As I predicted, state revenue up — for now

new year's tax increase, cagle, Jan. 2, 2013Jan. 23, 2013

By John Seiler

A week ago I wrote on CalWatchDog.com, “Two critical budget dates approaching.” I predicted that rich people’s quarterly tax payments briefly would goose tax collections for 2012 as they cashed in on investments to avoid the 2013 state and federal tax increases. But that likely wouldn’t last as they found ways to avoid taxes in 2013.

The Sacramento Bee just reported:

“After years of budget agony, California is seeing something strange this month: a heap of excess cash.

“The state is poised to finish January about $4 billion ahead of what forecasters expected in income taxes, according to the Legislative Analyst’s Office — the biggest one-month overage that state fiscal experts can recall in recent memory….

“But state leaders shouldn’t get too giddy.

“The one-month boom likely comes from a perfect storm of tax changes at the state and federal level, and budget experts urge restraint because a dollar received today could simply mean a dollar less tomorrow. This comes on top of an already volatile tax system that relies heavily on wealthy residents whose income is hard to predict.”

Well, as I also predicted, the future months will show that the wealthy have left or found ways to reduce their exposure to California’s massive 13.3 percent top income tax rate from Prop. 30. Gov. Jerry Brown insisted that the wealthy must “pay their fair share” — meaning pay more to his well-compensated allies in the government-workers’ unions. But the wealthy would rather move somewhere else where they can more easily create businesses and jobs.

And as to us “little people,” the middle class that also pays maximum taxes, as I mentioned in another article, I’m cutting spending because of the 2 percentage-point income tax increase imposed on us by President Obama and the Republican leadership in Congress. It’s not that hard, really. A lot of things can be cut, or cheaper substitutes found. Every day, I spend about 10 minutes finding places to cut in my budget (something Obama, Congress, Brown and the California Legislature refused to do with their budgets).

For example, I’ve cut restaurant spending sharply. Savings: at least $100 a month. I’m sorry for the people who might lose their jobs because of that, but I didn’t raise taxes, Obama and the Republicans did. Maybe people finally will learn to vote only for politicians who cut taxes, instead of increasing them.

A lot of other people are doing this. As the year progresses, sales tax collections by the Franchise Tax Board are likely to be below projections.

In a few months we should see that all the tax increases, instead of bringing in more revenue, actually cut revenue.

5 comments

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  1. CalWatchdog
    CalWatchdog Author 23 January, 2013, 11:18

    Profit has become a dirty word, but profit is what pays for government.

    Never underestimate envy and jealousy, and the power to destroy.

    Those who enjoy their own emotionally bad health and who habitually fill their own minds with the rank poisons of suspicion, jealousy and hatred, as a rule take umbrage at those who refuse to do likewise, and they find a perverted relief in trying to denigrate them. (Johannes Brahms)

    Katy

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  2. Sean Morham
    Sean Morham 23 January, 2013, 14:12

    I am sure that there is much back slapping in Sacramento over the inflow of the tax increase estimates payments. I agree, sit back and watch while there is a slow implosion of the revenue stream throughout 2013. It will really hit the fan in the following year, because there will be new spending, increased salaries,etc.. The beast will be starved. There will be attempts to increase vehicle, ammunition, alcoholic beverage tax receipts, while trying to overturn all of Prop 13 to cope with the fiscal emergency. The only hope will be a bailout from Washington.

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  3. doug
    doug 23 January, 2013, 15:11

    its also called a “rawhide necklace”
    it takes about 12 months to adjust for the full effect.

    Reply this comment
  4. double l
    double l 23 January, 2013, 16:34

    We’ll see, won’t we?

    Reply this comment
  5. Hondo
    Hondo 23 January, 2013, 19:37

    These tax hikes are a short term bump and a long term disaster. These taxes hit the small business owners, the ones like my boss who has gross revenues of half a million but take home maybe 50 grand after paying bills and my salary, the hardest. He could easily go out of business and I lose my job. He can’t afford to move to Florida like the truly rich. His business is local, built up from hard work and good customer relationships, over many years. Its these small small businesses that build the economy the fastest. And it is these taxes that will hit them the hardest.
    These tax bumps may last through the year, maybe. But next year could be a bear. I hope its not. I lose my job if it goes too bad.
    Hondo….

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