CA manufacturing rises — a little

CA manufacturing rises — a little

tesla factory, wikimediaCalifornia’s hard-hit manufacturing sector is coming back, although not as much as the rest of the country. The Great Recession sliced off 18.5 percent of state manufacturing jobs.

After that, from 2011 to 2014, “manufacturing employment has hovered around 12.5 million,” reported the Sacramento Bee.

“There certainly are pockets of success,” Gino DiCaro told CalWatchdog.com; he’s vice president of communications at the California Manufacturers & Technology Association.

A big contributing factor, he said, was the sales tax exemption for purchasing manufacturing equipment passed by the Legislature and signed by Gov. Jerry Brown in 2013. “Until then, we were one of the few states that taxed it,” DiCaro said.

It’s too early to see just how much that tax cut will help manufacturing. But DiCaro cited figures that the state has a lot of catching up to do. Since Jan. 2010, California manufacturing has increased just 1 percent. That’s much less than the 7 percent for the United States as a whole — and a whopping 18 percent for Indiana, a Rust Belt state currently inundated by the record cold and massive blizzard hitting the Northeast.

Toyota’s website boasts it employs “4,500 people here at Toyota Motor Manufacturing, Indiana, Inc. (TMMI), and our local suppliers employ thousands more across Indiana. Our $4.1 billion investment in the state of Indiana gives us the capacity to build nearly 300,000 vehicles a year here, including the Sequoia full-size SUV, the Highlander midsize SUV and the Sienna minivan.”

Toyota shut its California NUMMI plant in Fremont in 2010. And last year it announced its U.S. headquarters was moving from Torrance to Texas, costing 3,000 jobs. However, those are office jobs, not manufacturing.

On the positive, the NUMMI plant now builds Teslas. But even there, Tesla chose Nevada over California to build batteries, albeit because California wouldn’t match Nevada’s $1.3 billion in tax breaks — effective subsidies paid by the rest of the state’s taxpayers.

DiCaro also pointed out that, in 2013, the Golden State enjoyed “only 1.5 percent of new or expanded facilities in the United States,” even though our population is 12 percent of the country.

Energy problem

DiCaro said a big problem with California is that manufacturing paid 70 percent higher electricity rates than the rest of the country for electricity before AB32, the Global Warming Solutions Act of 2006 began to be implemented in recent years.

Currently, he said, “overall energy rates are increasing” due to AB32’s implementation of the cap-and-trade program, which charges companies, such as electricity utilities, for greenhouse-gas emissions that are too high. Also aiding the energy-rate increase is a separate mandate that 33 percent of California electricity must come from renewables by 2020. In his Inaugural Address last month, Gov. Jerry Brown called for an even higher goal of 50 percent renewables by 2030.

The exact cost is unknown. As CalWatchdog.com reported, “Brown recently was rebuked by the Little Hoover Commission for failing to disclose to Californians how much the price tag will be for renewable power in California.”

DiCaro fingered a particular problem. California still is the home for venture capital that funds amazing startups. But when such companies succeed “and want to scale up big time, the overall high energy rates become a significant impediment for a large manufacturer.”

The good, the bad and the weather

DiCaro urged that the manufacturing picture in California has its positive points:

  • A fantastic climate — unlike, say, Indiana;
  • Great quality of life;
  • An excellent university system that produces engineers and others needed by high-tech companies.

The bad points that need to be worked on:

  • A high cost of living that has produced the country’s highest poverty rate;
  • High electricity costs;
  • Environmental quality permitting that can delay projects for years;
  • The country’s highest workers’ compensation costs.

On the latter, Greg Jones, western bureau chief of the Work Comp Central news site, reported on Feb. 19, “A flurry of legislative activity next week is expected to present California lawmakers with questions about the state workers’ compensation system that are bigger than whether sports teams should be required to provide coverage for cheerleaders.”

The 2004 reforms signed into law by Gov. Arnold Schwarzenegger since have been eroded, again putting California at a disadvantage for other states.

Along with the 2013 sales tax cut for manufacturers, serious work comp reform could indicate the state at least is trying to move its business climate in the direction of its balmy weather climate.

22 comments

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  1. Richard Rider
    Richard Rider 21 February, 2015, 16:19

    If you want to see an updated, annotated comparison of CA with the other 49 states on 35 different economic criteria, check out my dreary fact sheet:
    http://www.TinyURL.com/CA-vs-other-states

    Reply this comment
    • S Moderation Douglas
      S Moderation Douglas 22 February, 2015, 10:41

      Ryder rants……RATES! RATES! RATES!
      Here’s a depressing but “truthy” comparison of California and the rest of the states.

      “CA now has by far the nation’s highest income tax rate”
      (also the 2nd. AND the 3rd. PLUS the 5th and 7th.)
      ????????
      But, at $1,453, ranked number 6 nationally in state income taxes per capita (2012). Not even the top ten percent.
      A family of three with normal itemized deductions would likely pay little, if any, state income tax on incomes (gross) up to $70,000.
      …………………………..
      “CA has the highest state sales tax rate in the nation. 7.5% (does not include local sales taxes).”
      ??????????
      Include average local sales taxes increases the rate to 8.41%……8th highest….not first…..not even the highest ten percent.
      That’s the Ryder rate rant. In actual per capita total sales tax collections, California ranks 16th, at $1,069. Not even in the top 20%.
      California has lower actual taxes than some states with lower “rates” because we do not tax groceries or services…….yet. Quoting “rates” alone can be misleading.
      ……………………
      Property tax rates, business tax rates, yada, yada, yada…rates, rates, rates.
      In total state revenue per capita (2012) California ranked 26th at $5,263. Not even the top fifty percent. For those of you in Rio Linda, that means LOWER than the national average.
      …………………
      “California has 12% of the nation’s population, but 33% of the country’s TANF (“Temporary” Assistance for Needy Families) welfare recipients-more than the next 7 states combined.”
      My favorite Meg Whitman “truthy” campaign canard. It is true, but…..TANF is one very small program (about 5% of total “welfare” spending in California). In total welfare spending, according to the US Census Bureau, California has about 12.5% of the nations spending. Above average, but about eight other states have higher per capita welfare costs.
      …………..
      Taxes are high in California (particularly for the top five percent of earners) and we have other problems, but why gild the lily?
      Kind of creates a credibility chasm, n’est–ce pas?
      The glass is at least half full.
      http://taxfoundation.org/article/facts-figures-2014-how-does-your-state-compare

      Reply this comment
      • Richard Rider
        Richard Rider 22 February, 2015, 14:22

        LOL, DOUG!! Good point about the AVERAGE CA state income tax.

        I’ve been making the same point. Like the federal income tax, 40% pay little or no CA state income tax — and frequently MAKE money on their tax return.
        http://riderrants.blogspot.com/2013/04/which-income-tax-is-more-progressive-us.html

        But in YOUR progressive mind, making the above average earners pay money and otherwise subsidize the below average earners (the core Communist approach) is a GOOD thing. You represent the bottom feeders and subsidy seekers — I represent the productive people. We each have our own constituencies.

        I like the fact that Taxachusetts charges a (fairly) flat 5.25% state income tax rate — most have skin in the tax game. You oppose that system (which collects more taxes) in favor of your 0% to 13.3% money grab. And then you have the gall to claim “we” pay less taxes!

        No, YOU and your parasites pay less income taxes — while the producers pay FAR more.

        Reply this comment
        • S Moderation Douglas
          S Moderation Douglas 22 February, 2015, 16:31

          LOL, RICHARD! Don’t shoot the messenger. I never said the “AVERAGE CA state income tax” was a “good thing”; only that your “statistics” are misleading.

          Poor mopes out there raising a family on the average California wage of about 50 grand a year believe, because they are CONSTANTLY told so, that they pay too much in taxes. Most of us (myself included) probably pay LOWER state and local taxes than the national average.

          According to some sources, even the “above average earners” in California actually pay LOWER state and local taxes as a percentage of income than the national average for “below average earners”. Yes, the “productive people” do supply a lions share of state revenue. As Willie Sutton said (maybe) “Because that’s where the money is.”

          My “progressive” mind is likely a gross understatement. My constituency is personified by my father. For most of his life he paid no income tax. Too many children, with a minimum wage job (sometimes more than one) I suspect, though, that between property tax, sales tax, and other government “fees”, he probably paid close to 10% of income. Retired on SS at 62 after his first heart attack. He was a “low earner”, but I never heard anyone refer to him as a parasite before. Or a bottom feeder.

          Or a “non-producer”. He never made as much money as your constituency, or paid as much tax (in dollar amounts, anyway. He may well have paid a higher percent of income)

          Non-producer, parasite? Try to think of it more as a symbiotic relationship. Without all us low-earner parasites “non” producing food, housing, appliances, automobiles, infrastructure, and services, what good would all the money from your constituency be?

          “You can hear the sound of two hands when they clap together,” said Mokurai. ” Now show me the sound of one hand.”.

          He did explain to me the evils of Communism, though. Primarily the lack of freedom and free markets, and the lack of incentive resulting from “from each according to his abilities”, etc.

          In this great country, even in California, if a man is more intelligent, or more talented, takes greater risks, or works harder, he deserves to earn much more than my minimum wage father.

          It is hard to imagine though, how anyone can work 1,000, or even 10,000 times harder than my dad and those like him. If they do, though, I see no reason why they shouldn’t pay tax, as a percent of income, at least as much as my father. California is one of the few states where that comes close to happening.

          As far as federal taxes go, progressive taxes are not the same thing as communism.

          Reply this comment
          • Richard Rider
            Richard Rider 22 February, 2015, 17:36

            LOL, Dougles! Don’t shoot the messenger! I never said we Californians pay the highest taxes — I said we have the highest income tax RATES in America.

            It’s YOU who has fabricated lies here. We pay LESS than the average national taxpayer in state and local taxes? Where do you conjure up such balderdash? It must take a special kind of courage to lie so sincerely. I still await your “explanation.”

            Our progressive rate structure coupled with generous exemptions and deductions results in most Californians paying little or no state income tax. It makes the progressive federal income tax look almost like a flat tax!

            The people I write for generally pay above average taxes, and hence have above average intelligence. They fully understand the progressive nature of your favorite tax.

          • S Moderation Douglas
            S Moderation Douglas 22 February, 2015, 19:52

            ITEP “Who Pays?
            A Distributional Analysis of the Tax Systems in
            All 50 States
            5th Edition January 2015

            I’ve cited them before. Some say they are biased, but their macro data pretty much agrees with Tax Foundation and other studies. They all get their data from the same sources. ITEP is the only one I have seen that breaks down taxes by income quintile.

      • John Seiler
        John Seiler Author 23 February, 2015, 08:07

        “A family of three with normal itemized deductions would likely pay little, if any, state income tax on incomes (gross) up to $70,000.”

        Ridiculous.

        Reply this comment
        • Richard Rider
          Richard Rider 23 February, 2015, 08:46

          John, while Douglas churns out many questionable figures and exaggerates to put his spin on things, he’s not TOO far off in his incorrect assertion above — given his innate dishonesty. If you take the top $70,000 income and assume his family of three and renter status (standard deduction), the owed state income tax (according to my back-of-the-envelope accounting) is about $940.

          Remember that from the $70K gross income we take out the standard deduction ($8,984) and take the tax credits for family members and renters credits.

          Now, most people would say that $940 is a HELL of a lot more than “little or no income tax,” but let’s just call it a “rounding error” by Douglas.

          If you do it for $60K income with the same parameters, you pay about $480 state income tax. For $50,000, you’ll pay ZERO state income tax — and likely get a check back for your exemption credits.

          If we assume such a family is “house poor” (buying a modest abode rather than renting — a difficult feat in California), even a $70,000 gross income could end up paying zero or less state income tax — though they’d be living a hand-to-mouth existence from a cash flow standpoint.

          Reply this comment
  2. Richard Rider
    Richard Rider 22 February, 2015, 15:05

    Douglas, you spout figures. But UNLIKE me, you don’t provide sources. For good reason.

    By avoiding sources, you are free to — uhhh — “misinterpret” figures with impunity. Or perhaps even just manufacture them.

    To be specific:
    “In total state revenue per capita (2012) California ranked 26th at $5,263.”
    That ranking appears to be a made up figure. Perhaps your found it in Mother Jones.

    To start with, we are about 9th highest in per capita STATE tax revenue, while we have the 15th highest per capita income:
    http://en.wikipedia.org/wiki/State_tax_levels_in_the_United_States

    But more important, when you compare state AND LOCAL tax revenue, we Californians pay the 4th highest per capita tax as a percent of income.
    http://taxfoundation.org/article/annual-state-local-tax-burden-ranking-fy-2011

    The credibility chasm is all yours, my friend.

    Reply this comment
    • S Moderation Douglas
      S Moderation Douglas 23 February, 2015, 13:34

      http://taxfoundation.org/sites/default/files/docs/Facts%20and%20Figures%202014.pdf

      Table 5

      State plus local collections per capita 2011…$4,938…ranked 11th

      Reply this comment
      • Richard Rider
        Richard Rider 23 February, 2015, 15:31

        Well done, Douglas! A URL AND a chart number! That wasn’t too hard for you, right?

        Well, aside from the fact that you listed table #5, when you MEANT table #6. Close enough by your standards! Grading on the Obama curve, I give you a “B+” — plus the coveted participation trophy of the day.

        Now, let’s take it a step further, shall we? You list the DOLLARS collected. But CA is ranked 16th in INCOME per capita, which largely explains the 11th place rank on collections. This relatively low income flies in the face of what most of you progressives claim — that CA is a high income state. On average, it’s definitely not.
        http://en.wikipedia.org/wiki/List_of_U.S._states_by_income

        A more accurate measure of our tax level is the PERCENT of income paid to state and local governments — not DOLLARS. And, as I keep pointing out, CA ranks 4th in the average per capita PERCENT we pay to state and local governments.

        Reply this comment
        • S Moderation Douglas
          S Moderation Douglas 23 February, 2015, 16:05

          Richard Rider,

          It’s a complicated subject, I’ll grant you. Like snowflakes, there are no two “studies” the same.

          Thank you for sharing the technique for posting a link. I had assumed, since I gave the name of the ITEP analysis in a previous post, you would be able to locate that and scan the entire study, rather than just the one page I cited.

          My apologies, again, for what you considered “cherry picked data”. I thought it was a direct response to your request for the source for my smugly presented “fact” that the average Californian pays less taxes than people in most of other 49 states.

          (Appendix A, page 21,22, by the way, http://www.itep.org/pdf/whopaysreport.pdf)
          …………………………………………………………………………
          I believe we’ve actually discussed this before, which is why I anticipated your distrust of ITEP. If that site is uber-progressive, I assume we can agree TaxFoundation is at least scosche-conservative.

          It seems, however, in their ongoing tiff, TaxFoundation criticized several elements of ITEP philosophy, but not their actual data. Their biggest gripe with the actual data was ITEP,s treatment of the federal offset. (ITEP gives both figures, with/without the offset) and felt that the top quintile should have not been split into three groups. Not that it was incorrect data, but that TF found it “misleading”. I thought that was useful information, but perhaps I, too am biased.
          ………………………………………………………………………….
          I am truly sorry you feel that “Douglas churns out many questionable figures and exaggerates to put his spin on things”; although admittedly, the reason I originally responded to your post was that your constant emphasis on “rates” was, and still is, misleading, in my opinion.

          Bad enough that California has the fourth highest tax burden (as a percentage of income), I stress that it is more important that people realize, as discussed before, that the “average” tax burden should be looked at very skeptically. I have seen people on many blogs; this one included, who can’t wait to exit this state, mainly because they have come to understand that it is a “high tax” state. Knee jerk reactions. It is possible, if carefully considered, to move to a lower tax state (for your particular income group, income source, and other tax factors). Also possible to jump from the frying pan into the fire. Even if you do happen into a lower tax state, it could take the remainder of your life to recoup relocation expenses.

          I don’t think Ulysses does refunds.

          Reply this comment
  3. Richard Rider
    Richard Rider 22 February, 2015, 17:11

    The progressive income tax was a KEY tenet (IS a key tenet) in the Communist Manifesto. Why do you pretend you aren’t a communist? Prefer “socialist,” perhaps?

    Naah — you like the trendy (and misleading) “progressive” term. We know what you really are, and so do you. Be proud — declare yourself! Marxists should stand tall in America. But seldom do.

    Your father may or may not have been a communist (I don’t care), but he didn’t make his living sponging off others. That’s what you support. A “bottom feeder” is NOT someone who makes little — it’s someone who uses force to get what they want — be it redistribution welfare or crony capitalism.

    Your credo? I can sum it up: “From each according to his ability, to each according to his need.” Gee, I think I’ve heard that term before . . . .

    It’s no surprise that your role model is Willie Sutton.

    Reply this comment
  4. S Moderation Douglas
    S Moderation Douglas 22 February, 2015, 19:27

    S Moderation Douglas: yeah..”My “progressive” mind is likely a gross understatement.

    I’m probably more atheist than agnostic, too. But that happened long before I read Marx “opiate of the people”. What’s in a name?

    My role model might be Mokurai.

    Point is, was, and always will be, when you stress the tax “rates” in California out of context, you are exaggerating the costs. Why would you do that?

    “12% of population and 33% of welfare cases” gives a very false impression of California welfare expenses. Why would you do that?

    Reply this comment
    • Richard Rider
      Richard Rider 22 February, 2015, 19:36

      Douglas, I’m STILL waiting for you to tell us where you came up with the source of your smugly presented “fact” that the average Californian pays less taxes than people in most of other 49 states. Oddly enough, you’ve yet to respond. Why do you do that?

      No need for you to answer. Your silence IS your answer.

      Reply this comment
      • S Moderation Douglas
        S Moderation Douglas 22 February, 2015, 20:07

        “STILL waiting”, Richard?

        Two hours, Richard?

        Some of us who read you pay lower than average taxes, therefore, apparently have lower than average intelligence.

        It might take us a bit longer.

        Reply this comment
        • S Moderation Douglas
          S Moderation Douglas 22 February, 2015, 20:36

          Specifically, Richard, according to ITEP, the top five percent of California earners pay about 8.7% of family income in state and local taxes.

          The national average for the four lowest quintiles is 8.7% to 10.9%. Higher than CA highest 5%.

          The four lowest quintiles in California are 7.7% to 10.5%. Again, lower than the national average.

          ITEP:
          “The bottom line is that many so-called “low-tax” states are high-tax states for the poor, and most do not offer a good deal to middle-income families either. Only the wealthy in such states pay relatively little.”

          Not to mention that many of the “low tax” states make up for low state and local taxes by a heavier reliance on federal funds. Where do you suppose that federal money comes from, Richard?

          California, our glass is still at least half full.

          Reply this comment
          • Richard Rider
            Richard Rider 23 February, 2015, 07:29

            Douglas, doing “cut and paste” (or invent and paste) posts from an uber-progressive website is NOT the same as showing the SPECIFIC source. You do that by posting the URL AND (if a full study) the page(s) you are referencing. How can you not know that?

            Of course, you DO know that, but choose not to provide such specific source material. Gosh, I wonder why??

            Your cherrypicked/invented figures do NOT agree with the Tax Foundation and others as you claim. Au contraire!

            Here, let me show you how it’s done:
            http://taxfoundation.org/article/annual-state-local-tax-burden-ranking-fy-2011

            Go to the interactive graphic map, OR the chart. CA is the fourth highest when it comes to average percent of income paid in state and local taxes.

  5. John Seiler
    John Seiler Author 23 February, 2015, 08:08

    Calif. has the second highest unemployment rate in the country. Nuff said about the state being “back.”

    Reply this comment
  6. Ulusses Uhaul
    Ulusses Uhaul 23 February, 2015, 08:29

    Bam. Your head can explode!

    Just really chill and relax, grab your chubby ankles, pay your taxes and enjoy the weather…..the money will run out and then you collect…..think on it…an investment….like your government pension finally…..Golden Annuity!

    Reply this comment
  7. Richard Rider
    Richard Rider 23 February, 2015, 15:38

    Douglas and I have shared info on per capita tax rankings of states in these comments. But one point should be mentioned: We are both using primarily 2011 data.

    What happened in 2012? We retroactively passed a MASSIVE “millionaire’s tax,” plus bumped up the state sales tax rate a quarter percent.

    Net result? It’s likely our tax collections jumped compared to other states in 2012, and especially in the following two years. After all, our politicians are relentlessly seeking that coveted “numero uno” ranking.

    BTW, several other states have recently been CUTTING their tax rates — going in the opposite direction. Even Taxachussetts! We’ll, CA has always been a maverick state.

    Reply this comment
    • S Moderation Douglas
      S Moderation Douglas 23 February, 2015, 16:26

      http://www.itep.org/pdf/whopaysreport.pdf

      p. 37

      “Note: Figures show temporary California tax law enacted in November 2012 (Proposition 30) at 2012 income levels. Temporary provisions impact the personal income tax (three upper-income brackets) through 2018
      and the sales tax (.25 cent increase) through 2017. Top figure represents total state and local taxes as a share of income, post- federal offset. Figures for permanent California law can be found in Appendix D on page”

      Reply this comment

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John Seiler

John Seiler

John Seiler has been writing about California for 25 years. That includes 22 years as an editorial writer for the Orange County Register and two years for CalWatchDog.com, where he is managing editor. He attended the University of Michigan and graduated from Hillsdale College. He was a Russian linguist in U.S. Army military intelligence from 1978 to 1982. He was an editor and writer for Phillips Publishing Company from 1983 to 1986. He has written for Policy Review, Chronicles, LewRockwell.com, Flash Report and numerous other publications. His email: [email protected]

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