Friday, January 6, 2012

Brown's Budget - California Still Emulating Greece

Leveraging the same intellectual and ideological bankruptcy as President Barack Obama is Governor Jerry Brown in California.

California remains a fundamentally bankrupt state with a real budget deficit of over $20 billion dollars. Decades of progressive leadership in the State Legislature has left the state a shadow of the 'Golden State' persona. For the 7th consecutive year, this is the worst state in the union for business - and the anti-business approach not only continues, but accelerates. Faced with an irresponsible fiscal model, the Governor introduces a fantasy driven budget (8%+ investment returns?) assuming that the Governor's $7 billion tax increases for the November ballot passes - and somehow will solve the huge deficit we have now...and will be worse in July.

Then he threatens us that if we don't pass his tax increases and fantasy drive revenue assumptions, he will gut education spending, first responders, courts, lifeguards at beaches, and state parks. These all take precedence over attacking real waste and fraud within the State Budget - the thousands of duplicate and wasteful agencies / regulatory bodies, giving illegal immigrants tuition to State Universities, funding and rewarding public sector unions, and making the State Government the leading employer in the State. In other words, doing the same thing as has been done for decades, promising different results - and too many morons in California buy this and other BS.

BS like the argument being made over the Brown tax increases. The target - celebrity twit Kim Kardashian. Brown's allies say that since Kim earned $12M in 2011 and only paid 10.3% state income taxes on that total - it's unfair that someone who earned the average salary in the state, $47K pays 9.3% income tax rate.

The 10.3% income rate is the current maximum state income tax rate and kicks in at incomes over $1,000,000 ....while the just 1 point lower 9.3% income tax rate is applicable at $46,766.  The next tranche down, the 8% rate starts at incomes at $37,005.

This is the structure the Democrat dominated State Legislature established.  Few other states have income earners making as little as $37,005 paying a 8% state tax rate - those that approach this are also dominated by progressives.

Today, in order to justify a major temporary (as the Governor's tax proposition is for only a temporary tax hike to fix a permanent problem) increase - we're told these rates as defined by the Democrats are 'unfair'...after all Kim only pays 1% more tax than the average Californian.

Is that really the case?  10.3% of $12,000,000 is a tax liability of $1,236,000.  9.3% of $47,000 is $4,371.  This means that Kim already is paying $1,231,629 more in state income taxes than the average Californian.  This is also on top of her Federal income tax liability which is likely well over $1,000,000 annually.

Is it really unfair that Kim pays 282 times what the average Californian pays? What is the right number?  500 times more?  1,0000 times more?  Why not take 90% of what the Feds leave her with?

Then what will Kim do if she sees her California tax liability increase significantly?

If she doesn't leave the State - as so many other job creators, wealthy, and middle class are already doing - will she still continue to hire / employ as many people as she does today?  The PR flacks, the makeup artists, the personal assistants, the personal trainers, the lawyers, the costumers, the entourage? 

Anyone consider the impact 'downstream' of this decision.  In Excremento - it's not likely.

Well, Kim might - as even if taxed at the higher rates and paying $300,000 or $400,000 more in California income taxes, she still has plenty left - but then...if the State is only getting less than half a million more from Kim and others like her - how does it close a $20 billion plus budget deficit?

The answer is, it doesn't.  Just as with the Feds, we can take 100% of the worth of the Forbes 400, and that will only provide $1.5 trillion towards this years $1.3T - $1.6T budget deficit or the $1.2T increase being asked for by the President on the nation's credit card limit.

California doesn't have a revenue problem.  The US doesn't have a revenue problem. 

We have spending problems.  Problems based not only on spending far more than the government seizes from the economy - but in it's priorities and choices as to how and where it spends it's money. 

No comments:

Post a Comment