Here’s a depressing but documented comparison of California taxes and economic climate with the rest of the states. The news is breaking bad, and getting worse (twice a month, I update crucial data on this fact sheet):
- California has the 2nd worst state income tax in the nation. 9.3% tax bracket starts at $48,029 for people filing as individuals. 10.3% tax starts at $1,000,000. Governor Brown has put on the ballot a prop to change the “millionaires’ tax” to 13.3%, starting at $500,000 – including capital gains. If approved, CA will be by far #1 in income tax rates. We will be 21% higher than the 2nd highest state (Hawaii), 34% higher than the 3rd highest state (Oregon), and a heck of a lot higher than all the rest – including six states with zero state income tax.
- CA has the highest state sales tax rate in the nation. 7.25% (does not include local sales taxes).
- CA corporate income tax rate (8.84%) is the highest west of the Mississippi (our economic competitors) except for Alaska, and is 8th highest nationwide.
- CA has the highest gas tax (tied with NY) in the nation at 67.7 cents/gallon (June, 2012). National average is 48.9 cents. CA also has the nation’s 5th highest diesel tax – 71.9 cents/gallon. National average is 53.8 cents.
- California in 2009 ranked 15th highest in per capita property taxes (including commercial) – the only major tax where we are not in the worst ten states. But CA property taxes per owner-occupied home were the 10th highest in the nation in 2009.
- CA has now instituted the highest “cap and trade” tax in the nation – indeed, the ONLY such U.S. tax. One study estimates the annual cost at $3,857 per household by 2020. Even proponents concede that it will have zero impact on global warming.
- California’s 2012 “Tax Freedom Day” (the day the average taxpayer stops working for government and starts working for himself) is the 11th worst date in the nation – up from 28th worst in 1994, but down from 4th worst in 2009. CA “improved” primarily because of our state’s soaring unemployment rate – the new tax dodge!
- CA has the 3rd highest state unemployment rate. (July, 2012) – 10.7%. National unemployment rate 8.3%. National unemployment rate not including CA is only 8.0%, making the CA unemployment rate 34.2% higher than the average of the other 49 states.
- CA needlessly licenses more occupations than any state – 177. Second worst state is Connecticut at 155. The average for the states is 92.
- California’s 2012 Business Tax Climate ranks 3rd worst in the nation – behind New Jersey and New York state.
- CA public school teachers the highest paid in the nation. CA students rank 48th in math achievement, 49th in reading.
- 1 in 5 in Los Angeles County receive public aid.
- California has 12% of the nation’s population, but 33% of the country’s TANF (“Temporary” Assistance for Needy Families) welfare recipients – more than the next 7 states combined. Unlike other states, this “temporary” assistance becomes much more permanent in CA.
- California prison guards are the highest paid in the nation.
- For every dollar California pays to D.C., we get back 78 cents. We rank 7th worst.
- California is the worst ranked state for tax administration – another anti-business factor.
- California now has the 2nd lowest bond rating of any state – Basket case Illinois just beat us out for the lowest spot. We didn’t improve our rating – Illinois just got worse.
- California has the 6th highest (worst) state per capita debt. Not counted is local government debt.
- The American Tort Reform Association ranks CA the worst state “judicial hellhole” – extremely anti-business.
- CA tickets are incredibly high. Red-light camera ticket $480. Next highest state is $250. Most are around $100.
- California is tied with 3 other states (Hawaii, Texas[!] and Florida) for having by far the least competitive property & casualty insurance markets.
- California has a nasty anti-small business $800 minimum corporate income tax, even if no profit is earned, and even for many nonprofits. Next highest state is Oregon at $150. A few others under $100, with most at zero.
- California small businesses failed in 2011 at a rate 69% higher than the national average — the worst state in the nation.
- America’s top 650 CEO’s rank California “the worst state in which to do business” for the 8th straight year (May, 2012).
- California, a destitute state, still gives away college education at fire sale prices. Our community college tuition is the lowest in the nation. How low? Nationwide, the average community college tuition is about three times higher than California CC’s.
- This ridiculously low tuition devalues education to students – resulting in a 30+% drop rate for class completion. In addition, 2/3 of California CC students pay no net tuition at all – either filling out a simple unverified “hardship” form that exempts them from any tuition payment, or receiving grants and tax credits for their full tuition.
- On top of that, California offers thousands of absolutely free adult continuing education classes – a sop to the upper middle class. In San Diego, about 1,000 classes for everything from baking pastries to ballroom dancing are offered totally at taxpayer expense.
- Protests about increased UC student fees too often ignore one crucial point – all poor and many middle class students don’t pay the “fees” (our state’s euphemism for tuition). There are no fees for California families with under $80K income. Moreover, Pell Grants and federal tuition tax credits covered the total 2009-10 fee increases for nearly 3/4 of all undergraduates with household incomes below $180K.
- California residential electricity costs an average of 29.2% more than the national average (significantly higher in San Diego and Orange counties). For industrial use, CA electricity is 59.8% higher than the national average (average for 2011).
- A 2011 survey of home water bills for the 20 largest U.S. cities found that for 200 gallons a day usage, San Diego was the highest cost. At 400 gal/day, San Diego was third highest.
- From 2007 through 2010, 10,763 industrial facilities were built or expanded across the country — but only 176 of those were in CA. So with roughly 12% of the nation’s population, CA got 1.6% of the built or expanded industrial facilities. (California Manufacturers and Technology Association podcast)
- California is now ranked as the 2nd worst state to retire in. Only basket-case Illinois is worse. We “beat” NY, RI and NJ.
- Consider California’s net domestic migration (migration between states). From 2000 through 2009, California lost a NET 1.5 million people. Net departures slowed in 2008 only because people couldn’t sell their homes. But more people still leave each year — in 2011 we lost 66,000 net people to domestic out-migration. Again, note that this is NET loss.
These are not welfare kings and queens departing. They are the young, the educated, the productive, the ambitious, the wealthy (such as Tiger Woods) – and retirees seeking to make their pensions provide more bang for the buck. Too often these departing seniors are retired state and local government employees fleeing the state that provides them with their opulent pensions – in order to avoid the high taxes that these same employees pushed so hard through their unions. And once they move out of California, our state can no longer tax their California-paid pensions.
As taxes rise and jobs disappear, we lose our tax base, continuing California’s state and local fiscal death spiral. This “race to the bottom” must stop NOW.
(Richard Rider is the Chairman of the San Diego Tax Fighters. To see the latest version of this “Breaking Bad” column, go to his blog, or his more active Facebook page. The latest two-page fact sheet Word file is available free upon request.)