Skip to comments.California Tax Revenues Plunge; Businesses Exit "Taxifornia" in Droves
Posted on 03/25/2012 6:44:58 AM PDT by SeekAndFind
California Tax Revenue Plunges
Inquiring minds have noticed a huge plunge in California Tax Revenue for the month of February compared to February 2011.
That is a 22.55% plunge in spite of the fact that this February was a leap year adding a day to the calendar.
Madeline Schnapp, at TrimTabs Investment Research sent me a quick note regarding that plunge a few days ago.
Hello MishMany Explanations for the Unemployment Puzzle
I came across this little tidbit from the February report from the Comptroller's office of the State of CA.
In Feb 2012 income tax receipts are down $328 million y-o-y, or 16.5%. Ouch!
What about retail sales taxes? CA had a "temporary" sales tax hike of one cent that expired last July. Adjust the data to reflect that change, it looks like sales taxes in February are $400 million y-o-y +/-, a decline of about 12.4%. Double ouch!
That doesn't sound like robust growth to me.
Something About the Economy Doesn't Add Up
In Piecing Together the Jobs-Picture Puzzle, Jon Hilsenrath at The Wall Street Journal wonders "How can an economy that is growing so slowly produce such big declines in unemployment?"
Something about the U.S. economy isn't adding up.Trimtabs thinks the problem lies in the heavily massaged BLS employment data and the highly suspect BEA personal income data.
At 8.3%, the unemployment rate has fallen 0.7 percentage point from a year earlier and is down 1.7 percentage points from a peak of 10% in October 2009. Many other measures of the job market are improving. Companies have expanded payrolls by more than 200,000 a month for the past three months, according to Labor Department data. And the number of people filing claims for government unemployment benefits has fallen.
Yet the economy is barely growing. Many economists in the past few weeks have again reduced their estimates of growth. The economy by many estimates is on track to grow at an annual rate of less than 2% in the first three months of 2012. The economy expanded just 1.7% last year. And since the final months of 2009, when unemployment peaked, the economy has expanded at a pretty paltry 2.5% annual rate.
How can an economy that is growing so slowly produce such big declines in unemployment?
That said, withholding tax data is also messy and not a perfect measure either, but no matter what I do with the data, I can't get to 200,000+ jobs unless a huge percentage of the workforce is suddenly working for McDonalds
Director, Macroeconomic Research
TrimTabs Investment Research
U.S. unemployment, as measured by Gallup without seasonal adjustment, increased to 9.1% in February from 8.6% in January and 8.5% in December.So, is the BLS carefully massaging the data, or are their seasonal adjustments simply that far out of line with reality, tax collections, and common sense?
The 0.5-percentage-point increase in February compared with January is the largest such month-to-month change Gallup has recorded in its not-seasonally adjusted measure since December 2010, when the rate rose 0.8 points to 9.6% from 8.8% in November.
California politicians seem delusional in their continued delusion that high taxes have not savaged the State’s economy. Each month’s disappointment is written off as due to some one-time event.Taxed to Death
The more likely reason tax collections continue falling is that businesses and successful people are leaving California for the better tax rates available in more pro-business states.
Derisively referred to as “Taxifornia” by the independent Pacific Research Institute, California wins the booby prize for the highest personal income taxes in the nation and higher sales tax rates than all but four other states. Though Californians benefit from Proposition 13 restrictions on how much their property tax can increase in one year, the state still has the worst state tax burden in the U.S.
Spectrum Locations Consultants recorded 254 California companies moved some or all of their work and jobs out of state in 2011, 26% more than in 2010 and five times as many as in 2009. According SLC President, Joe Vranich: the “top ten reasons companies are leaving California: 1) Poor rankings in surveys 2) More adversarial toward business 3) Uncontrollable public spending 4) Unfriendly business climate 5) Provable savings elsewhere 6) Most expensive business locations 7) Unfriendly legal environment for business 8) Worst regulatory burden 9) Severe tax treatment 10) Unprecedented energy costs.
Vranich considers California the worst state in the nation to locate a business and Los Angeles is considered the worst city to start a business. Leaving Los Angeles for another surrounding county can save businesses 20% of costs. Leaving the state for Texas can save up to 40% of costs. This probably explains why California lost 120,000 jobs last year and Texas gained 130,000 jobs.
California Governor Jerry Brown’s answer to the State’s failing economy and crumbling tax revenue is to place a $6 billion tax increase initiative on the ballot to support K-12 public schools. He promises to only “temporarily” raise personal income rates by 25% on any of the rich folk who haven’t already left.
IN his Townhall column, Shedlock writes:
Not only does Obama want to tell you that you have to have insurance, the State of California (with Obama giving a careful eye) wants to mandate self-insured businesses be responsible for the first $40,000 per person, in healthcare liability.
If this passes, any sane business would move to another state if possible.
Indeed businesses are exiting California in drove already.
Those businesses with 25-40 employees who need to stay within the state will start firing employees to get below the 25 employee minimum. The rest will simply be screwed (some into bankruptcy).
This Taxifornia proposal is yet another huge step in the wrong direction, and the idiots running the state cannot even figure out why businesses are leaving.
Enough is enough. It’s time to start all over with health-care. Hopefully the Supreme Court tosses out Obama-care next week.
California is obviously out to prove that Detroitification can be done to a state...not just a city.
For those who want to understand one of the issues facing Small Businesses in California, Here’s a quick look ( From the Los Angeles Times ):
At issue is a new type of self-insurance for small businesses with as few as 25 workers.
Critics said insurers such as Cigna Corp. are using these new plans to game the system and cherry-pick companies with healthier workers. They said this could undermine a key goal of the federal Affordable Care Act to lower premiums by pooling together more healthy and sick Americans into insurance exchanges. Premiums could continue to escalate without a diverse pool of consumers. That prospect has federal health officials weighing action against this practice as well.
Self-insurance, in which employers pay medical providers for their workers’ care, has traditionally been used only by large employers that have the financial resources to pay for expensive medical claims. A Kaiser Family Foundation study found that 60% of U.S. workers with health coverage were in self-insured plans last year.
Now some insurers are chasing after much smaller customers with new plans designed to limit employer payouts for big claims using what’s called stop-loss policies. This guarantees that businesses won’t be responsible for anything over a certain amount per employee, perhaps as low as $10,000 or $20,000, with the rest paid by an insurer. Regulators and health-policy experts say this arrangement undercuts the notion of self-insurance since employers aren’t bearing much of the risk, and it allows companies to circumvent some state insurance rules.
California Insurance Commissioner Dave Jones will unveil proposed legislation next week that would bar insurers from selling stop-loss policies below a certain amount. The specific dollar figure is still under consideration, but some experts recommend a minimum of $40,000 per worker.
Officials in the Obama administration are keeping a close eye on developments in California and other states where insurers are aggressively selling these plans.
The bad news is that now all of the Californians are leaving and will Californicate the states they move to.
I don’t understand the big drop in vehicle license fees, but the increase in booze and cigarette consumption makes sense. I am curious about how Illinois has fared since raising income taxes (on top of tons of hidden taxes and high property taxes).
- former Illini who voted with his feet.
“A Kaiser Family Foundation study found that 60% of U.S. workers with health coverage were in self-insured plans last year.”
That seems way too high to me. Are they doing something like including the military which I suppose is self-insured? Or public workers?
I mean I worked at Macy’s, that’s a huge company, and we weren’t self-insured.
RE: The bad news is that now all of the Californians are leaving and will Californicate the states they move to.
Who takes the place of those leaving California?
My thought also.
Maybe all of those rich hollywood liberal elites will help with the tab.
Out-witted by Mexico. That’s kinda sad.
Something is rotten...and we all know what it is.
The problem with killing the rich and taking all their stuff is you only get to do it once.
Beautiful coinage of a new word! Love it.
I know.I fear for those other states.
This state (Ca)has been destroyed by the crap that goes on here.Now I hear people taking off for places like South Dakota,Montana,Nevada,and of course Texas.I know I have said this before,but it riles me to no end what will happen elsewhere because of their left leanings and the manure that they spread.
“The problem with killing the rich and taking all their stuff is you only get to do it once.”
Maryland is beginning to feel the effects of this phenomenon as many people are sick and tired on the rapidly increasing tax burden Democrats. Needless to say, Democrats have a stranglehold on the state legislature.
Between the Detroitification of states and the Chicagoization of America, we're in deep dark ugly stink.
There will be some of that, but the vast majority of Californians leaving, work in the private sector. That would skew them a bit more to the right.
It also means that California Republicans will likely win even fewer elections in the future than they do now.
Nobody is buying new cars. The fees drop every year on keeping your car. Did you know ca has a sales tax on your car so every time it is sold they collect a sales tax of 8 3/4 percent.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.