Defeat" and that has the anti-war left steamed but Obama's forgotten all about them already.

Obama's intimations of leaving the Bush tax cuts undamaged has a bunch of congressional Democrats pretty angry and they aren't as easily ignored as the anti-war left. But against the backdrop of a weak economy, and with the memory of the Republican Revolution of '94 coming as it did as a result of the big Clinton tax hike still living in the memory of incumbent Democrats, I'd say any tax hike is an uphill fight within the Democratic party let alone congress. At least until the economy improves markedly.

With regard to California, I'm hoping you California frogs prove that no matter how slowly you raise the water temperature at a certain point even the dumbest frog jumps out of the pot and you throw out a bunch of incumbents.

mazenko said...

And, yet, I cannot fully understand California's problems, as it seems they moved to restrict taxes and government throughout the nineties. Where exactly do you see the California state government owning or taking control of any means of production? Isn't it really the opposite? Or do I not understand California's problems? To what specific details do you attribute California's problems?

Darren said...

Honestly, I don't think you understand California's problems. And that's because those in the media don't see them as problems, and hence don't report them that way.

California isn't seizing the means of production; however, our laws and taxes are such that production is being driven to nearby states. Arizona and Nevada love us in that regard! I don't claim to know much about business taxes, but I've read that they're among the highest in the nation--and right next door are Nevada and Arizona, which are significantly lower. Add to these our burdensome regulations, litigious environmentalism, and general class hatred stoked by lefties against anyone successful (except for Hollywood types), and toss in an obscenely generous entitlement "entitlement society", and it's a recipe for disaster.

We can't spend more than we take in forever. To quote Ross Perot, "It's just that simple."

Ellen K said...

California has chased off manufacturing with environmental laws that are too expensive and too unwieldy to implement. Many of those manufacturers moved factories and jobs east to Nevada, where they value the income from working businesses. For a long time, California has thrived as an entry port for goods, but with a weak dollar, fewer goods are coming in because Americans can't afford them. That means less shipping, less transportation, less jobs for blue collar workers. Likewise, building standards and taxes have made what should be a middle income home cost millions. I have many students whose families have moved from such homes in California to homes here in Texas. In Cali, MY HOME-which is a small four bedroom on a creek lot-would probably fetch a $750K price tag. When people move here from Cali, or New York or Illinois, the end up in mansions. Which is why we have so many big homes here. Of course heating, cooling and powering those homes is another story, but the disparity is obvious. And then there's the illegal immigrant issue. Cali has become a safe haven. They give lip service to immigration laws but look the other way. And to add insult to injury, Cali provides some very nice benefits for breaking the law. That California's legislature has gone off on a quixotic ride into glory by funding countless social, environmental and other programs when their basic infrastructure was in tatters speaks to gross malfeasance on all levels. Yet their hands are out like sulky 13 year olds who want money for the mall after they've blown their allowance on pot. We can't afford it. We can't afford California's failures. The other 49 states are suffering, too.

gbradley said...

Is that $1,400.00 per person right?

A 1.5 Cent tax requires more than $93,000.00 to generate that much money.
I don't think that too many folks make, let alone spend that much in a year.