More on California’s epic self-inflicted failure

November 28, 2012

Fairness

It’s okay. It’s all in the name of fairness:

California residents already contend with one of the most progressive tax codes in the country. Not only does California have high marginal rates, those high rates kick in at relatively modest income levels. California’s middle class residents earning $48,000 a year, for example, pay a state tax rate of 9.3%. Millionaires in 47 other states don’t even pay that high of a marginal rate. However, one of the state tax code’s greatest flaws is it’s over-reliance on upper income households and the revenue volatility it creates, and that is a problem that Prop. 30 would further exacerbate.

As of 2010, the state relied upon 144,000 households, 1 percent of taxpayers, for 50 percent of total state income tax… [With Proposition 30’s passage,] the top 10 percent of earners would be responsible for over 80% of the projected income generated – a fact that Gov. Brown and other advocates of the bill readily acknowledge.

I think I know how the lookout on the Titanic must have felt.

One of the weirdnesses (among many) I’ve noticed on the Left is the assumption that tax compliance is static, that, no matter how high you set the rates, you’ll draw in the expected revenue. That idea is, of course, a crock.

Tax behavior instead is dynamic: raise the rates too high, and rationally self-interested taxpayers will do whatever is legal to avoid them, including moving out of the jurisdiction.

Businesses are already leaving California at a rapid pace. Once Prop 30 really kicks in –with its backdated taxes– businesses and the so-called rich will truly head for the border.

But that’s okay; the left has already figured out the answer — we’ll just charge them exit taxes!

(Crossposted at Sister Toldjah)


Yikes! Student loan bubble bursts.

November 28, 2012

“The next subprime crisis.” This is bad.


California: We’re the best worst state! Yay? Updated.

November 28, 2012

The new flag of California

Now here’s something to be proud of. Thanks to nearly 50 years of  Democratic control of the legislature and the legislators’ kowtowing to public unions in return for donations and  support, the state of California –the Golden State, the land that inspired untold millions of dreams and created unheard of prosperity for its people– is officially the worst-run state in the nation:

50. California

Debt per capita: $4,008 (18th highest)
Budget deficit: 20.7% (17th largest)
Unemployment: 11.7% (2nd highest)
Median household income: $57,287 (10th highest)
Pct. below poverty line: 16.6% (18th highest)

California is 24/7 Wall St.’s “Worst Run State” for the second year in a row. Due to high levels of debt, the state’s S&P credit rating is the worst of all states, while its Moody’s credit rating is the second-worst. Much of California’s fiscal woes involve the economic downturn. Home prices plunged by 33.6% between 2006 and 2011, worse than all states except for three. The state’s foreclosure rate and unemployment rate were the third- and second-highest in the country, respectively. But efforts to get finances on track are moving forward. State voters passed a ballot initiative to raise sales taxes as well as income taxes for people who make at least $250,000 a year. While median income is the 10th-highest in the country, the state also has one of the highest tax burdens on income. According to the Tax Foundation, the state also has the third-worst business tax climate in the country.

The best run state? North Dakota. In fact, the top five are run by fiscally conservative Republican governments, while the three worst of the bottom five are dominated by liberal Democrats.  I detect a pattern here, and it has much more to do with governing philosophy than with the letter after the politician’s name.

The analysis given after the data is horse feathers, though. Yes, California did suffer heavily from the economic crisis that hit in 2008 and the resulting recession. But that does not explain the slowness of our recovery. That, instead, is explained by the poor policies followed by the government in Sacramento, which has done everything right — if the objective was to choke of economic growth and job creation. Borrowing too much money, then spending it on on padded public pensions and useless projects like high-speed rail; raising already-high taxes on the very people who create the jobs we desperately need, thus leaving no money for reinvestment and driving those people out of the state or out of business; and a regulatory environment that can only be described as miserable. Our “leaders” have taken us straight into the pit and they show no sign of changing course.

Well done, California. Well done!

via Legal Insurrection

RELATED: Other measures of our success: California now leads the nation in poverty, or, as my friend Teach puts it, we’re “Brokefornia.”

UPDATE: Walter Russell Mead explains far better than I did why California’s recovery is so weak:

The problem with California has never been that bad policies put the state in a permanent recession. Rather, bad policies have meant that the state and its residents suffer more than average when recessions come, and that they benefit less than they should when the good times return. Some of the world’s most dynamic people and industries are found in California, but poor governance means that the state as a whole keeps losing ground when compared with the country as a whole. That is California’s real problem, and the Times would serve its readers better by analyzing the forces holding California back from achieving its magnificent potential instead of hailing a modest and cyclical economic recovery as some kind of proof that the state’s model ‘works’.

Left unspoken: We keep electing those responsible for the poor governance.

(Crossposted at Sister Toldjah)


PA college to cut hours to avoid Obamacare

November 28, 2012

“But at least we won the election! Obama!!”

Don’t say we didn’t warn you:

Pennsylvania’s Community College of Allegheny County (CCAC) is slashing the hours of 400 adjunct instructors, support staff, and part-time instructors to dodge paying for Obamacare.

“It’s kind of a double whammy for us because we are facing a legal requirement [under the new law] to get health care and if the college is reducing our hours, we don’t have the money to pay for it,” said adjunct biology professor Adam Davis.

On Tuesday, CCAC employees were notified that Obamacare defines full-time employees as those working 30 hours or more per week and that on Dec. 31 temporary part-time employees will be cut back to 25 hours. The move will save an estimated $6 million.

I don’t know how Professor Davis voted, but I’m sure some at least of his affected colleagues voted to reelect Obama and a senator who voted for Obamacare.  Maybe they should have thought more (or at all) about the perverse incentives built into the bill.

‘Cause, y’know, elections have consequences.

PS: The article continues with a representative of the Steelworker’s Union saying the answer to these cuts is to… Wait for it… organize!! Economic reality shall bow before the power of the Almighty Strike!

After all, that did the Baker’s Union so much good with Hostess.

PPS: Yes, this is news from before the holiday. I’m catching up on some interesting stuff.

(Crossposted at Sister Toldjah)


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