A few weeks ago, David Dayen highlighted Asm. Noreen Evans' work stamping out the myths of the budget process through video. But that's not the only myth out there, there's also the persistent Myth Of The Corpse of Howard Jarvis. Specifically that Californians pay outsized taxes and that corporations are flocking away from California. Simply put, it is not true:
A study by giant auditing firm Ernst & Young showed that, as of 2007, businesses in 34 states paid a higher share of overall tax collections than in California. California ranked 17th in tax collections as a percent of income in 2006, the most recent year data is available from the U.S. Census Bureau. That is hardly the worst and is a more accurate reflection of effective tax burden, said Justin Garosi, an economist with the Legislative Analyst's Office.
In addition, a 2007 study by the Public Policy Institute of California showed that only a small number of businesses leave the state - and for many reasons other than taxes.(MediaNews 6/15/09)
Californians pay taxes that are fairly average, but certainly not extraordinary in the course of American politics. There are more holes in our tax code than swiss cheese. (see the cute picture of a mouse in cheese, cute, huh?) All the loopholes allow the rich to pay a far lower effective tax rate than the poor and even the middle class. It's why Warren Buffett blasted California's tax system and subsequently saw Arnold distancing himself from the investment magnate.
Combined with California's role as a donor state to the federal government, with the feds only returning about 80 cents on the dollar, that California ends up with a massive budget crisis should shock nobody.
The fact is that our current tax structure, with all the loopholes and deceptively high tax rates serves the Right's message well, but doesn't actually serve to effectively fund the state government. We desperately need tax reform to fix these loopholes in order to make the tax structure MORE progressive and more fair. Furthermore, it would be absolutely ludicrous to go down the absurd path of making the system more regressive that Susan Kennedy suggested. |
