Skip to comments.Despite Tax Increase, California State Revenues in Freefall
Posted on 12/08/2012 7:47:45 AM PST by lowbridge
California State Controller John Chiang has announced that total state revenue for the month of November 2012 fell $806.8 million, or 10.8%, below budget.
Democrats thought they could hammer the rich by convincing voters to pass Proposition 30 to create the highest state income tax in the nation. But it now appears that high income earners have already voted with their feet by moving themselves and their businesses out of state, resulting in over $1 billion shortfall in corporate and income taxes last month and the beginning of a new financial crisis.
Passage of Proposition 30 set off euphoria and expectations of higher spending for public employees. The California Teachers Association (CTA) trumpeted: California students and working families won a clear victory today as voters clearly demonstrated their willingness to invest in our public schools and colleges and also rejected a deceptive ballot measure aimed at silencing educators, other workers and their unions.
State bureaucrats immediately ramped up deficit spending far beyond the states $6 billion annual tax increase,with the Departments of Health Services and Developmental Services increasing this months spending by over $1 billion versus last year. The lower tax collection and higher spending drove the States deficit after the tax increase to $2.7 billion for the first 5 months of this fiscal year.
(Excerpt) Read more at gopthedailydose.com ...
Well - One + One = Two... some arithmetic that Libs have NEVER bothered to learn. Tax increases + Increased spending = Increasing deficit. How complicated is that?
The California ‘RATS will blame it on Bush or Sandy. You can’t fix stupid.
agree with previous poster, they didn’t raise taxes enough, obviously. Then, once it gets to 100% of all income, they can nationalize all private business and property, and take all net worth. Surely that would work for them. And when that doesn’t work, well, only thing left it is to liquidate some of the uncooperative residents.
CA should probably borrow some more money and build a wall (iron curtain) to keep their people from fleeing?
As us Freepers would say, “well, durrrrrrrrr...”
Astonishingly, the article doesn’t appear to contain the word ‘unexpected’.
The roaches that infested California in the Sixties, Seventies and Eighties are now finishing the job of burning (my home) state to the ground before they all colonize Oregon and Washington and other states to begin the process anew. (Yes, I know it’s already well underway in those states and in others).
In the good old days, Colorado natives had a dislike for Texans, who showed up at the winter resorts, and were a bit too ostentatious for the locals. When left coast real estate boomed, the Californians bailed out en mass when they discovered they could buy the same house in Colorado for 1/5 the cost (with 5 acres of land surrounding it). Two bumper stickers seen during that time:
“At Least the Texans Went Home after Ski Season”, and, later:
“Don’t Californicate Colorado”
>>> .... California State Revenues in Freefall
WHAT in the world does that have to do with things?
Democrats designed the scheme to give them absolute power, absolute control, over The People. They have completely destroyed ‘their enemies’. Look at the CA repub in shambles. It worked, didn’t it?
Do you think they fear People rise up and oppose them? No, those who are able, left.
A lot of high roller already are non-residents of CA..while spending about six months a year there. I wonder about Romney. He has a house in La Jolla and NH I think. NH has no state income tax..I wonder which one will be his tax residence?
For those who are considering a move to N Nevada to work in the Reno/Carson City/Sparks area, I have a rural property all set up for horses.
Need to move closer to a family member who has health issues.
I have a CASH finder’s fee on this property. Contact me if you are interested.
problem is the Calif stupids will buy whatever the libs are selling.
The Laffer curve is not funny for those whose refuse to acknowledge its truth.
It’s not like history is absent of lessons to be learned from bad fiscal policy and oppressive taxation.
The people in charge are either stupid or just don’t care about the consequences.
Contributing states like Texas (net contributor) will get fed up with having to bail out the failed social engineering policies of other states. As long as things are okay nothing will happen.
But when the collapse affects the daily lives of people there will be a reckoning.
It is as predictable as the law of gravity.
The only question is when, how, the cost, and what will be left in the aftermath.
I’m admittedly not smart enough to answer those questions but I am smart enough to know its coming and I need to be prepared to survive or be at the mercy of FEMA, DHS, etc.
This is a true story...in Germany back around twelve years ago...the liberal democratic gov’t had decided that they’d raise the taxes on cigarettes...in a two phase approach. It’s not a minor tax hike....it’s very significant in nature. On one side, the tax revenue folks who desperately need more cash in the tax bucket for the government to survive, and the other side are the health folks who want enough taxes to pursue folks to quit smoking.
Well...they get around eight months into this new taxation period, and nearing where phase two of a hike would occur. Suddenly there’s an emergency meeting of the tax revenue folks and the leadership of the Chancellor’s office. There’s a major problem.
The money they typically take in for eight months....is around thirty percent less than they anticipated. It’s a huge drop in revenue. At the one year point, it might be near forty percent less tax revenue than they were aiming for. They need solutions and answers quick.
The health guys stand up and say that the high tax rise was enough to make people quit buying German smokes (evident by fewer cigarettes sold). Full speed ahead for them.
But then, the customs people speak up and admit they’ve been catching thousands of people bringing in cheaper cigarette cartons from Poland, Luxembourg, etc. Some guys were bringing in thousands of cartons which had been slipped into ports with no taxation and were being brought into a new German black market.
Suddenly, it was obvious that the increased tax rate deal had backfired and they made a quick decision not to implement phase two. They instead tried to put more emphasis into stopping the black market and hope to bring the tax losses back into the normal range.
It’s been a decade now....and there’s still lots of illegal cigarettes being brought into Germany....avoiding the taxes entirely. They lost billions over that decade period from their tax revenue practice. No one will admit it was a stupid move....but they’ve had to raise taxes on other things...to make up for this loss.
Hayek was right.
Notice how hard-core Obama and his cronies (and backers) are. Look at the fiscal cliff pseudo-debate.
Next set of dictators will be even harsher.
do I really have to say it???
Headline should read: “Because of Tax Increase, Tax Revenues Fall”
This is one point that the old-school democrats and republicans could agree on, that if you lower the tax rate, you’ll increase tax revenues. JFK proved this. Reagan proved this.
This is the point of the Laffer curve, that the tax rate has a peak where it will cease to result in higher tax revenue, once you reach that peak, if you raise the tax rates higher, revenue will fall off as the workers and producers will take offense at being robbed and will have a vested interested in finding ways to hide their money and protect their earnings.
We must now assume that the politicians who seek to raise the tax rates know this to be an undeniable truth and that they are raising the tax rates not (as they claim) to increase tax revenue, but to punish the workers and producers.
Again, their end goal is to perform a Trayvon type smashing of the head of their opponents into the sidewalk, spitting in our face as they crush our skulls saying, “Don’t you ever...EVER deny me the power to do whatever I want. You deserve to be punished. And I’m going to punish you until you wish you’d been born and raised in the poverty of a third-world country, which is what we are going to turn America into.”
I was talking to a director of a major California company. They have operations worldwide but are heavily California-centric. He said theyd convened the corporate planning team the day after the election. He also said that they earlier had moved a major program from LA to Tennessee. They offered a move package but expected few people to take it. They were stunned to find that everybody took it.
He said that most likely the company would begin moving more and more projects to other states and not replace their California staffs as they retired or were laid off.
They can get behind the Detroit City Council in demanding that Obama bail them out as a quid pro quo for their votes. That will be quite a line.
I liked this line from above article.
there was welcome news that a business had committed to opening in the State. Executives of the 99 Cents Only Stores Inc. proclaimed they would be opening a new location in Beverly Hills on formerly posh Rodeo Drive.
“... resulting in over $1 billion shortfall in corporate and income taxes last month and the beginning of a new financial crisis.”
I mean....who woulda guessed???
Take note zero and reid and all you silly dumbles.
You too Boehner...stand and FIGHT! You have proof: what they want doesn’t WORK!
The ones that you mentioned know exactly what they are doing. And why they are oing it. They are only trying to fool the idiots into thinking they care about them.
Filed as “No Shit Sherlock”.
“The roaches that infested California in the Sixties, Seventies and Eighties are now finishing the job of burning (my home) state to the ground before they all colonize Oregon and Washington and other states to begin the process anew. (Yes, I know its already well underway in those states and in others).”
Everything you say is so true! And Brown has been in the thick of it throughout his miserable Marxist life. It even goes back to his worthless father Edmund G. (Pat) Brown. The man who brought us ugly freeways to nowhere, and gassed the “student protests” at Berkeley with a helicopter. If it haddn’t been for Ronald Reagan’s terms between the two of them, California would have been finished a decade ago. I only hope that this state goes over the fiscal cliff with Brown at the helm. It will be a fitting end for him (and his party). Oh, and let’s not forget to give him “credit” for how Oakland is today. LIke his governorships, being mayor of Oakland achieved the same results. Like FUBO, this jerk has never had a real job.
Sadly, I have to agree....the financial cliff is their windfall and they want it.
“You can’t fix stupid.”
Sure you can,the problem is that the ways to do that are all illegal at the present time.
If CW2 comes,then fixing stupid will be a top priority.
Neither Kalifonia nor the federal government gets it. I happily left that Socialist Republic more than a decade ago when Gray Davis was busy driving it into the ground. Wish it were as easy to escape the heal of the feds.
They’ll keep pushing the tax button until the whole thing collapses around them.
That's also called the point of diminishing returns.
That's what I get for posting before coffee.
The point where revenues start to drop, because prices are just too high - THAT is the point of diminishing returns. To optimise income, pricing (tax) should be set right before that point.
At least there’s no income tax in WA. It’s been soundly beaten every time it’s been brought up for a vote, despite the best attempts of the left to use class warfare as a means of passing it.
Some version of Directive 10-289 to prevent the “rich” from leaving their punitive tax state coming soon !
It's all politics. Reality, and its consequences, just doesn't figure into their lust of power. After all, they will get theirs. To heck with common sense.
To wit, in Congress, the CBO can't use dynamics, such as the Laffer Curve, to give a more realistic estimate of the impact of tax policy.
The old story of a TX US Rep (economics prof, Dem turned Pubbie, iirc, name escapes), asked the CBO what the revenue of 100% tax rate would be.
The answer was the expected income of all US taxpayers without any effects of the punitive, and disincentivizing tax rate.
Let’s not forget to give due credit to Arnie. He did even more than Gray Davis to push California over the cliff, and he also ensured the return of Jerry Brown.
And, regretably, we owe the installation of Arnie to Bush and Rove and company, who moved in and “fixed” the California Republican party.
Ah, but do they bring their pernicious voting habits with them?
I guess the so callled “rich” don’t want to be “eaten” afterall and are leaving CA by the hundreds of thousands. CA can rot and fall into the Pacific... It won’t be missed.
A credible source pretending to be a reporter on a blog would provide their last name.
Conservatives will be blamed, and the MSM will support it.
Google News is our friend. The story is true and at sources I’m sure you’d consider credible you can get all the lame excuses and rationalizations you’d expect for the “problem”.
the libtards in Washington will bailout the libtards in California. It will be another too big to fail and libtards are emotionalists and don’t care about principles.
This is a rather strange article: It begins by saying that high income Californians have “voted with their feet” and moved out of state, causing an increased revenue shortfall. But then it goes on for 5 paragraphs, citing studies and articles to “prove” that the “super rich” are not leaving.
My own anecdotal evidence suggests that the “super rich” may indeed not flee in large numbers: Generally they either “don’t feel it” personally, don’t mind, or can manipulate their finances such that the high taxes have little effect on them. Of course those same manipulations tend to damage economic growth...
I suspect that more important, what instead happens is that businesses gradually “bleed out” even if the top end CEO’s and such stay — after all, California is overall a beautiful / nice climate place to live. (If I didn’t need to worry about money, I’d consider it myself.) More important, new entrepreneurs and businesses look at the costs of a place like CA and tend to not move into it, depriving the state of vital “new blood”. Then add large numbers of people who are middle and upper middle class, including many retirees, who move to states with lower costs of living.
All said, reckless fiscal policies and a poor business climate probably harm CA more than taxpayers leaving to avoid the high taxes. But then again, all those factors and more are inextricably intertwined.
It’s a small example of the future of Al Amerika.
To the Socialist-RATs, no tax is ever enough.
“And, regretably, we owe the installation of Arnie to Bush and Rove and company, who moved in and fixed the California Republican party.”
And yet just yesterday, I responded to a poster who took exception to my comments that Bush was a lousy president! The Bushes, McLames, Doles, Boners, Arnolds, et. al., are the reason I am re-registering Independent. The GOP is at the root of this nation’s problems, because it is an gutless, semi-socialst group of East Coast “liberals” whose only care is which office they occupy in the HOB! and which DC parties they get to attend! BTW, I voted for Tom McClintock, a man who, as governor would have worked to put things back together. But we got instead a third-rate actor who has, it turns out, gone through life with an open fly!
“The beatings will continue until morale improves.”
a. Tax increases haven’t hit yet.
b. Falling revenues seem more likely to be the effect of the leading edge of a recession. Earnings, sales are down.
c. The article discussed the sociology of high income earners. Which is fine as far as that goes. People who are wealthy in California aren’t likely to leave just because of this increase. The real problem though is that business formation and growth in California is busted. New rich people are more likely to start getting rich elsewhere. And there is the marginal effect of tax avoidance.