Instead of tax increases on the wealthy , California takes money from poor, elderly

[Phoebe Loosinhouse]

http://www.latimes.com/news/local/la-me-budget17-2009jan17,0,4472460.story

California controller to suspend tax refunds, welfare checks, student grants

John Chiang announces that his office will suspend $3.7 billion in payments owed to Californians starting Feb. 1, because with no budget in place the state lacks sufficient cash to pay its bills.
By Evan Halper and Patrick McGreevy
January 17, 2009

skip

The payments to be frozen include nearly $2 billion in tax refunds; $300 million in cash grants for needy families and the elderly, blind and disabled; and $13 million in grants for college students.

http://www.dailykos.com/storyonly/2009/1/18/02540/6176/997/685480

Panic Grows In Ca As Welfare Checks Set To Stop
by SmileySam
Sat Jan 17, 2009 at 10:18:20 PM PST

Imagine living hand to mouth already, barely squeaking by. Come Feb 1 the State has warned you may not see another check for months. No Rent money, no money for food for medicine and even worse for some of the disabled, your Caregiver that comes by daily to feed, clean, shop, and generally make sure you are cared for, isn't coming anymore.

But there is something very, very morally corrupt with a Governor and a legislature and a population that would take food from the starving, shelter from the poor, medicine from the sick, care from the elderly and education from students before they would do the obvious -

Increase taxes on the wealthy and corporations.

[derby378]

1. Now THAT takes some giant balls!

Does John Chiang carry them around in a wheelbarrow?

[ProgressiveProfessor]

58. Its politcal blackmail to force the legislators to fix things

Problem is that they can't. Supermajority requirements mostly

[SammyWinstonJack]

2. Same as it always was/is.

BTW, has Obama decided to rescind the bu$h tax cuts for the wealthy or is he just going to let them expire in two yrs? x(

[aquart]

3. Well, there are so many more of them.

I'm sure it seems quite sensible: take a little from the many rather than a lot from the few who have it all. Kinda like flat tax reasoning.

[gratuitous]

4. Haven't the overrich suffered enough?

Some of them are still pulling into the marinas in last year's model yacht. Oh, the humiliation!

[Turbineguy]

5. I don't think it's as simple as:

"Take from the wealthy!"

[Phoebe Loosinhouse]

7. I do! I agree with this guy

http://www.globalresearch.ca/index.php?context=va&aid=11312
Tax the Rich! State Budget Crisis Deepens: Humanitarian Crisis Emerges
by Shamus Cooke
skip

The first step in addressing the current crisis is to confront those who benefit most from the current social arrangement. It is not by accident that most corporations pay far less taxes than the average worker, while the rich continue to have their taxes lowered. In fact, according to a recent study, two-thirds of all corporations did not pay any taxes during the past year. These same interests sparked the current crisis by not only driving down the wages of workers to the point they were unable to purchase goods, but by creating and profiting from the pyramid scheme that created the housing crisis.

The vast profits made by the rich and corporations in the previous boom must be funneled back to the states and local governments to pay for the current crisis. Because this solution is a threat to the corporate elite who control government, it will not happen merely by request.

To accomplish this, a broad-based coalition is needed of working and poor people affected by the current crisis, led by the organized labor of the teachers, health care workers, and public employees, united around the demands of ending corporate bailout and for a progressive tax policy— one aimed at taxing the rich, not working people. Such a coalition, because of the vast numbers of people it represented, would have the potential to unite all workers, both in the public and private sectors. It would therefore have the strength to transform this "request" into a demand: TAX THE RICH!

I would love to ask Ahnold if he would prefer to balance the budget by: A)seeing his taxes raised on his humongous personal wealth or B) balance the budget on the backs of the poor, the blind, and the disabled.

[Dreamer Tatum]

6. Do you want CA to steal rich people's checkbooks?

There is no money in the state's bank account. Increasing taxes on the rich takes time. Those checks have to cash NOW.

The budget has to be dealt with, period. California's wealthy are already taxed at a fairly high marginal rate. If you
try to get them to pay more, they can simply leave. Substantial cuts have to be made if revenues are falling...there just
isn't any other way.

[Phoebe Loosinhouse]

8. Do you think Obama should rescind the Bush tax cut on the wealthiest 1%?

I do. But, I guess they can just leave and go someplace else. Scroom - let them. I'm sure they'll all love the heavily armed lifestyle of the super rich in places that don't tax them equitably. Or they can all go to that new Eden of conspicuous consumption, Dubai.

[Dreamer Tatum]

9. I am not sure what you are saying.

If you're wealthy and you live in California, and you are facing increased state taxes, you can move to Texas, Nevada, or some other place with much lower taxes. In fact, if Obama increases taxes on the wealthy, they have an even greater incentive to leave CA to lower their overall tax burden.

Here are two facts that make the CA budget problem difficult:

1. You can't pin people down to CA because you want to take a lot of money from them in taxes.
2. CA doesn't have to provide a military for its people, so you can't point to the foreign wars it's fighting.

Something has to be cut. It's just that simple.

[Phoebe Loosinhouse]

10. I was just relating your comments on a state level and ratcheting them to a national level

If we raise taxes on the wealthiest Americans, will they leave the US? Probably not and then again if that is the basis for their choice, then they are crummy Americans to start off with. Same with Californians. The ones that care have most likely already moved out.

When you say something has to be cut, do you agree with going to the poorest and least able to defend themselves first?

Why not reinstate the car tax? I know Ahnold thought that was a big deal, just like Virginia's loser Governor Jim Gilmore who hung his hat on that sole, same paltry "acomplishment".

[Dreamer Tatum]

14. A car tax is extraordinarily regressive

Plus, do you really want to make it more expensive for 1/6 of the country to buy a car right now?

California doesn't give cash to rich people, though it might give money to their businesses.
The plain fact of the matter is that state budgets are almost exclusively devoted to the
public interest: health, education, infrastructure. Playing populist is fine, but you have to be
pragmatic about it. The budget must decrease, period. There is no other way.

[Hannah Bell]

24. no, it used to be progressive: adjusted to the value of the vehicle. the

"reform" is regressive, changing it back would generate more revenue.

but some would rather starve people for a shortfall = to 2.3% of income.

Like someone who makes $50K being short $1000, first thing he does is stop feeding his kids.

[hfojvt]

23. people are as pinned to a state as they are to a country

You have to pay taxes there because that is where you make your money. Unless you can move your job, your customers and suppliers to Florida or Texas (which is possible, but would involve transition costs), you are kinda stuck in California.

[Dreamer Tatum]

32. Not even sort of true

Net/net, CA lost something like 150,000 people in 2008 to other states. You can ABSOLUTELY move your job, and you can
definitely move your business. Happens ALL the time.

[lolly]

113. One reason they're moving

Is the deterioration of the state--caused in large part by the anti-tax crowd.

The middle-class people who are leaving aren't leaving because of taxes--which Arnie hasn't raised in 2008 anyway, so there goes that argument.

For example--a large chunk of the folks moving out are teachers. LATimes ran an article a while back about how fed up CA teachers are with threats of layoffs every few years, budget cuts that affect the classroom etc. Other states have caught on, and are "poaching" California teachers for their own classrooms.

[ProgressiveProfessor]

48. Its easy enough to move the nexus of the business out of state

And its been happening for many years in California.

[Hannah Bell]

54. the "nexus"? elucidate, please.

[ProgressiveProfessor]

64. The location or site of the business

Scenario: I move my private window manufacturing facility to Utah, Arizona, or Nevada from southern California
- I still sell the windows to contractors in CA. No change in my business customers and cash flow.
- I sell the house I owned in California making a large profit, but there is no capital gains taxes under current law.
- I write off the costs of the business move so California gets little to no corporate income tax in my last year there.
- The place I am moving too offered me a discounted tax rate for the first few years.
- My former employees are now without jobs.

Nothing changes but the loss of taxes and jobs in California. Lots of smaller companies are looking at doing this every day. The receiving states are loving it and encouraging the moves.

[LeftyMom]

84. Doesn't really work that way.

Scenario: I move my private window manufacturing facility to Utah, Arizona, or Nevada from southern California
And then you're stuck living in one of those places.
- I still sell the windows to contractors in CA. No change in my business customers and cash flow.
Your transportation costs are way up, you either have to train a new work force or provide significant incentives for your current employees to move, and you have to build a new manufacturing facility. Oh, and either you fly back and forth regularly or you lose contact with your customers and competitor start poaching them. That gets old, and expensive, really fast. And also requires you to relocate to a relatively expensive area near an airport and not to BFE, thus eating most of your savings.
- I sell the house I owned in California making a large profit, but there is no capital gains taxes under current law.
Have you read anything about the housing market in the last six months? You'll also be looking at much higher property tax pretty much anywhere you go. :rofl:
- I write off the costs of the business move so California gets little to no corporate income tax in my last year there.
- The place I am moving too offered me a discounted tax rate for the first few years.
Unless you're a very large company, or moving to a blighted area, that's unlikely. Especially now.
- My former employees are now without jobs.
As addressed above, you're paying more to train new ones. Also, California will bill you for their unemployment

[Cleita]

71. And good riddance.

The fact is they would already be in those low tax paradises like Texas and Nevada if it were advantageous to them. Peddle your RW BS elsewhere. California is over ridden with out of staters and foreigners enjoying the low tax status that they get.

[ProgressiveProfessor]

80. California is scarcely a low tax paradise

look for the subthread on relative tax rates on income.

Props 4 & 13 are sacred there. Nothing can be done in the short term about them.

[Cleita]

90. One percent property tax is very attractive to investors.

It can make up for other taxes. Also, the rich have ways of circumventing sales tax and other annoying taxes that are not available to us prollies.

[ProgressiveProfessor]

91. The income taxes are not, as are other fees and charges

The 1% rate is only if you do not churn your investments

[Cleita]

93. I don't see them running away yet and honestly

they won't. Their assets are too important to themselves. They will pay if only we get some real leadership to make them.

[Hannah Bell]

96. top rate of 9.3%. + 1% on incomes over 1 million, while people making 40K pay 8%

i guess if they can afford it, billionaire "investors" can.

[shanti]

99. that's bs

you actually think the wealthy would leave their enclaves in malibu, beverly hills, etc. for nevada?? please. they will not leave.

[Dreamer Tatum]

105. I'm talking about the people who make $250K+

Doctors, lawyers, dentists, small business owners, mid-level executives, and so forth. Is Streisand going to leave CA? No.
Will a guy working as a partner at PWC in LA leave for Deloitte in Dallas if he would see substantial tax benefits? Oh yes. I've seen it
happen. I'm SEEING it happen.

No one is saying that those people shouldn't be taxed. I am saying that if they have an option to go elsewhere, they might.

[Cleita]

109. Since those people use more of the commons infrastructure than the ordinary

family home owner with one or two cars, they shouldn't object to paying more. If they do, let them go somewhere else because frankly we are sick of doing welfare for the wealthy.

[Dreamer Tatum]

110. You can't have it both ways

On one hand, you want that tax base. On the other, you're saying good riddance? I don't think so.

[Cleita]

112. Where do you get that? If they aren't paying taxes, they aren't a tax base.

We will always have a tax base. California is just that way. For those who leave, new people come in. I think deadbeats though won't be missed.

[Dreamer Tatum]

122. Are you claiming that the wealthy pay NO taxes in CA?

[Cleita]

136. No I'm not making any claims from words that you are putting in my mouth.

However, by and large, the working class and poor pay more taxes that the wealthy ever do. Clever tax accountants take care of that and state sales tax, which can be as high as 7%, is known to be a regressive tax. The wealthy don't pay as much of their income into sales tax as poor and working class people do. That also goes for hidden taxes in cigarettes, liquor and gasoline. I once worked for a very wealthy lady who owned her own wine distribution company. She never distributed it to anyone but was able to buy the product wholesale for her parties and paid no sales tax and it was all legal.

[HelenWheels]

11. CA did themselves in

with voters approval of Proposition 13 (think that's the right one). Californians thought they could get by without paying any taxes. Now they are going to want a federal bailout. Just what is the tax rate in CA? What do they pay for property taxes?

[Dreamer Tatum]

12. You don't understand Prop 13

It doesn't outlaw taxes at all. It just limits tax exposure due to skyrocketing property values. Nevertheless, you are
correct in that tax receipts will lag expenditures if they can't get reassessed.

The marginal tax rates in CA are pretty high. I don't have them in front of me, but they are not exactly low.

[hfojvt]

19. according to google they are pretty high and not very progressive

"For single and married filing separately taxpayers:
-- 1 percent on the first $6,827 of taxable income
-- 2 percent on taxable income between $6,828 and $16,186
-- 4 percent on taxable income between $16, 187 and $25,546
-- 6 percent on taxable income between $25,547 and $35,463
-- 8 percent on taxable income between $35,464 and $44,818
-- 9.3 percent on taxable income of $44,819 and above.

A 1 percent surcharge is collected on taxable incomes of $1 million or more, making California's highest marginal rate 10.3 percent."

Compare to Kansas

0 - 15,000 - 3.5%
15 - 30,000 - 6.25%
over $30,000 - 6.45%

California is more progressive than Kansas, but in both states, you hit the top rate, or close to it at fairly low incomes. That is, a person with taxable income of $50,000 pays the same marginal rate as somebody with income of $500,000. Not as bad as Kansas though, where a person with taxable income of $20,000 pays almost the same marginal rate as somebody with income of $2,000,000.

[Dreamer Tatum]

34. I submit that substantially higher marginal tax rates for, say, $200k and above

would cause a large number of those earners to leave. I've seen it happen already, even at 9.3%.

The draw of California is not so great that people won't leave.

[Hannah Bell]

43. yes, better to kill the poor. god forbid the rich, who've had 30 years of declining

taxes, should ever pay a penny more.

tell you what, if they wish to leave, seize their state assets that produce 1.7 TRILLION in GDP.

California is the world's 8th-biggest economy; its GDP is bigger than Canada's, Brazil's, Russia's, India's, Australia's, Netherland's, Sweden's...

But sick nazi fucks like ah-nold want us to believe that there's "no money" to cut checks to the poor, aged, disabled.

go ahead, you just buy into it, & it'll be coming to your state soon.

[Dreamer Tatum]

44. Godwin's Law. I win.

:eyes:

[Hannah Bell]

50. i notice you don't respond to the data, so you lose.

[Dreamer Tatum]

106. Your data is rectally derived

So it deserves no regard.

[Hannah Bell]

116. your mouth is rectally derived, not the facts i presented.

[ProgressiveProfessor]

52. CA indeed has no cash, its due to the lack of budget and its short term

The real issue is that California can not balance its budget without massive tax increases or massive cuts. Neither side is willing to allow that.

[Hannah Bell]

55. no, that's not the "real issue," no matter how often you say it.

[ProgressiveProfessor]

56. Then what is? This FY, California has more expenses than it has income and neither side

will accept what is needed to fix it (big cuts or big tax increases).

The initiative process has created so many protected funding areas that there is very little room to maneuver.

[Dreamer Tatum]

111. The real issue, according to Hannah Bell, is Nazis.

And fascists, though any reasonable person would be at an utter loss to apply national concepts to state in the union.

For the record, Hannah Bell thinks the size of the budget is fine - we just need a level increase in taxation for every dollar of productivity in the CA economy.

In the interim, CA should just go borrow $40B from someone, because it is such a good credit risk.

:eyes:

[Hannah Bell]

123. nope, the real is the cause of the present "shortfall"

& why it's being trumpeted as a crisis requiring putting the poor into the streets, when the current deficit is somewhere between .8 & 2.3% of its GDP. (Deficit variously reported 14-40 billion).

Even though other options are available, & they are, because:

Arnold's budget ALREADY proposes borrowing 38 billion - but not to cover obligations, no - those he'll cut. He proposes to borrow more money essentially to provide subsidies to contractors, & let the bill come due after he's out of office.


And why "Democrats" buy into this storyline, & echo the cry of the corporatists: "we won't play if we have to pay!"

[Dreamer Tatum]

126. It's an annual deficit, which promises to get bigger

Sounds like you want to apply a patch to a growing hole.

[Hannah Bell]

128. nope, the patch is to avoid stealing life preservers from the already drowning.

longer-term adjustments can be made once life preservers are in place.

some folks don't like life preservers, though. they're more worried about rich people moving.

"if some must drown to spare great wealth, so be it! who would give us jobs & bread if our gods left the state?"

[lolly]

114. Really?

So if we raised the rates, say, .5% for everything over 200K, people earning 300K would leave (sell their houses, pay real estate fees, pull their kids out of school, find a new job in Texas) to avoid paying 500$ extra in taxes?

[ProgressiveProfessor]

65. Property and other ad valorem taxes are independ of income and therefore quite regressive

[Hannah Bell]

72. They don't have to be. They typically are because the wealthy lobby for reductions.

But they lobby for reductions in everything. They can move or hide income, but they can't move property.

[ProgressiveProfessor]

75. Property taxes are flat rate...are you suggesting a progressive tax rate based on value

Also in California, the tax rate is fixed in the state constitution.

[Hannah Bell]

78. I'm suggesting an exemption at the bottom & progressive rates per value.

States change their constitutions frequently. E.g. prop 13.

They can change it again - but someone prefers to kill poor people.

[ProgressiveProfessor]

79. Unprecedented, but not necessarily bad. Implementation would be a real PITA

Prop 13 is the third rail of California politics. Courts and legislature repeatedly have refused to touch it or the Prop 4.

[Hannah Bell]

81. What's unprecedented?

[ProgressiveProfessor]

82. Graduated property tax rates

Rates used to be set by municipalities not at the state level.

There is a split between mulitple parties for the property taxes (districts, state, cities, counties)

Would require multiple changes to the state constitution.

It would never happen in time for this fiscal year.



It does have some long term potential

[Hannah Bell]

86. Maybe in California, not in world history.

For the short-term, the feds have the capacity to do a number of things, if they don't want people to starve.

But since the Bush admin *does* want the poor to die & starve (as it already demonstrated in NO)...

[ProgressiveProfessor]

88. Have a current precedent that is actually working?

The complexity of what you suggest is so high that there are certainly more timely and effective means to get there

[Hannah Bell]

92. There are some, have been others at various times & places.

http://books.google.com/books?id=1CkRqHX0caYC&pg=PA112&lpg=PA111&ots=lOAItAL5y-&dq=graduated+property+taxes+sweden

I don't have the in-depth knowledge to discuss how well they work. I can say, though, I lived in Japan 3 years in the 80s & never saw a homeless person or beggar, & though things have apparently changed a bit since, it's still not like the states, per friends.

I assume Korea & Japan's systems are a holdover from their post-war land reforms that broke up their old landlord class - mandated by the US Occupation, ironically.

[Odin2005]

25. Prop 13 is in practical terms the elderly screwing over younger generations.

[Dreamer Tatum]

28. That is not entirely correct, and a poor framing of the issue

When I bought my first CA home, the elderly owners were paying $800/yr in property taxes. I was assessed about
10x that when the property changed hands.

Prop 13 kept low- and fixed-income people in their homes when values went through the roof. It wasn't a screw-job.

If only the budget didn't ratchet up, and up, and up...these issues would be smaller.

[ProgressiveProfessor]

51. You forget Prop 4 and the supermajority requirements

And in effect, Prop 13 screws new homebuyers, those who move often, etc. While not intentionally age discriminatory, it is in its impact

[girl gone mad]

66. Prop 13 contributed to the RE bubble in CA.

People who ordinarily would have downsized or moved to cheaper neighborhoods held on to their homes, which created false demand. New buyers saw the fixed tax as an incentive to buy and lock in a rate while prices were soaring. It's been a failed experiment.

[Dreamer Tatum]

68. I'm trying to imagine DU response to the following headline

"Low income, elderly homeowners forced to sell homes or face tax liens and foreclosure"

I think I can guess.

[Cleita]

70. You know, all it would have taken is to put an exception into

property taxes to cover elderly and poor property owners. Jarvis conned the whole state by making it about the poor and elderly. What he and his minions knew was that it would be a real estate bonanza that would happen to make so many people rich and throw the really poor under the bus.

[Dreamer Tatum]

104. You'll have to explain that logic.

I am not seeing how Prop 13 makes anyone rich.

[Cleita]

107. Just read the history.

When Prop. 13 passed, property values in California rose exponentially in a few years to five or six times and even more the value before it was passed. People who had bought homes for $40,000 sold their houses for sometimes half a million or more in five years or less. In the meantime all the social programs supported by the taxes were chopped off and all the dysfunctional people helped by these programs were thrown out into the street creating the first institutional homelessness that spread nationwide as proposition 13 type amendments were passed from state to state. The second wave of homelessness was when speculators started converting rental apartments to condos or more than tripling the rents. Many people who couldn't buy their apartment as a condo or couldn't make the rent became homeless. In my community we voted in rent control. Apartments similar to my $350 a month apartment were renting for $1,500 a month in the next community over that didn't have rent control. More working homeless hit the streets. The free education our university and state college systems were able to give to all deserving California children were defunded and had to start charging tuition, meaning that many poor children would not be able to further their education without incurring debt through student loans, which has very much benefitted the banking industry, which up until today squandered everything they received in excess riches for their executives and board members. All those mortgages to get people into overpriced homes started the downward spiral of where we find the banking industry today.

[SoCalDem]

67. Not necessarily..

As long as you STAY in the house you bought, your property taxes remain "moderate".based on when you purchased it..

For "flippers" and "floppers", it's a different story..

"floppers" definition:
$15hr workers with NINJA loans for $500k & a 2% IO loan for 2 years..

It's been the constant "churn" that's driven up housing prices to ridiculous levels..

We've been in the same crappy house we bought in 1982, so why on earth SHOULD our taxes have increased ridiculously because a bunch of greedy buffoons driven up "values"?

The reasoning behind it was to PROTECT people from being driven out ouf a house they bought and paid for prudently..

[ContinentalOp]

97. But if you're young you still get screwed.

I bought my house in 2004 so I get screwed on my property taxes compared to people who bought in this same neighborhood 30, 20, 10, or even 5 years before me. And since I'll probably be staying in this house for a very long time, I'm going to be paying sky high property taxes for a very long time, while you still enjoy your 1982 rates. There needs to be some balance between the two approaches.

The real key is to repeal Prop 13 FOR CORPORATIONS. I think most voters would get behind that. Disneyland for example pays some ridiculously low property taxes thanks to Prop 13.

[Cleita]

108. I didn't think Prop 13 covered commercial property.

Maybe there was another law that did that.

[lolly]

115. You can apply for a reduction

Prop 13 does allow you to petition for a reduction in property taxes if the value of your house dips below its tax assessed value. If that's your situation, you should be doing that now.

If/when property values start soaring again, however, you'll be jumped back to where you would be under your old assessment.

[Yukari Yakumo]

143. So basically...

Prop 13 encouraged Californians to move out-of-state if they were to move, especially younger Californians.

[slackmaster]

121. I'm 50

I don't consider myself to be elderly.

My property tax last year was about $1,900.

[slackmaster]

120. Our reasonable property tax rates are offset by high income and sales taxes

We did ourselves in by continuing to elect partisan idealogues who don't grasp the concept of fiscal restraint. We had a nine billion dollar surplus a few years ago, and they blew the whole thing.

I remember very well the debate over Proposition 13 and the conditions that led up to it. My parents were subjected to reassessment on our family home every year.

Proposition 13 was a godsend for many people. I reject the simplistic, facile notion that our fiscal problems were caused by putting reasonable limits on property taxes.

[hfojvt]

13. Joseph Stiglitz disagrees

http://www.cbpp.org/1-8-08sfp.htm

"Some state-level policymakers contend that the weakness of the economy means that a state should rely solely on cutting spending, rather than raising taxes. But this one-dimensional approach is not based on sound economics.

Two highly regarded economists — Nobel Prize winner Joseph Stiglitz of Columbia University, and Peter Orszag, until recently director of the Congressional Budget Office and now the nominee to direct the federal Office of Management and Budget — wrote during the last recession that spending cuts could actually be more harmful for a state’s economy during a recession than tax increases. This assertion still holds true; Stiglitz recently reiterated the point in a letter (co-signed by 120 other economists) to New York’s governor David Paterson."

[Dreamer Tatum]

15. How quickly can you implement higher taxes on the rich? Can you do it before Friday?

No.

There is a practical component to this, too. If there is no money in the account, checks can't be written.

[HelenWheels]

17. Can't they borrow the money

or is their credit too bad?

[Dreamer Tatum]

18. Borrow it from whom?

They can't borrow what they can't credibly pay back.

[Hannah Bell]

29. "Can't credibly pay back?" Cali's GDP: 1.7 TRILLION. Deficit = 40 BILLION, i.e. 2.3% of income.

That's like you having income of $50K & borrowing $1000. Of course they can credibly pay it back.

California = world's 8th-largest economy. State budget = 8% of GDP.

Arnold is starving the poor, sick & elderly & crying "crisis" because Arnold & his backers have an agenda.

[Dreamer Tatum]

31. Can you show me California's currency printing press, please?

Or some of their currency?

No, you can't. Thanks for playing.

[Hannah Bell]

33. Irrelevant. California's income is 1.7 trillion/year. So obviously, if they borrowed $40 billion,

they could pay it back.

But obviously, they prefer to starve poor people, because the budget problems have been known for years, & ah-nold did nothing to head them off but further reduce taxes on wealth.

[Dreamer Tatum]

36. Good lord, are you ever mixing concepts

California's GDP is called "income," but if you think that's actual greenbacks, then you should crack a textbook someday.

California's ability to repay, say, $40B is based on its ability to collect revenue, which is currently impaired due
to the economy and previous commitments of funds.

If you are really claiming that CA can borrow against its GDP, then let me run a few possible new names by you:

JP Morgan Chase University of California at Berkeley
BNP-Golden Gate Bridge
Beverly Hills, CA, a municipal subsidiary of HSBC
Bechtel Interstate Tollway 5


Get the idea?

[Hannah Bell]

38. No, sorry, it's you who doesn't get it. Cali's GDP is its INCOME, & its INCOME is taxed to the tune

of 8% to fund its GOVERNMENT.

I'm claiming California could easily "pay back" $40K by raising taxes .025%.

.025% of 1.7 trillion = 42.5 billion.

They could start by rescinding the REGRESSIVE vehicle tax & restoring the PROGRESSIVE one.

But no, ah-nold & his fascist backers would rather let people starve & go homeless, because they have an AGENDA.

So do you, apparently.

[Dreamer Tatum]

42. Good heavens. I am now laughing at you.

That modest little 2.5% increase you're so sure will close the gap? It would actually have to be
a few times that, given the disproportionate contribution of households to tax revenues, coupled
with the increase in unemployment and collapse in asset values. If I asked you, you would probably
say we're in a "Depression," which if you're right, whittles that GDP number now by at least 10%.

Which is fine - tax people to hell and back. They won't move. They would NEVER demand that anyone look
at the budget. Heck, people would go out and CREATE jobs just to have the privilege of having their
taxes increased.

This thread is 75% cursing public finance based on an insanely planned policy of revenues < expenditure and 25% hamhanded and impractical solutions to the problem.


I would suspend all corp tax breaks, raise income taxes progressively, create a new personal income tax bracket of
15% over $1MM, and lower taxes on small business. I'd also eliminate budget waste.

[Hannah Bell]

47. No, it would be exactly what i said it was, on average.

You're worried about people leaving cali over a .025 average increase, but you'd "suspend all corp tax breaks"?

you're not even consistent.


i'm sure these guys will move if you hike their taxes 2%.

http://sfluxe.com/2008/09/29/the-44-billionaires-of-northern-california/

That's just in northern california. Cali is home to 10% of the WORLD's billionaires.

[glitch]

45. Everybody's credit is "bad" when no one is lending.nt

[hfojvt]

22. How long have they known this problem existed?

How long have Republicans insisted "no tax increases!" and the Governor vetoed budget proposals with tax increases? (Not that it was the best proposal, but perhaps the best one likely to pass.) There's a big difference between
1. We have no choice
and
2. NOW we have no choice

As in, before they backed themselves into a fiscal corner, they could have proposed and instituted tax increases on the wealthy. They chose not to, and now this is the result.

[Dreamer Tatum]

30. That's a complaint, not a solution

And it might not even be the best solution. Once again, the Tiebout Hypothesis has been proved: if you overtax people
and they can go elsewhere, they will.

I have not studied whether CA Assembly Republicans could block anything, but I sort of doubt it.

[Garbo 2004]

125. ? Yes Repubs have been blocking, for years. 2/3 majority vote required for appropriations bills. nt

[lolly]

117. Yes--with a budget passed

The problem is that the state can't keep spending money when it hasn't passed a budget--not that there literally is no money left in the state coffers.

So yes, if we passed a budget tomorrow, one that included higher taxes on the very wealthy, then the state could go ahead and cut those checks.

[Garbo 2004]

127. Budget was passed & enacted months ago. Problem is it was BS.

Just something they could get through before election. But it was not realistic in terms of revenue and dealing with existing deficit.

Problem now is cash flow.

[lolly]

138. Emergency budget

Temporary (?) emergency budget--but now the extension is expiring, and I believe the state constitution says they have to come up with the real thing now.

And they can't just borrow--also against the state constitution.

[Garbo 2004]

139. 2008/2009 Budget Act was not temporary law. No "extension" required since it doesn't expire

until June 30, the end of the 08/09 fiscal year. What pols are haggling over is amending the existing Budget Act and if/how to increase revenues to address general fund deficit.

The immediate issue is a general fund cash/flow problem. (And not all state programs/agencies are funded by general fund.)

[Hannah Bell]

142. I was wondering about that when i saw the report of arnold wanting to put out some bond

issues. This is a kind of "borrowing," no?

[Dreamer Tatum]

134. touche nt

[elifino]

21. People and business are already leaving Ca.

I think I read that Ca. will lose a Rep the next time that this is adjusted because of population change. I do not remember the reason given. I do believe that the well off are the most likely to leave as they can afford to relocate.

[Hannah Bell]

35. Doesn't look like they're losing population, or a rep, to me.

1950 10,586,223 53.3%
1960 15,717,204 48.5%
1970 19,953,134 27%
1980 23,667,902 18.6%
1990 29,760,021 25.7%
2000 33,871,648 13.8%

Est. 2008<2> 36,756,666 8.5%

[cascadiance]

49. Some of the cities are losing population now...

And I think the granularity you need to look at for recent trends has to be smaller in scope than since 2000. A big chunk of people moved in places up until the recent housing crash there. I myself just left San Diego in November to move to Oregon...

This article was from 2006 and it was even starting to get bad then...

http://www.signonsandiego.com/uniontrib/20060316/news_1n16pop.html

There was a more recent population gain, but a larger segment of this growth is more due to immigration and to more births than deaths in this area. People from are still not moving here from other parts of the country much now.

http://www.voiceofsandiego.org/articles/2008/12/27/toscano/750populationgrowth122708.txt

[ProgressiveProfessor]

53. What CA is losing is higher wage earners and businesses that provide jobs

[Hannah Bell]

59. sure, that's why 10% of the world's billionaires live there.

[ProgressiveProfessor]

60. Living there and paying taxes there very different things

Also billionaire refers to wealth, not income. With that level of assets, its very easy to hide income.

[Hannah Bell]

61. my point exactly, & that's the problem.

the truly rich won't be leaving california anytime soon.

in fact, i suspect more will be coming.

[ProgressiveProfessor]

63. There is no wealth tax in the US as there is in other nations

There are some ad valorem taxes (property, cars...) but they would not address the disparities.

[Cleita]

73. No there isn't. Maybe it's time for California to start.

Frankly, I don't care if the rich get miffed and get the hell out. Then those of us, the working class and working middle class may be able to turn this back into the state that was once the fifth largest economy in the world, before the parasites moved in to turn it into the sixth largest economy in the world and going down to seventh.

[ProgressiveProfessor]

76. The process would take years and would not address the short term issue

It would literally be a new tax unprecedented structure in the USA and require a tremendous amount of overhead.

There is a huge tax avoidance industry in the US, mostly due to the overly complicated tax code. Its run by the rich for the rich. If a much simpler structure were implemented with minimal if any deductions, then state income would be more steady and the results fairer. I am not arguing for flat taxes or the Forbes Fair Tax nonsense, but some basic restructure is called for.

[Hannah Bell]

95. The short term issue can easily be addressed - if there's the will.

Witness the bank bailout, which by at least one estimate, has so far cost 8 TRILLION, close to 60% of one year's US GDP.

[Cessna Invesco Palin]

144. Yeah, that's easy when you can effectively print your own money.

California can't.

[Greyhound]

83. In Gov.Dufuss' last PSA he mentioned that CA is the world's 8th largest economy,

that is down 3 places in 6 years. CA is, as usual, ahead or the curve. They have taxed and fee'd small business out of existence while continuing to pay negative growth large corps to stay, genius.

In the next scene we find out that these large corporations he is so concerned with keeping are nothing but hollowed out shells with no assets left that he can touch.

[bread_and_roses]

26. So they are to let poor children and elders starve and die?

They damn well find another way. That "pragmatism" is heinous. It is unthinkable. People on welfare have NO reserve. They've usually had to go to a food bank before the end of the month. It is simply unbelievable to see anyone defending such a monstrosity.

[Dreamer Tatum]

37. It's not a defense, it's an explanation

People need money now. They can't eat "should haves," and no one ever got a full belly from "Damn politicians."

What do you think should happen TODAY?

[Hannah Bell]

39. no, it's a rationalization. what i think should happen is emergency funds

from the feds, increase the tax base .025 to repay it, & impeach ah-nold.

[lolly]

119. Pass a budget with small tax increases on the very wealthy

Pass it TOMORROW.

The reason the state can't issue those checks is because it is not authorized to without a "balanced" budget passed.

You keep saying that the checks aren't being issued because the money isn't there, but that's not really accurate. The "non-essential" payments (such as non-contractual) can't be issued without a budget in place.

PASS the budget, then the checks will go out.

But Arnie and the 2 dozen or so reps from Fresno and Bksfld and the OC are holding everything up because they want to include provisions to decimate environmental and occupational safety regs, and they refuse to consider even minimal tax increases for the wealthiest individuals.

THAT is why the state has to issue IOUs. It's not that they have to collect the extra 20 bucks from every millionaire in the state before they can issue welfare checks.

[Phoebe Loosinhouse]

130. That sounds like the same suicidal plan Newt led the Republican lemmings in

when they shut down the federal government and didn't give a rat's ass who they hurt in the process.

Good job, Ahnold. People will remember.

[Hannah Bell]

40. yes, he's fine with that. there's "no money," you know, even though

california produces 1.7 trillion in goods & services, the world's 8th biggest economy, & state taxes = <8%.

just one of those things. so sorry, but people must die, it's just the way it is when there's "no money".

[shanti]

100. and pete wilson

is the man behind the curtain. :(

[Hannah Bell]

133. can you add some details?

[shanti]

135. apparently

pete wilson is proving "advice" to the gropenator behind the scenes. i read this awhile ago...

[Hannah Bell]

140. thanks.

[ProgressiveProfessor]

57. Actaully is a form of politcal blackmail to force the legislature to move

The courts will step in and force the state to cover the elderly and poor since they are federally mandated programs California has accepted federal funds for.

The State Treasurer is an elected office in California

[book_worm]

16. To deprive checks to people who are poor, elderly, disabled is a crime

He should be looking at corporate welfare.

[Dreamer Tatum]

20. Like the $700B the government's giving out to companies?

CA's "corporate welfare" should be on the table, but I doubt it's anywhere near big enough to deal with
a budget that only ratchets up.

[Hannah Bell]

27. "only ratchets up":

Fiscal year general fund spending* as a percentage of personal income:
1981-82: $21.7 billion (6.78%)
1985-86: $28.8 billion (6.43%)
1990-91: $40.3 billion (6.21%)
1995-96: $45.4 billion (5.93%)
2000-01: $78.1 billion (7.07%)
2002-03: $77.5 billion (6.75%)
2005-06: $91.6 billion (6.08%)
2007-08: $103.5 billion (6.82%)

BIGGEST CONTRIBUTORS TO SPENDING GROWTH PRISONS: Spending jumped nearly 75 percent, from $5.8 billion a year to $10.1 billion, thanks not only to an 11,000-inmate increase in prison populations but sharply higher salaries for guards and other prison workers.

VEHICLE LICENSE FEES: Gov. Arnold Schwarzenegger cut the car tax but promised to pay local governments who use the money from the state treasury anyway. State payments to local governments rose about $3 billion over the period, to $6.1 billion per year, as more cars hit the road and their value increased.

EDUCATION: The biggest dollar increase has been in state support of K-12 education, from $28.8 billion in 2002-03 to$42.1 billion in 2007-08, but $6.1 billion of that increase was from shifting the method of reimbursing localgovernments for losses of vehicle license fee revenues.

The real increase for schools was $7.2 billion, or 25 percent. Inflation during the period was 17 percent, and school enrollment was relatively flat, so inflation-adjusted per-pupil spending by the state did rise by approximately 8 percent.

OTHER FACTORS: Spending on Medi-Cal also outstripped population growth and inflation due to increased health carecosts. Increases in most other major state expenditures were in line with inflation and population growth.


http://www2.csusm.edu/academic_senate/Misc/08-09/BudgetBriefWalters.pdf.

[barbtries]

41. that's going to be a disaster.

just do what the feds do. borrow it.

[glitch]

46. So are we at the "shrinking govt down" stage or the "drown it in a bathtub" stage? nt

[Cleita]

62. Why haven't we Californians recalled Arnold yet? He's had a longer time to

open "das buchs" and fix the economy than Grey Davis had and he's messed up royally.

[Greyhound]

85. While it was typical California to send an actor with no experience, knowledge, or ability

to Sacramento, the majority of the blame lies with the legislature in Sacramento and the various city and county councils and boards.

Just ask Henry Waxman what working within the LA city council is like.

[Cleita]

89. The LA City Council has always been the worst of incompetence, to be kind.

However, the Governor can get stuff done for the state if he isn't an idiot.

[Greyhound]

101. A more capable Governor certainly could do much to help, but I think that

more than anything else, the ridiculous Prop 13 is the primary source, combined with morons of both parties that dominate the State Legislature, of their permanent budget woes.

The stupidly low property taxes and endless giveaways to big business have caused the upside-down income mechanisms. "Little people" and small businesses are bled to death through taxes, fees, and endless regulation, all because they can't make the parasites that own the state pay their fair share for it.

[Cleita]

102. I agree with you there. Those two problems need to be reversed to

get California back on track. I have been saying this since we have been having budget problems. You would be surprised how many DUers disagree with me and claim reversing Prop. 13 would cause undue hardship. Phooey it can be done in a way, protecting poor and elderly homeowners and renters, and still target the rich who are not paying their fair share. Remember when Arnold got selected Governor, he asked Warren Buffett to be his financial advisor? Buffett recommended exactly these remedies and Schwarzenegger told him to do push ups and then dismissed him.

[Greyhound]

103. Wow, I didn't know that. I(sadly) left LA in 2002.

The motivation for the passage of prop 13 is completely understandable, but the implementation was and is a disaster.

So, if Warren Buffet can see it, why in hell can't the people? They're paying much higher taxes anyway, they just don't call them taxes anymore, and small businesses are just mercilessly punished. It is the negative growth, asset exporting, innovation stifling, corporations that get to ride the gravy train.

[Garbo 2004]

129. It's not just Governor...Repubs in Leg have been blocking revenue increases for years.

Davis's problem was not the economy. Was "restructuring" of CA's electrical system by Wilson & the Legislature & subsequent gaming of that system by Enron, etc. CA under Davis went into debt by entering into contracts at inflated prices with electricity providers to keep the electricity flowing in California. Either that or just let the system crash.

[Cleita]

137. He was trying to fix things and only shortly into his second term, which

we all reelected him to because we knew he had a big problem but needed a chance to fix it, Darryl Issa was able to pull off his recall. We all know the money for it came from RW think tanks in Washington. Issa didn't have that kind of dough. Governor Ann Richards said so in an interview while the recall was going on.

[dysfunctional press]

69. will people be able to use their i.o.u.'s to pay rent and buy groceries?

:shrug: seems fair.

[1]

74. no, but the answer is simple...

you tell your landlord (and credit card companies, and the person at the supermarket checkout) that you must

"suspend payments owed to them starting Feb. 1, because you lack sufficient cash to pay your bills."

its all in saying it with confidence...

:sarcasm:

[Greyhound]

87. LOL!

:rofl:

Of course that will set off another round of foreclosures and the cost of running the courts will skyrocket.

Truly the cereal state.

[Ladyhawk]

77. In CA and disabled.

State workers for the disabled were recently forced to go on an unpaid furlough. I'm ambulatory so I didn't suffer too badly, but I bet those who had nobody, those who are not ambulatory, suffered greatly.

Still my family continues to vote and think Republican. I half-expect my tiny SSDI check to evaporate. If that happens, I'm not sure what will happen to me. I can't go live with my mother and expect to retain my sanity. I love her, but we are simply incompatible.

[Garbo 2004]

131. AFAIK unpaid furloughs have not yet begun. Still in litigation. State employee furloughs

slated for February. There's a court date Jan 29 to challenge Gov's unilateral authority to authorize furloughs. .

[shintao]

94. Maybe I am missing something here!!

The reason the checks are not going out is the delay in signing a budget, not that raising taxes on the rich would solve the current problem.

I like your nice horse, it is just the wrong color for the mud you are throwing at it.

[Hannah Bell]

98. No, the root issue is the shortfall in revenue. asshole's budget

cuts "10% from each state agency, $400 million from schools immediately and takes away $4.4 billion beginning in July...1/5 of state parks, benefits for the children of welfare recipients if their parents fail to get jobs... State subsidies for the elderly, blind and disabled also would be frozen through the end of the decade, Medi-Cal would be cut by $1 billion.

...early release of more than 22,000 state prison inmates over the next two years...elimination of active supervision of 18,522 parolees...


At the same time, he proposes to borrow more money instead of raise taxes (except for a stealth surcharge on property insurance for "firefighting"); $38 billion in bonds to fund "school construction, water projects, high-speed rail and new courts" which wouldn't come due until he was out of office.

This article says the deficit is 14.5 billion. The earlier one said 40 billion. I don't get why the discrepancy.

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/01/10/financial/f180541S65.DTL

[Garbo 2004]

132. Your article is from Jan 2008. Not current info. nt

[Hannah Bell]

141. oops, my error then. so what happened in the previous face-down,

& in particular, did the gov wind up borrowing to fund his budget?

is this kind of threat-down a regular move in the gov's playbook?

[burythehatchet]

118. So Enron's guv'nuh couldn't muscle the state back into shape? Color me shocked.

[Ezlivin]

124. Legalize, tax and regulate marijuana

Convert all that black market money into legitimate, taxable revenue.

But that probably makes too much sense....