California’s proposed tax hike will destroy 23,000 jobs
California Governor Jerry Brown said he would use a proposed sales tax increase as the vehicle to get the Golden State out of its growing deficit problems. That solution has met with a great deal of criticism from the State Board of Equalization.
George Runner said the Governor’s plan to increase taxes on working Californians is not the answer. His office released an analysis proving the half-cent sales tax increase will cost California thousands of jobs and millions of dollars in lost investment.
This isn’t the first time California lawmakers have tried to solve Sacramento’s spending problems with tax increases. However, the growing state deficit poses serious hurdles for Californians to consider.
“We project a $10 billion operating shortfall (the difference between annual revenues and expenditures) in 2012-13. The $3 billion “carry-in” deficit from 2011-12 and the projected $10 billion operating shortfall mean that the Legislature and the Governor will need to address a $13 billion budget problem between now and the time that the state adopts a 2012-13 budget plan,” according to California’s Legislative Analyst Office.
“Tax policy has consequences,” Runner explained. “As this analysis shows, a higher sales tax rate would take money out of the pockets of working Californians, destroying more than 23,000 jobs and $267 million in business investment. The projected job losses would be equivalent to every worker in a medium-sized California city like Glendora or West Sacramento losing their jobs.”
A stubborn economy and lagging unemployment numbers have led to weary taxpayers. In the past few years, Californians have voted down proposed tax increases by large margins.
Runner explains that lawmakers often rely on static analyses that ignore behavioral changes by consumers and business owners when they set out to increase taxes.
The analysis, conducted by the State Board of Equalization, projects that nearly all of the proposed sales tax increase would be passed along to consumers. “The state would receive $222 million less in revenues than projected by a static analysis, an 8% loss in potential revenue,” Runner said.
Add to that the argument from taxpayer advocacy groups who contend spending has increased during this recession.
“It is a common myth that state spending has been slashed in recent years. While it is true that General Fund spending is down as a result of the recession, overall state spending is actually up sharply, growing by more than $19 billion over the last four years,” according to the Howard Jarvis Taxpayers Association.
Runner finished by adding that; “Since July of last year, lower tax rates have enabled Californians to keep more of their hard-earned dollars, and our economy is growing stronger. Let’s not rewind our progress by reinstating, even a portion, of the tax burden Californians endured during the Great Recession.”
The full analysis can be found online at; http://www.boe.ca.gov/Runner/info/pdf/Dynamic_Revenue.pdf.
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© Copyright 2012 Kimberly Dvorak All Rights Reserved
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California lawmakers sue state controller for docking their pay for late budget
In another brazen move to cheat California, state lawmakers have sued Democratic State Controller, John Chiang, for withholding nearly $5,000 each (12 days or a total of $600,000) of loss pay and expenses for failing to balance the state’s budget on time.
Years of fighting over a balanced budget each year led California taxpayers to pass Proposition 25, allowing a simple majority vote to pass a budget instead of the two-thirds requirement. The catch, lawmakers have to send the governor a budget on time or face loss of pay.
Lucky for taxpayers and unlucky for lawmakers, the first year this law was implemented, the budget was late. Lawmakers contend they were unaware their first budget was flawed and that the state’s expenditures did not match revenues. Nevertheless, the first budget was rejected by Governor Jerry Brown (D), because it underfunded public schools to the tune of $1.3 billion.
However, the Democratic majority in Sacramento decided to renege on the law and will sue the state. John Perez, assembly speaker, said he was going “to clarify the constitutional role of the California State Controller.”
Of course, the lawsuit will not only cost the taxpayer’s money, but the Democratic lawmakers have retained independent lawyers who will invoice… the taxpayers.
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© Copyright 2012 Kimberly Dvorak All Rights Reserved.
While President Obama continues his tax the millionaires (actually those who make $250,000 per year) mantra in order to pay for the payroll tax holiday set to expire in 30 days, California Governor Jerry Brown hoping to tax all residents in the not-so Golden State.
The Democratic leadership and union members in Sacramento are putting the final touches on a November 2012 ballot initiative that would make Californians the highest-taxed state in the nation.
Currently, California is facing monumental billion dollar budget shortfalls and Governor Brown wants residents to vote for a tax increase to narrow the gap. In June of this year, state legislators voted on a supposed-balance budget, but underestimating expenditures has left a $12.8 billion hole for the state.
Democrats are hoping good-natured residents will elect to increase the state sales tax by half-a-cent for the next four years.The tax measure would also levy a 1 percent income tax on income earners who make $250,000, 1.5 percent on income over $300,000 and a 2 percent income tax on those earning more than $500,000. Effectively the state income tax would increase from 10.3 percent to 12.3 percent making California the most expensive state to live. Governor Brown anticipates the increase will raise $7 billion, still shy of the $13 billion budget deficit.
California tax crusader, Richard Rider of San Diego Tax Fighters points out the hard reality for Golden State residents. “If passed, California will advance from the third highest income tax state to numero uno. Any sane rich person HAS to be thinking of moving out of the state.”
Rider explains that Maryland already enacted a smaller tax proposal with some glaring results. “About three years ago, Maryland raised its millionaires income tax. The following year, one out of every eight millionaires no longer filed Maryland income tax forms. A few died – the rest left. The net Maryland tax revenue from millionaires declined – and the state economy suffered from the loss of the big spenders. And the Maryland tax increase was only a FRACTION of the huge percentage increase being proposed by Governor Brown.”
To find out how dreadful California taxes are compared to the nation, please click Richard Rider’s Breaking Bad blog for complete up-to-date tax information; http://open.salon.com/blog/richard_rider/2011/11/30/breaking_bad_ca_vs_the_other_states_rev_112611
San Diego’s Stop Taxing Us has also indicated that the state doesn’t have a revenue problem, but a spending problem.
“The State of California is in the middle of a budget crisis and revenue is not the problem,” said Dr. Gary Gonsalves, MD, the co-founder of Stop Taxing Us. “We have structural spending issues which must be fixed if the government of California is to live within its means.” Gonsalves cites one of the biggest offenders is the state pension crisis and transfer payment programs. This is just a math problem. We can’t raise taxes anymore; the people won’t stand for it. If we can’t raise taxes, how can we balance our budget? We have to cut spending.”
Rhonda Deniston, a director of Stop Taxing Us, argued against the higher taxes being proposed in Sacramento. “Every time California raises taxes, productive individuals flee the state, taking businesses and jobs with them.”
In an effort to curb California’s spending problem, Stop Taxing Us has proposed “The Promise to California Taxpayers. We intend to offer the Promise as a way for fiscal conservatives, regardless of party affiliation, to articulate clearly that raising taxes is something they will never, ever do. We want to make it easy for candidates to tell the voters where they stand. Additionally, we want California taxpayers to know which candidates protect them and, should the unfortunate happen…that is… if a candidate breaks his/her promise in office, we want to let the taxpayers know that their governing actions were inconsistent with their campaign rhetoric,” said Brian Brady of Stop Taxing Us.
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© Copyright 2011 Kimberly Dvorak All Rights Reserved.
California’s “golden” status set to run out of money in two weeks
Once famous for the “gold rush,” California’s fertile land drew anybody who wanted to strike it rich, sadly those days are long gone and have been replaced with tax and spend policies that have ended in massive deficits.
California’s financials offer proof that the month of October painted serious accounting problems for the state. According to the October Statement of General Fund Cash Receipts and Disbursements report from California State Controller John Chaing, the state’s income plunged by $3.6 billion. On the other side of the balance sheet, California’s spendaholic ways will increase by $10.2 billion this year. The governor and state legislators don’t seem to be smarter than a fifth grader- that’s a $6.6 billion deficit.
According to Chriss Street of Cal Watchdog, “California has already drawn down 85 percent of its credit lines and only has $4 billion remaining to fund a $13.8 billion deficit. With the same sovereign credit rating as basket-case Portugal, California’s debt is at maximum risk of being downgraded to ‘junk’ bonds. With credit lines almost tapped-out, the sovereign debt crisis that has hammered Europe may arrive in America.”
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For the past few years California, like the federal government, has stayed afloat by borrowing money. However, unlike the federal government, California cannot print money, and is set to run out of “borrowed” cash in a couple of weeks.
While President Barrack Obama’s Administration tries to decide if Italy or Greece is too big to fail, the once “Golden State” is teetering on bankruptcy and risks a devastating new trend for America.
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© Copyright 2011 Kimberly Dvorak All Rights Reserved.
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Welfare checks can be used to buy alcohol and cigarettes in California
On a straight party-line vote California lawmakers gave the green light for welfare recipients to purchase alcohol and tobacco products using taxpayer money. The insanity in the Golden State continues despite the state’s $23 billion deficit and double-digit unemployment.
Recently California changed the way it disperses food stamps. In an effort to take the stigma away from food stamps the state issues welfare beneficiaries with an Electronic Benefits Card which look and work like an ATM card.
The Golden State doles out welfare benefits through the CalWORKS program. In the past welfare recipients were not allowed to buy beer and cigarettes, but compassionate state lawmakers decided it wasn’t fair to stop TAXPAYER money from being used to subsidize non-essential bad habits.
“You would think a simple common sense reform like trying to make sure taxpayer money is not used for the purchase of alcohol and tobacco would find bi-partisan support,” said GOP State Senator Bob Dutton.
No such luck in California, Dutton, SB417’s sponsor saw his legislation to save taxpayer money fail on a straight party-line vote.
California’s EBT/ATM card caught national attention last year when the Los Angeles Times uncovered several documents proving the welfare cards were being used for vacations to Hawaii, Las Vegas and strip clubs. Former California Governor Arnold Schwarzenegger quickly quashed the vacation perks, but failed to stop the alcohol or cigarette buying ability.
“These funds are designed help the neediest in California meet their basic requirements of providing food, clothing and shelter,” Senator Dutton quipped. “I doubt there’s not a taxpayer in this state who believes purchasing alcohol or tobacco with welfare money constitutes a basic need and should be allowed.”
Senator Dutton also explained that more than half of welfare beneficiaries are parents who are no longer eligible for state aid, but still receive cash assistance on behalf of their anchor baby children.
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“With over half of the caseload consisting of ‘child-only’ cases, it is unconscionable to allow designated caregivers the ability to purchase tobacco and alcohol products on behalf of a minor,” Senator Dutton said. “I was quite frankly surprised that Democrats believe that this practice should continue. I remain committed to continue working on real reform measures, like SB 417, to ensure that all taxpayer money is used as it is intended,” Senator Dutton concluded.
In an effort to reform welfare Senator Dutton sought the assistance of the California Grocers Association to implement a ban on alcohol and tobacco purchases with the state’s EBT/ATM card.
This year California taxpayers will support nearly 600,000 families by enrolling them into CalWORKS. The program disperses more than $100 million to help welfare recipients purchase groceries.
Something else taxpayers should consider is that California Governor Jerry Brown is seeking to raise the tobacco tax another dollar in order to fund cancer research; while Democrat Senator Alex Padilla already introduced a bill to raise the cigarette tax by a whopping $1.61 to be used to curb smoking. Neither program will cut the $23 billion deficit.
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© Copyright 2011 Kimberly Dvorak All Rights Reserved.
Santa Barbara loans $4.4 million to employees to buy homes
In an ultimate case of government gone wild, the city of Santa Barbara has given “teacher’s pet” employees money to purchase homes in the expensive seaside community.
The down-payment for home program began in 2001 when the city gave Santa Barbara Police Chief Cam Sanchez a $500,000 loan. Over the years and multiple employees later the city has given city employees approximately $4.4 million to purchase homes.
The city of Santa Barbara, like most California cities, is broke and needs to fill budget shortfalls. As a result the city has cut back on numerous resident services.
The scandalous program caught the eye of council members and watchdog groups who are outraged the city has not made a better attempt to recoup taxpayer money, according to the Daily Sound.
The severe budget crisis has already forced community leaders to close city pools and libraries while the 37 employees enjoy their homes on the taxpayer dime.
“The whole thing is nuts,” says Ernie Salomon a Santa Barbara City Hall watchdog. The money used for the loan program was taken from the city’s reserve general fund, according to Solomon. “It’s unforgivable.”
Responding to the criticism surrounding the city loans was Bob Samario, Santa Barbara finance director. “At the time we weren’t having the financial problems that we are having today.”
He explained that city employees needed to come up with 85 percent of the financing on their own before the city gave them the remaining 15 percent to purchase homes. Samario also noted the loan recipients did not have to pay any principle for the first five years, just the interest which ranged from .46 to .56 percent of the loan.
The lucky employees were also treated to the city buying down the interest rate of their second mortgage by two percentage points saving employees even more money.
According to the city finance director, claims the $4.4 million of taxpayer money is gone are not true, it’s just tied up in employee loans. However, over the past eight years the city has only been reimbursed $188,000.
Oversight for the employee loans has been limited. The 37 loans were given out without the approval of the city council something that outraged current City Councilmember Michael Self.
“We do not have the due diligence or the fiduciary understanding to implement a loan program. That is out of our purview. These people are getting benefits no private company could pay for,” she said.
For now Self says she will work to get the city’s money back and make sure this program is suspended moving forward.
For those not familiar with Santa Barbara, the seaside neighborhood is home to many Hollywood movie stars and home prices are some of the highest in the country, however, nearby towns do offer affordable housing options.
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© Copyright 2011 Kimberly Dvorak All Rights Reserved.
Internet sales giant Overstock.com to cut ties with California
California’s evolving budget crisis continues to meet headwinds with major Internet companies who are lining up to flee the state if Democratic Governor Jerry Brown signs new tax increase legislation into law.
Overstock.com will join Amazon.com in pulling all affiliate sellers from the state if lawmakers insist on additional taxes. A letter from Overstock.com to Board of Equalization Member Senator George Runner said it will terminate its California affiliates should pending affiliate tax legislation become law.
“This issue is much, much bigger than one company,” said Runner. “A law requiring out-of-state retailers to collect sales tax from California consumers could force thousands of online retailers to terminate their relationships with California-based affiliate businesses. This hurts California jobs and revenues.”
A few weeks ago Amazon voiced their concern in the form of a letter and now Overstock.com has done the same.
Mark J. Griffin, general counsel for Overstock.com, said his company has terminated affiliate relationships “in every state where this legislation has passed” and “will do so in California.”
According to Griffin, in 2009 Overstock.com terminated 3,200 California affiliates after the Legislature passed a similar measure.
“Taxes have consequences,” Runner explains. “Too often we assume companies and individuals will keep acting the same after new tax laws are passed. That is simply false. Businesses change their behavior as tax laws change.”
California’s budget woes are legendary and lawmakers on either side of the aisle have avoided making the first move –fearing voter recalls.
Take Florida for example, voters in Miami-Dade, recalled Mayor Carlos Alvarez yesterday in a landslide 90 percent vote. Disgruntled constituents lashed out when Alvarez’s missteps showed his office handing out lavish pay increases to staffers, a publically-funded stadium for the Florida Marlins and the taxpayer a larger property-tax bill. The local recall results were the largest in political history.
Meanwhile, California continues to operate without a state budget and Governor Brown emphasizes that state residents must take part in a $26 billion “shared sacrifice” – half tax hikes and half spending cuts. Brown insists it’s the state’s Republicans who are blocking budgetary progress, yet Sacramento is ruled by Democrats in both houses and the governor’s office.
California’s weary taxpayers have not indicated the consequences that will be shouldered by lawmakers if tax increases become reality. However, politicians beware- angry Florida voters recalled a popular mayor and California recalled Arnold Schwarzenegger’s predecessor Gray Davis after tax increases.
While the jury is out on the level of voter anger in the Golden State, proposed tax hikes could come back to haunt any lawmaker who signs on the dotted line.
“Supporters of this proposed policy claim that they want to create a level playing field for businesses that have retail presence in California and are required to collect sales tax,” Runner said. “Unfortunately, none of the bills under consideration will level the playing field because out-of-state online retailers will simply modify their business model to avoid collecting California’s sales tax.”
Runner contends the 25,000 Internet affiliates in California are at risk of being wiped out by this attempted sales tax grab. “This law will kill jobs and cost the state revenue as these individuals and businesses close up shop in California,” he finished.
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© Copyright 2011 Kimberly Dvorak All Rights Reserved.
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Amazon to cut California jobs if legislators insist on Internet tax
Looking for ways to drum up extra revenue in the state of California, legislators are seeking to impose a new state sales tax on Amazon.com Internet sales. However the Internet giant says not so fast and if proposed laws are passed they will sever all ties with affiliate businesses in California.
Currently the Golden State has more than 10,000 Internet businesses that earn a living with Amazon.com.
“In no uncertain terms, Amazon has made it clear to me that the checks they send Californians will be cut off overnight if pending (sales tax) legislation aimed at regulating their operations becomes law,” said George Runner, former state senator and current State Board of Equalization member.
Runner posted a letter he received from Paul Misener, Amazon’s Vice President for Global Public Policy, in which Amazon leaders cite four pending tax bills—AB 153 (Skinner), AB 155 (Calderon), SB 234 (Hancock), SB 655 (Steinberg) as anti-business laws.
All these measures would require out-of-state online retailers, like Amazon, to collect sales tax on purchases made by Californians.
The assault on taxpayers would cost California much-needed revenue as well as thousands of jobs.
“If any of these new tax collection schemes were adopted, Amazon would be compelled to end its advertising relationships with well over 10,000 California-based participants in the Amazon ‘Associates Program,’” Misener explained.
Don’t think Amazon will actually cut ties with California? Just ask the folks in North Carolina, Rhode Island and Colorado, who lost their livelihoods with Amazon.com. Misener says statewide terminations occurred in those states after lawmakers enacted similar laws.
Amazon points to U.S. Supreme Court’s ruling, Quill, that prohibited states from requiring sales tax collection by sellers lacking physical presence in the state and clearly Amazon falls under this high-court decision, according to Misener.
A Board of Equalization analysis illustrates the impact of the pending Assembly measures and cautions that 50 percent of projected revenues would vanish as a result of Amazon’s action.
According to the BOE analysis an “adverse impact on state employment,” would likely result in lower corporate and personal income tax revenues for the state.
Runner concluded that, “The Legislature needs to stop considering bills that would hurt jobs and instead start improving California’s dismal business climate so we can attract much-needed jobs to our state.”
The state stands to lose a substantial amount of revenue. According to the Sacramento Bee, “California affiliates last year paid $124 million in state income taxes, plus business, employment and property taxes. (And) that doesn’t count the multiplier effect of affiliate dollars in local economies.”
Unlike the federal government who can print money or borrow trillions from China (they currently hold nearly $1.2 trillion of U.S. bonds), California is financially bankrupt. Driving businesses and taxpayers out of the state will only postpone the inevitable- draconian cuts and failure.
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© Copyright 2011 Kimberly Dvorak All Rights Reserved.
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Shady California bookkeeping creates the nation’s largest budget shortfalls
Depending on the day California taxpayers are on the hook for $25-28 billion of debt, however according to one state watchdog group, this number is just the tip of the iceberg.
California Political News reported that the $25 billion figure does not include $10 billion in outstanding lawsuits, $3 billion owed to government schools or the $146 billion owed to the California Teachers’ Retirement System (CalSTRS).
If these numbers don’t resonant with the voters, the Golden State pension funds are destined to collapse the state. Currently California taxpayers pay nearly 25 percent of the teachers’ bloated pension fund for which they are treated to some of the worst schools in the country. Currently, Los Angeles County only graduates 50 percent of its high school students.
“The governor is ignoring that they (teachers’ pensions) need another $4 billion a year, every year, for CalSTRS,” said Marcia Fritz president of California Foundation for Fiscal Responsibility.
While there have been rumblings of revamping the antiquated Internal Revenue Service (IRS) on a national level, financial experts think the time is right for California to lead the way with a flat tax.
“If done right, it would profoundly and positively change the economy in California. A low single-digit rate would unleash creativity,” said Steve Forbes of Forbes Magazine. The genius behind the flat tax is the more you make or spend the more you pay. The added bonus is the flat tax could eliminate special interests and level the playing field for those paying taxes.
Why not implement the flat-tax program? If it fails, California goes down in flames- if it works the Governor takes the glory and Beltway politicians will have no more excuses to avoid revamping the IRS.
Most voters would like to banish lobbyists’ and a flat tax would do just that. By only allowing dependants to be claimed on taxes, the special interest groups would starve because lawmakers could no longer provide them with key tax breaks.
The new IRS would also hold more Americans responsible for paying taxes therefore affecting their take-home pay and encourage them to vote accordingly.
California is currently one of the most expensive states to live and conduct business in and the continual bevy of regulations, oppressive business taxes and generous entitlements have only resulted in large businesses fleeing to more business-friendly states.
Businesses like Bing Energy, who produces hydrogen-fuel powered cells, is moving its manufacturing and corporate headquarters to Florida in order to save more than $150 million in taxes. Because the Sunshine State doesn’t have an income tax, Floridians are able to recruit companies throughout the country and increase their bottom line.
Desperate times should provoke lawmakers to do the right thing, but for the meantime it looks as if California politicians intend to carry on with business as usual- at the expense of the taxpayer.
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© Copyright 2011 Kimberly Dvorak All Rights Reserved.
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Want to go to college? Not in California
California’s budget crisis will now be handled by adults according to newly-minted and former California Governor Jerry Brown. Nothing is off the table Brown said- except those who have collective bargaining contracts. That grown-up budget conversation came at the expense of the state’s coveted higher-education programs.
The billion-dollar cuts shocked college administrators and prompted warnings to high school seniors it will get a whole lot tougher to attend a University California like (UCLA) or any California State college.
Brown’s new budget proposals include $12.5 billion in overall spending cuts, including $1 billion for the California University campuses.
“These cuts will be painful, requiring sacrifice from every sector of the state, but we have no choice,” Brown said. “For 10 years, we’ve had budget gimmicks and tricks that pushed us deep into debt. We must now return California to fiscal responsibility and get our state on the road to economic recovery and job growth.”
Charles Reed, the chancellor of the Long Beach-based CSU, said the proposed budget amounts to an 18 percent decrease in state funding for universities. This proposal, if passed by the state Legislature would take college spending back to the levels of 1999-2000. California universities currently educate roughly 70,000 more students than it did a decade ago.
“The magnitude of the budget reduction in one year will have serious impacts on the state’s economy, limit access for students seeking entrance into our universities and restrict classes and services for our current students,’” Reed explained.
Reed said universities have already raised tuition and employed furloughs, but it’s not enough.
“We will work with the administration and the Legislature to minimize, as much as possible, impact to students,” he said. “However, the reality is that we will not be able to admit as many students as we had been planning for this fall.”
Questions will surely mount as the state Legislature passed a DREAM Act law of their own. Arguments against the bill came from those who said citizens would have to compete for university slots with illegal aliens. However, proposed cuts will surely lead to more competition because colleges will be forced to reduce incoming students.
University of California President Mark Yudof called the proposed budget “a sad day for California.”
He continued to explain that “the budget proposed by Gov. Brown, the collective tuition payments made by University of California students for the first time in history would exceed what the state contributes to the system’s general fund. The crossing of this threshold transcends mere symbolism and should be profoundly disturbing to all Californians.”
Yudof explained the chancellors of UCLA and other UC campuses will have six weeks to develop plans to meet the proposed budget reduction. “With the governor’s budget, as proposed, we will be digging deep into bone,” he said. “The physics of the situation cannot be denied, as the core budget shrinks, so must the university.”
For the meantime Brown left K-12 education alone and said they have already sacrificed pay in the last few years under Schwarzenegger. Brown claims he will seek a June special election to increase California’s income and sales taxes, including the state’s vehicle license fees.
Assemblyman Bob Blumenfield, D-Van Nuys, said the panel will start reviewing Brown’s proposed budget on this week.
“Brown’s call for change doesn’t hold anything back,” he says. “His vision acknowledges that we are long past a debate about cuts and taxes. California government must be restructured in order to be more responsive and cost-effective.”
For more stories; http://www.examiner.com/county-political-buzz-in-san-diego/kimberly-dvorak
© Copyright 2011 Kimberly Dvorak All Rights Reserved.
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