The future of California

I have lived in California since 1956. When I arrived as a freshman college student, California had the best infrastructure in the nation, the University of California was the best public university and the state had a balanced budget and a part-time legislature. In fact, the last items were connected because, once the state legislature became a full-time career for politicians, the growth in state spending followed rapidly. Now we have the highest state taxes in the country, some of the worst infrastructure and people are leaving. Not everyone is leaving. Illegal aliens are streaming into the state. Legal, tax paying residents are leaving.

Including me.

Now, 56 year later, we have come to this.

California has the highest state income tax rate in the country (10.3%), while New York State also has a high income tax rate (6.85%), with the combined state and city rate rising to 10.5% in New York City. Their overall government spending totals also happen to top the national charts. And, what do you know, California is $15 billion in the red this year while New York is trying to close a $6.4 billion 2009 budget hole, which budget expert E.J. McMahon of the Manhattan Institute expects to grow to $26 billion over three years.

California hasn’t even passed a budget yet, many weeks into the fiscal year. The Democrats in Sacramento have proposed a series of new taxes on businesses and individuals with incomes above $1 million. Their plan would raise the top income tax rate to 12%, which would be the highest in the nation. They would also repeal a tax law allowing businesses to carry forward losses against future profits.

In August, Governor Arnold Schwarzenegger abandoned his promise not to raise taxes and proposed a hike in the sales tax — by one percentage point for three years, which would bring the rate in many cities to as high as 9%. California taxpayers are fortunate that state law requires a two-thirds majority to pass a budget, which gives Republicans in the legislature leverage to block these tax hikes. They realize that these budget showdowns are the only chance they have to force even modest spending restraint.

So what is happening ?

As for California, its spending soared to $145 billion in 2008 from $104 billion in 2004. Every time the politicians raise taxes, they merely lift their spending by as much or more, and then plead poverty and demand another tax hike during the next economic slowdown.

The “progressives” who dominate politics in these states target the rich on grounds that they have the ability to pay. They also have the ability to leave. From 1997-2006, New York State lost 409,000 people (not counting foreign immigrants). For every two people who move into the state, three flee. Maybe the problem for New York is merely bad weather, not high taxes.

Except that sunny California is experiencing a similar exodus. Over the past decade 1.32 million more native-born Americans left the Golden State than moved in — despite beaches, mountains and 70-degree weather. Mostly the people who have fled are the successful, the talented and the rich.

Why do you think Las Vegas has a million people ? Who in the world would live there if the income tax was not zero ? The sales tax is also zero. Tucson now has a sales tax. Twenty years ago, Arizona had no sales tax but they have a Democrat governor now.

We see the same phenomenon in New Hampshire. Democrats move to New Hampshire to escape the taxes of Massachusetts. Then they vote Democrats into office in their new home state. Pretty soon the taxes rise.

No wonder Arizona residents hate Californians. I have to change that license plate on Annie’s car.

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4 Responses to “The future of California”

  1. doombuggy says:

    >>>>We see the same phenomenon in ________. Democrats move to __________ to escape the taxes of _________. Then they vote Democrats into office in their new home state. Pretty soon the taxes rise.

    That is so frickin’ true on so many levels. Mexicans move here and recreate the barrio. Russians move here and start racketeering.

  2. Brett says:

    The same phenomenon is occurring in Orange County. A beautiful area settled by conservatives. It’s such a terrific a place to live the liberals are attracted to it. Then they try to change it to L.A.

  3. Tatiana says:

    Very useful page. where can i find more articles about The future of California ?

  4. Richard Rider, Chairman, San Diego Tax Fighters says:

    Breaking Bad: California vs. the Other States
    by Richard Rider, Chairman, San Diego Tax Fighters
    Version 1.47 Revised 18 July, 2009
    Phone: 858-530-3027

    Here’s a depressing comparison of California taxes and economic climate with the rest of the states. The news is breaking bad, and getting worse (I keep updating this article):

    California has the 2nd highest state income tax in the nation. 9.55% at $48,000. 10.55% at $1,000,000

    By far the highest state sales tax in the nation. 8.25% (not counting local sales taxes)

    Highest state car tax in the nation – at least double any other state. 1.15% per year on value of vehicle.

    Corporate income tax rate is the highest in the West. 8.84%

    2009 Business Tax Climate ranks 48th in the nation.

    Fourth highest capital gains tax 9.55%

    Highest gasoline tax (averaging 64.5 cents/gallon) in the nation (July, 2009). When gas hits $3.00/gallon, we are numero uno – because unlike many states, we charge sales tax on gasoline purchases (built into the price).

    Sixth highest unemployment rate in the nation. (June, 2009) 11.6%. National rate 9.5%.

    California’s 2009 “Tax Freedom Day” (the day the average taxpayer stops working for government and start working for oneself) is again the 4th worst date in the nation – up from 28th worst in 1994.

    To offset lower state revenues, 29 states are proposing 2009 state tax and fee increases totaling $24 billion. California, with 12% of the nation’s population, is proposing 47% of that increase (6/5/09).

    1 in 5 in LA County receiving public aid.,0,4377048.story

    California has 12% of the nation’s population, but 36% of the country’s TANF welfare recipients – more than the next 7 states combined. Unlike other states, this “temporary” assistance becomes much more permanent in CA.

    California prison guards highest paid in the nation.

    California teachers easily the highest paid in the nation. (CA has the second lowest student test scores)

    California now has the lowest bond ratings of any state, edging out Louisiana.

    California ranks 44th worst in “2008 lawsuit climate.”

    In 2005 (latest figures), for every dollar Californians sent to D.C. in taxes, we got back 78 cents – 43rd worst.

    America’s top CEO’s rank California “the worst place in which to do business” for the fourth straight year (3/2009). But here’s the interesting part – they think California is a great state to live (primarily for the great climate) – they just won’t bring their businesses here because of the oppressive tax and regulatory climate.
    Consider this quote from the survey (a conclusion reflected in the rankings of the characteristics of the state): “California has huge advantages with its size, quality of work force, particularly in high tech, as well as the quality of life and climate advantages of the state. However, it is an absolute regulatory and tax disaster.”

    California, a destitute state, still gives away college education at fire sale prices. Our community college tuition is by far the lowest in the nation. How low? Nationwide, the average community college tuition is 4.5 times higher than California CC’s. This ridiculously low tuition devalues education to students – resulting in a 30+% drop rate for class completion. In addition, 2/3 of California CC students pay no tuition at all – filling out a simple unverified “hardship” form that exempts them from any tuition payment, or receiving grants and tax credits for their full tuition.

    On top of that, California offers thousands of absolutely free adult continuing education classes – a sop to the upper middle class. In San Diego, over 1,400 classes for everything from baking pastries to ballroom dancing are offered totally at taxpayer expense.

    California residential electricity costs an average of 35.4% more than the national average. For industrial use, CA electricity is 56.2% higher than the national average (2007).

    It costs 38% more to build solar panels in California than in Tennessee – which is why European corporations have invested $2.3 billion in two Tennessee manufacturing plants to build solar panels for our state.

    Consider California’s net domestic migration (migration between states). From April, 2000 through June, 2008 (8 years, 2 months) California has lost a NET 1.4 million people. The departures slowed this past year only because people couldn’t sell their homes.
    These are not welfare kings and queens departing. They are the young, the educated, the productive, the ambitious, the wealthy (such as Tiger Woods), and retirees seeking to make their pensions provide more bang for the buck. The irony is that a disproportionate number of these seniors are retired state and local government employees fleeing the state that provides them with their opulent pensions – in order to avoid the high taxes that these same employees pushed so hard through their unions.

    As taxes rise and jobs disappear, we lose our tax base, continuing California’s state and local fiscal death spiral. This spiral must stop NOW.

    NOTE: If you would like to receive my free periodic “Richard Rider Rant” e-newsletter with more of this type of information and analysis, just drop me an email at To see the latest version of this “Breaking Bad” column, plus samples of my free “Richard Rider Rant” e-newsletter, go to my blog at