Brown’s new budget attacks producers

Brown’s new budget attacks producers

May 14, 2012

By John Seiler

Gov. Jerry Brown’s May Revise to his 2012-13 budget proposal, released today, only will club more producers into leaving the state. It calls for $8.5 billion in tax increases from the initiative he is placing before voters on the November ballot. Most of the tax increase will come from increasing the top income tax rate by 3 percentage points. It would go from the current 10.3 percent to 13.3 percent, which would be the highest in the nation.

At his 10 am press conference, Brown explained why he believed the wealthy should pay more, “In the past three decades, the most affluent have doubled their share of the state’s income…. The shares of income going to those owners have been disproportionate. The share of income has been going upward” for them.

But he failed to note something crucial: That “those owners” are the owners of businesses that create jobs. And if the jobs aren’t created, then the businesses die. And if the businesses and jobs are gone, then the tax base goes down.

Taxing “those owners” more isn’t a simple matter of moving money around in separate bank accounts. It means punishing the jobs creators.

Revenues declining

Brown also didn’t note something else: Although the economic recovery is tepid, it is a recovery. Tax revenues should be increasing a little — or at least not going down, as in California. The Wall Street Journal just reported:

“California is suffering this tax drought even as most other states enjoy a revenue rebound. State tax collections were up nationally by 8.9% last year [2011], according to the Census Bureau, and this year revenues are up by double digits in many states. The state comptroller reports that Texas is enjoying 10.9% growth in its sales taxes (it has no income tax), while California can’t seem to keep up despite one of the highest tax rates in the land.”

And last week there was wide publicity given to Facebook co-founder Eduardo Saverin leaving not just a particular high-state tax, but the entire USA for tax relief in Singapore, which has no capital gains tax. He’s worth $4 billion, assuming the Facebook’s coming IPI rakes in $100 billion.

Other wealthy people are leaving the USA for freedom in other countries.

Jobs leaving

Wall Street also noted:

“Meanwhile, an analysis by Joseph Vranich, who studies migration of businesses from one state to another, finds that since 2009 the flight of businesses out of California “has increased fivefold due to high taxes and regulatory costs.”

“This month Chief Executive magazine reports that its annual survey of CEOs ranked California dead last among the 50 states in business climate. Texas was number one. The silver lining for Jerry Brown, if not for the California fisc, is that if you’re already ranked 50th you can’t get any lower—though he seems willing to try.”

Even businesses that stay here, such as the iconic Apple Inc., are expanding in other states, including 3,600 just announced for Austin, Tex.

Brown himself implicitly acknowledged the problem with the state’s high taxes and regulations when he said, “I’ve committed to righting the ship of state and getting it into balance. That means that things that are good in and of themselves have got to be stopped. Otherwise we’ll go deeper into debt. Spain, Italy, Greece, Portugal, all are having problems…. Takeaways [government speak for budget cuts] are never pleasant. Look at what’s happening in Portugal, Greece. 100,000 people are marching in Spain.”

Those countries all went on wild spending binges, paid for by high taxes and borrowing — just like California. Now the bill is due and they’re suffering.

He mentioned Portugal. Here’s what’s happening there:

“The cost of seeing a doctor in Portugal has more than doubled, from about $12 to $26 a visit…. Those fees may seem low by U.S. standards. But the Portuguese, like most Europeans, have long been accustomed to universal public healthcare, one of the government benefits at the core of Europe‘s postwar welfare state. Now such entitlements are slowly being chipped away by the continent’s debt crisis.”

The people thought socialized medicine, their version of Obamacare and Medi-Cal, was “free.” It wasn’t.

“The cutbacks may be having a particularly grim effect here in Portugal, already Western Europe’s poorest country. The nation’s mortality rate shot up this winter: Nearly 20% more people died in February and March than in those months last year.”

If that happens in California, Brown could rationalize it as increasing jobs for undertakers.

Yet more taxes?

Amazingly, Brown even left the door open for yet higher taxes. He attacked the “single sales tax,” saying he would sign a bill to increase it to pay for college scholarships. It was a $1 billion tax cut from 2009. But he didn’t note that it was part of Gov. Arnold Schwarzenegger’s budget package that also increased taxes $13 billion overall for two years. Brown called it an “obvious loophole. It was a dumb idea to begin with.” Ending the “loophole” he said, “is equitable, it’s logical.”

But unless closing loopholes is accompanied by cutting taxes elsewhere, then it’s just another tax increase — another attack on the private-sector business and jobs creators.

A question was put to him of ending the “loophole”: “Why not use it for the budget?

He then quickly hedged a bit on spending the money for a new program for college students, saying, “It’s a little bit hypothetical. I shouldn’t have answered so quickly.”

Brown even left open the door for possible tax increases after voters render their decision on his tax-increase ballot measure. He said, “What will the people vote for, what is fair? I came up with the answer. Could it be more?”

But he also surely knows that Democrats might gain two-thirds majorities in both houses of the Legislature this November. If that happens, they could increase taxes at will, without needing a single Republican vote in the Legislature, or the approval of voters.

It’s just such talk of even higher taxes that makes business owners and workers think about leaving this state.

New recession?

Brown, strangely, talked about his tax increase lasting seven years. Which means, he said, “It will expire before the end of the next recession,” meaning the state will then ease up on taxpayers before the economy starts declining again. But as noted above, if one goes by the declining state revenues, a new recession already has struck here.

And nationally, recessions regularly come at five-to-seven-year intervals. The last one started in 2007, so we’re already up to five years. The likelihood of another recession striking the United States in the next two years — not seven years from now — is high. If Europe’s economy keeps imploding, it’s almost certain.

As Stephen Frank warned at CaPoliticalNews.com:

“Please mark January 1, 2013 on your calendar.  That will be an historic day for the State of California.

“Unless things change, President Obama will give us a $494 billion tax increase, nationwide.  That day ends the Bush tax cuts, the [Alternative Minimum Tax] patch and starts the massive, first stage, of Obamacare tax increases.

“In California, that will be the first day of the ten billion dollar per year transfer of funds from one business to another, with billions also going to government, for the scam of the century, ‘Cap and Trade.’  This does not clean one little bit of our air, just moves the dirty air around.  That is ten billion.

“Then, if passed, that will be the first day of the Brown/union $10 billion per year tax increase.  If it passes, families and businesses in California will transfer $10 billion a year to government—causing a loss of jobs in the private sector, forcing more businesses to move out of State.”

Brown said today, “Cash is going to be tight. We have to have the tightest budget we can. We have to make sure it’s a financeable budget.”

But you can’t have a “financeable budget” with businesses and jobs fleeing the state like refugees from Russian in 1917. If Brown were serious, he would cut taxes, not raise them. And he would suspend AB 32, which he can do by executive order, for at least a year.

But he’s not serious.

17 comments

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  1. Rex The Wonder Dog!
    Rex The Wonder Dog! 14 May, 2012, 13:37

    Clown will be forced to get real when the pension sales tax fails spectacularly

    Reply this comment
  2. NTHEOC
    NTHEOC 14 May, 2012, 13:44

    Rex The Wonder Dog! says:
    Clown will be forced to get real when the pension sales tax fails spectacularly
    ===
    Even if it does fail,the pensions will still be there. The money most likely will just come from a cut in your services!! I’m just wondering which ones.Oh well, that’s not for me to decide…

    Reply this comment
  3. Beelzebub
    Beelzebub 14 May, 2012, 14:05

    “Taxing “those owners” more isn’t a simple matter of moving money around in separate bank accounts. It means punishing the jobs creators”

    Too bad we can’t specifically target those businesses that offshore their jobs with higher taxes. Ooops…we can. Those are called ‘tariffs’ which I am completely in favor of. The corporations that screw Americans by sending their jobs overseas should be punished IMO.

    “And last week there was wide publicity given to Facebook co-founder Eduardo Saverin leaving not just a particular high-state tax, but the entire USA for tax relief in Singapore, which has no capital gains tax”

    We should certainly adopt Singapore’s punishments for hard core drugs like heroin and for illegal immigration. That’s another reason their society prospers. They don’t tolerate nonsense and they have the citizen’s interests at heart. Most wealthy people make the majority of their incomes off capital gains. Giving preferential treatment for capital gains means JoeSixPack must pay more.

    “He mentioned Portugal”

    It’s not just Portugal. It’s Spain, Greece, Ireland, France, Hungary, Romania, Czech, Italy, etc….all on the verge of bankruptcy. Why? Because they want to live the good life on credit and debt. Like old fat Wimpy they say “I’ll gladly pay you on Tuesday for a hamburger today”. And Tuesday never comes. Greece should have never been admitted to the EU. The EU decision makers knew they did not meet the standards – but they let them slip through the cracks anyway – and now it’s come back to bite them. Serves them right. Gov Clown is no different from the EU clowns. Regardless of what he says he still wants to eat that hamburger today and not pay for it until next Tuesday. All of them are bloviating con artists.

    “Amazingly, Brown even left the door open for yet higher taxes”

    Come on. That’s the big bottom line here. They screw up – overspend and mismanage the budget – then run to YOU to rescue THEM! How long are you going to put up with that crap anyway?

    “The likelihood of another recession striking the United States in the next two years — not seven years from now — is high”

    Change “recession” to “depression” FIXED!!!!

    “But he’s not serious”

    Are any of them “serious”? They specialize at looking you square in the eye and lying through their teeth with a straight face.

    Let’s start telling it like it is.

    Reply this comment
  4. Beelzebub
    Beelzebub 14 May, 2012, 14:20

    “Even if it does fail,the pensions will still be there”

    No, you’re wrong, NTHEOC. It’s much easier to change the laws or even the constitution itself than to pay people with money that doesn’t exist.

    You think the pensioniers will get priority over the welfare people. Welfare people riot. All you would do is complain. You pension is ripe for a big fat haircut. Prepare yourself. And there is a 100% chance yours will get cut since you have many years to go until you start collecting.

    Reply this comment
  5. Rex The Wonder Dog!
    Rex The Wonder Dog! 14 May, 2012, 15:09

    NTHEOC says:
    ===
    Even if it does fail,the pensions will still be there.

    That is the exact same thing the cops and ff’s in Central Falls RI said ntheoc.

    There is an old saying thta goes something like this; Dont count your chickens before they hatch.

    Reply this comment
  6. Rex The Wonder Dog!
    Rex The Wonder Dog! 14 May, 2012, 15:11

    You think the pensioniers will get priority over the welfare people.

    There is no doubt in my mind Clown will pay pensions to his money backers over welfare recepients.

    But the fact is the money is not going to be there for the multi million dollar pensions. 3%@50 should have never been passed-ever. 2%@50 is also too much.

    2%@65 is where it should be AT MOST. AT MOST.

    Reply this comment
  7. Beelzebub
    Beelzebub 14 May, 2012, 15:43

    “There is no doubt in my mind Clown will pay pensions to his money backers over welfare recepients”

    I disagree, rex.

    The welfare crowd has nothing to lose. Most pensioniers do have something to lose. Pensioniers would work through the system to get what they want. The welfare crowd would take to the streets. And don’t forget. CA has 12% of the nation’s population and 33% of the nation’s welfare population. That’s some impressive welfare crowd horsepower. And once the welfare crowd uprising starts in one city it will spread like wildfire. Pols are immoral and unethical – but not stupid.

    Reply this comment
  8. Rex The Wonder Dog!
    Rex The Wonder Dog! 14 May, 2012, 15:45

    The gov/pulic employees are Clowns bread and butter money spigot-he will never get serious with them.

    Welfare class has NO ONE to lobby for them, they will get the cuts.

    Reply this comment
  9. NTHEOC
    NTHEOC 14 May, 2012, 17:01

    California is Not Broke , but corporate tax subsidies are destroying the economy.We suffer from two problems: a huge concentration of income at the very top of the income distribution and a tax system that fails to tax that concentration. Our tax system asks those with less to pay more and those with more to pay less.Cuts will be imposed because the state will not- or can not – deal with corporate tax evasions. $10 billion in tax evasions from Apple, and there probably is a similar tax evasion by Google, Yahoo, and other internet companies.Because of these corporate pigs we face More cuts to schools, more cuts to social services, health care, child support, police and fire protection.This depression will continue until we require the corporations to pay their share of taxes!!! They benefit from the taxes to!!! They get roads, bridges, an educated work force, police and fire protection, etc.

    Reply this comment
  10. NTHEOC
    NTHEOC 14 May, 2012, 17:30

    Rex says,
    2%@65 is where it should be AT MOST. AT MOST.
    ============
    BAD,BAD idea rex,HORRIBLE in fact!! The cost of workers comp and job injuries would skyrocket! This would be devastating to california!The 3%at50 saves money rex and is why you will never see it gone,I would go no further than 3%at55..Now i agree that this should only be for public safety.

    Reply this comment
  11. Rex The Wonder Dog!
    Rex The Wonder Dog! 14 May, 2012, 17:30

    NTHEOC says:
    They get roads, bridges, an educated work force, police and fire protection, etc.

    NTHEOC, please do not ever, NEVER again, mention cops, FF’s and “educated work force” in the same sentence, it makes me laugh so hard I almost wet myself 😉

    They are GED/HS education jobs.

    Reply this comment
  12. NTHEOC
    NTHEOC 14 May, 2012, 17:42

    Rex says,
    They are GED/HS education jobs.
    =========
    Ahhh, there’s the rex i know!!

    Reply this comment
  13. NTHEOC
    NTHEOC 14 May, 2012, 17:45

    Again rex,
    I challenge you or anyone else to show up and test for the fire dept with only a GED or HS diploma,see how far you get!

    Reply this comment
  14. Ulysses Uhaul
    Ulysses Uhaul 14 May, 2012, 19:46

    Pipple faced kids making 100k to scrub firehouse chili pots a bit much!

    It must end!

    Reply this comment
  15. Beelzebub
    Beelzebub 14 May, 2012, 21:40

    “Welfare class has NO ONE to lobby for them, they will get the cuts”

    No lobbyists? The entire state dem legislature is their lobbyist. The public unions are their lobbyists. Corporations like JP Morgan that administer the food stamp program (and other welfare programs) are their lobbyists. The welfare leeches are a HUGE political force, rex. They represent 33% of all the welfare leeches in the entire nation – right here in California. Power is in the numbers. LOTS OF PRIVATE BUSINESSES AND GOVERNMENT AGENCIES HAVE THEIR BREAD BUTTERED BY THE WELFARE LEECHES. To say the welfare leeches have no lobbyists is completely inaccurate.

    Reply this comment
  16. Beelzebub
    Beelzebub 14 May, 2012, 22:55

    As far as polling is concerned, all we ever see are PPIC polls on the tax measures. I don’t trust PPIC. It is a liberal based polling agency. And they have been proven wrong many times from what I recall. Why don’t other agencies like Rasmussen poll the tax increase proposals? I have more confidence in their polls. The last poll I believe was in April by PPIC. They claim 54% of Californians favor the increase. About 65% favored the millionaire tax (of course – make somebody else pay) but only 46% favored the sales tax increase (which proves it’s much more popular to make someone else pay). I just totally distrust PPIC. I want to see other polls. And I think Gov Clown will lose support in the last 6 mos before the election.

    Reply this comment
  17. Rex The Wonder Dog!
    Rex The Wonder Dog! 15 May, 2012, 07:52

    only 46% favored the sales tax increase

    The sales tax will kill the tax hikes. It is not passing, and iI predict it will fail by a 2-1 margin.

    Reply this comment

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