Perhaps the rumors of a recovery aren’t yet reaching the ears of California employers, because these numbers aren’t all that recovery like.
Despite signs an economic recovery has begun in the state, California’s unemployment rate inched up in August, once again setting a new postwar high at 12.2%.
The state is one of 14 in the nation with an unemployment rate in the double digits, the Bureau of Labor Statistics reported this morning. Only Michigan, Nevada and Rhode Island, at 15.2%, 13.2% and 12.8%, respectively, have higher unemployment rates than California. The national unemployment rate in August was 9.7%. (LAT 9/18/09)
Now employment is a lagging indicator of economic health, because employers like to be sure business is picking up before they hire workers back. So this very well could be that the economy is recovering, but just not yet for jobs. However, here in California the job situation is quite bad, and the addition of more state budget cuts as we move forward into the fiscal year and next won’t help either. It’s going to be a sloooooow recovery here.
Breaking Bad: California vs. the Other States
by Richard Rider, Chairman, San Diego Tax Fighters
Version 1.49 Revised 18 September, 2009
Here’s a depressing comparison of California taxes and economic climate with the rest of the states. The news is breaking bad, and getting worse (I keep updating this article):
California has the 4th highest state income tax in the nation. 9.55% at $47,055. 10.55% at $1,000,000
By far the highest state sales tax in the nation. 8.25% (not counting local sales taxes)
Highest state car tax in the nation – at least double any other state. 1.15% per year on value of vehicle.
Corporate income tax rate is the highest in the West (our economic competitors). 8.84%
2009 Business Tax Climate ranks 48th in the nation.
http://www.taxfoundation.org/research/topic/15.html
Fourth highest capital gains tax 9.55%
http://www.thereibrain.com/realestate-blog/capital-gains-tax-rates-state-by-state/109/
Highest gasoline tax (averaging 64.5 cents/gallon) in the nation (July, 2009). When gas hits $3.00/gallon, we are numero uno – because unlike many states, we charge sales tax on gasoline purchases (built into the price).
http://www.api.org/statistics/fueltaxes/
Fourth highest unemployment rate in the nation. (August, 2009) 12.2%. National rate 9.7%.
http://www.bls.gov/news.release/laus.nr0.htm
California’s 2009 “Tax Freedom Day” (the day the average taxpayer stops working for government and start working for oneself) is again the 4th worst date in the nation – up from 28th worst in 1994.
http://www.taxfoundation.org/research/show/387.html
To offset lower state revenues, 29 states are proposing 2009 state tax and fee increases totaling $24 billion. California, with 12% of the nation’s population, is proposing 47% of that increase (6/5/09).
http://money.cnn.com/2009/06/0…
1 in 5 in LA County receiving public aid.
http://www.latimes.com/news/local/la-me-welfare22-2009feb22,0,4377048.story
California has 12% of the nation’s population, but 36% 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.
http://weblog.signonsandiego.c…
California prison guards highest paid in the nation.
http://www.caltax.org/caltaxletter/2008/101708_fraud1.htm
California teachers easily the highest paid in the nation.
http://www.nea.org/home/29402.htm (CA has the second lowest student test scores)
California now has the lowest bond ratings of any state, edging out Louisiana.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/03/19/BA7F16JLKH.DTL
California ranks 44th worst in “2008 lawsuit climate.”
http://www.instituteforlegalreform.com/component/ilr_featured_tools/29/item/LAI/19.html
In 2005 (latest figures), for every dollar Californians sent to D.C. in taxes, we got back 78 cents – 43rd worst.
http://www.taxfoundation.org/taxdata/show/22685.html
America’s top CEO’s rank California “the worst place in which to do business” for the fourth straight year (3/2009). But here’s the interesting part – they think California is a great state to live (primarily for the great climate) – they just won’t bring their businesses here because of the oppressive tax and regulatory climate.
Consider this quote from the survey (a conclusion reflected in the rankings of the characteristics of the state): “California has huge advantages with its size, quality of work force, particularly in high tech, as well as the quality of life and climate advantages of the state. However, it is an absolute regulatory and tax disaster.”
http://tinyurl.com/cyvufy
California, a destitute state, still gives away college education at fire sale prices. Our community college tuition is by far the lowest in the nation. How low? Nationwide, the average community college tuition is 4.5 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 tuition at all – filling out a simple unverified “hardship” form that exempts them from any tuition payment, or receiving grants and tax credits for their full tuition.
http://www.sacbee.com/static/weblogs/capitolalertlatest/020722.html
www3.signonsandiego.com/stories/2009/jun/29/1n29fees225829-two-year-colleges-fees-likely-rise-/
On top of that, California offers thousands of absolutely free adult continuing education classes – a sop to the upper middle class. In San Diego, over 1,400 classes for everything from baking pastries to ballroom dancing are offered totally at taxpayer expense.
http://www.sdce.edu
California residential electricity costs an average of 35.4% more than the national average. For industrial use, CA electricity is 56.2% higher than the national average (2007).
http://www.eia.doe.gov/cneaf/electricity/epa/fig7p5.html
http://www.eia.doe.gov/cneaf/electricity/epm/table5_6_a.html
It costs 38% more to build solar panels in California than in Tennessee – which is why European corporations have invested $2.3 billion in two Tennessee manufacturing plants to build solar panels for our state.
http://tinyurl.com/llussb
Consider California’s net domestic migration (migration between states). From April, 2000 through June, 2008 (8 years, 2 months) California has lost a NET 1.4 million people. The departures slowed this past year only because people couldn’t sell their homes.
http://www.mdp.state.md.us/msdc/Pop_estimate/Estimate_08/table5.pdf
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. The irony is that a disproportionate number of these 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.
As taxes rise and jobs disappear, we lose our tax base, continuing California’s state and local fiscal death spiral. This spiral must stop NOW.
NOTE: If you would like to receive my free periodic “Richard Rider Rant” e-newsletter with more of this type of information and analysis, just drop me an email at [email protected]. To see the latest version of this “Breaking Bad” column, plus samples of my free “Richard Rider Rant” e-newsletter, go to my blog at http://www.open.salon.com/blog/richard_rider. This report also is available as a 2 page Word file for formatted printing.