July 2009 Archives

The Governor says, "all the rich people are living the state" because of taxes.

We tackled the myth that businesses are leaving the state because of taxes a couple of weeks ago.  (Hint: they seem to be leaving every state -- at least they seem to be leaving the ones where conservative think tanks used the same talking points...)

And we pointed out that a 2% tax increase on incomes above $500,000 means that people making $600,000 after all deductions would pay an additional $38.42 per week (which is deductible from federal taxes).

So are rich people are leaving the state over $38.32 per week?

According to a Wall Street Journal op-ed, the rich are leaving lots of states,
"California, Connecticut, Delaware, Illinois, Minnesota, New Jersey, New York and Oregon"
The op-ed goes on to claims that,
 
"more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio"
So 1,100 rich people every day are leaving these states!  That's a lot of yachts being moved to the Nevada desert!

But wait!  PPIC Report Finds Poor Leave California At Much Higher Rate Than Rich.

I guess no one will be left in California soon.  



Comments (13)
Well, the Republicans got their way. The state's budget (read: services provided to the state's people) has been cut and cut again.  Services to the disabled are cut again.  State workers suffer a huge pay cut through furloughs.  The state's universities and colleges are cut dramatically.

Corporations got a big tax cut. 

All of this, of course, is for today.  In a few weeks we will get another reduced estimate of revenue and the process starts again.  And because so many things were just kicked into next year - including interest owed in borrowing - it will be even worse.  Citizens will see a 10% increase in withholding, which will all come back, but which reduces their ability to pay mortgages, etc.

All so that oil companies won't be asked to pay for the oil they take and sell back to us.  All so people making $600,000 will not be asked to pay $38.42 more per week in taxes (which can then be deducted from federal taxes).  All so businesses will not be asked to pay property taxes at current rates.

The LA Times on Sunday, Pat Brown's California takes a beating in Sacramento,

The visionary governor swept into office in 1959, and by the time he was swept out eight years later, he had created the 16-dam, multiple-aqueduct state water project, devised the three-tier college and university system, constructed nine major campuses and built more than 1,000 miles of freeways to connect regions of his burgeoning state. To this day, much of what gets us where we are going -- literally and figuratively -- stems from what he did in his two terms.

[. . .] In Brown's California, there was a broad consensus that government was a competent force for good. Now, among Californians of all political ideologies, there is the opposite: a repudiation of government and, even more, of any confidence in the governor and the Legislature to act competently. On that matter, at least, California as a whole has shifted to the right.

[. . .] "The whole spectrum has shifted so far to the right that today's Democrats are yesterday's Republicans. Yes, the state is more Democratic, but it is by no means liberal."

I'm not sure I agree that the people of the state are behind this at all.  The Republicans depended on that infrastructure that was built up in the years of good government, before the conservatives tore government down.  Now the public will start to see what it means to not have the government there for them.

Comments (0)
So they reached a budget deal.  The gap was closed entirely with cuts to essential service, schools, health care, etc.  Democrats had to cave out of fear that elderly people literally would not have oxygen tanks.

And to add insult to injury, instead of paying for the oil they take from the state the oil companies receive waivers to allow them to drill offshore!  In the last deficit-fix deal big corporations got a huge tax cut and now oil companies get more of our oil for free.  And we will suffer more pollution of our coasts.  (It's pretty clear from deals like these who is in control of the Republican caucus.  The citizens get services taken away, the big corporations get perks that increase the deficits.)

This is a Republican budget deal, entirely on their terms.
  Make them own it.

Here is how you make them own it: Make them vote for it.

Before any Democrat votes for this deal, every single Republican has to vote yes.  When the voting start, just sit there.  Wait.  And then when the Republicans have all voted, ONLY THEN should Democrats start voting, but not before. 

If we are going to have to live with a budget forced on us by Republicans and oil companies, then the Republicans have to show up and vote for it.


Comments (2)
I looked around and found that "businesses are leaving the state because of taxes" is one of those drumbeats that the corporate conservatives are using.  (Also, FYI the wealthy are leaving, too, parking their yachts in Salt Lake I guess.

I wrote about this myth the other day
, basically you pay taxes on profits and you certainly don't pack up and leave profits behind.  I wrote,
Oh, one more thing for the slower-thinking Republicans out there: profits are a good thing, not a bad thing.  And when you are making a profit the last thing you do is pack up your business and leave behind the circumstances that enabled making that profit.
So I looked around for "businesses are leaving the state" articles.  Here are a few:

A Republican member of the Assembly writes, Governmental Restrictions, High Taxes Driving Businesses & Jobs Out Of California.  Oops, the example company didn't leave, it started in Nevada, and it wasn't because of taxes it was because they wanted "freedom" to dump toxins into the environment.

Businesses and wealthy individuals flee state because of taxes. Oops this is another company that started in Nevada.  This time it was an income tax avoidance scheme where Californians set up the company in Nevada - but still live here.  So it's a PO box, not employees, etc.
 
This one quotes a Republican Party official,
"The high cost of living that continues to force Californians out of state should serve as a powerful reminder of the effect high taxes are having on our society," said Ron Nehring, the Republican state party chairman.
But doesn't give any examples, and in fact shows how California has very favorable business conditions, credits, and is the only state that doesn't ask oil companies to pay for the oil they take.

California's High Taxes and Burdensome Regulations Drive People and Businesses Away -- scary title, lots of scary words, but no examples of businesses actually leaving the state.

Another Company Leaving California because of High Taxes, Regulations  - Oops, this one is leaving the state because they want to pollute the air, not because of taxes.  Nice title, though. Scary.

We went through a flurry of this a few years ago, too.  Did any leave then? Let's see what we can find.

Companies Can't Leave CA Fast Enough - A title insurer left the state.  The 2003 article doesn't explain why but mentions retail energy rates.  Remember Enron, Bush, all that?

California proves too costly for departing businesses,
Coast Converters is spending $800,000 to move to Las Vegas, but the Los Angeles plastic bag manufacturer will save enough on workers' compensation, electricity and other costs to recover that in less than a year, CEO Mitchell Greif says.

"It's really an unfair business practice to allow companies to move to Nevada and sell into California," Greif says. "But I'm doing it."

Nope, not taxes.  And how do you like living in the desert, Mitchell?  Another 2003 electricity-costs thing.  You want deregulation?  Deregulating energy costs worked out great, no?

Nation's Business.  Oops, the headlines are misleading, they are leaving because of costs.  Yes, it costs more to live here because people are coming here, not leaving.  Also,
... 10 percent of the 90 Southern California companies responding said they "definitely" plan to move some or all operations from California within a year, and an additional 13 percent said they would "probably" do so.
OOPS, this one is from 1993, before the huge business boom.  Sorry.  I guess all the businesses left California.  Oh, wait...

Wait, here are some more articles:

New York's Taxes Send People and Businesses Out Of State -- Maybe they're coming here.

Are Millionaires Leaving Maryland to Escape Higher Taxes? -- Maybe they are passing California's millionaires going the other way.

Leaving Oregon, and its taxes, behind

Executives say firms may leave state if computer services levy is not repealed (Maryland)

Poll shows many mull leaving state (Buffalo)

NY's High Taxes Drive Small Business Away, Too

I guess all the businesses are leaving ALL the states!

Comments (22)

Who Is At The Table?

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This article was produced as part of Commonweal Institute's Progressive Op-Ed Program

Progressives believe in a "we're all in this together" philosophy while conservatives follow a "you are on your own" philosophy. The differences between these approaches can be clearly seen in the battle over how we share the benefits of our economy.

Conservatives encourage people to take "personal responsibility" rather than to rely on each other for support and guidance. When it comes to things like negotiating for pay and benefits this approach limits each of us to the power and resources that we have alone as individuals.

But big companies are not "on their own." They are legally allowed to concentrate resources and power that dwarf anything an individual could muster. Companies might have thousands, even tens of thousands of employees who have to do what they are told. They have top legal teams at the table across from you. They can place advertisements and hire PR firms to spin false stories that turn the public against you.

A "you are on your own" approach puts each of us alone at the table with powerful the big companies. When we ask for higher pay, time off, benefits or better working conditions they can set us against each other by saying, "we'll just find someone else to do your job." Big companies seeking to lower or eliminate worker costs (you) and pocket the savings on one side of the table with regular individuals on the other side of the table is a one-sided negotiation. The result is an increasingly one-sided economy, with the benefits of the economy going overwhelmingly to those who control these powerful companies.

The negotiating table is out of balance and the result is this terrible economic downturn.
There is another approach. We can create win-win solutions that work for companies and for each of us as individuals. This will happen when there is balance between those at the table negotiating shares in the benefits of our economy. To achieve this we need to strengthen the unions. We know this because there was a period in our history when we had a few strong unions which brought a better balance of power at the negotiating table. This balance didn't just help union members, it created the middle class.

Unions are the very essence of "we're all in this together". People banded together and refused to work unless conditions improved. This unity gave them the power to ask for better wages, benefits, time off, sick pay, health care, pensions and other benefits that we all came to expect and enjoy. The resulting balance of power forced both sides to look for balanced, win-win approaches. It created an economy with a stable workforce that could afford to purchase consumer goods, so companies prospered as well.

But in recent decades the unions have been weakened. The companies have created a stacked deck, forcing unions away from the bargaining table. With only the big companies at the table, of course the outcome reflects their short-term interests. Job security is non-existent. Raises are rare. Benefits are cut. Pensions and health insurance are ever harder to find.

The fact is, when unions are weakened the interests of all workers, unionized or not, are not represented.

The current state of the economy demonstrates how the conservative "you're on your own" approach has failed us. Our economy is terribly out of balance because the negotiating table has been out of balance for so long.

So it is time to restore balance. A progressive "we are in this together" approach can restore our economy. The Employee Free Choice Act, now before the Congress, is an example of the kind of progressive policy that would let workers join unions and again sit at the table without fear of being fired by their employers.

When working people are once again represented at the bargaining table, the big companies will be forced to accept win-win solutions. The economy will be restored and can once again benefit all of us.


Comments (1)
Republicans like to claim that businesses leave California because of having to pay taxes.

I used to own and run a business, and I have some news for Republicans:  Businesses only pay taxes on profits.  You don't pay taxes unless you are making a profit.  Paying taxes means you are making a profit.  Making a profit is a good thing, and California businesses pay a small percentage of the profits to the state to help cover the expenses that enabled you to make that profit.

I'm not sure how many different ways I can say it.  You pay taxes after you make a profit.  At the end of the year you add up your revenue and you subtract your expenses and other deductions and then you know what your profit is.

Oh, one more thing for the slower-thinking Republicans out there: profits are a good thing, not a bad thing.  And when you are making a profit the last thing you do is pack up your business and leave behind the circumstances that enabled making that profit.

I understand that Republicans hate government and are enraged by the idea of actually giving something back to the community to help pay for the roads, bridges, courts, police and fire protection, educated citizenry and the other parts of the state's infrastructure that created the environment that led to the ability to make a profit.  Yes, they hate that.  I understand.

But the fact is that businesses do not pack up and leave when they are making profits.  So if Republicans want to trick people into supporting tax cuts for the big companies that shelled out so much cash put them in office they really do need to come up with better stories than trying to claim that businesses pack up and leave the state because they are making too much profit. 

Comments (5)

During my first term in the California Legislature back in 1998, I was reminded regularly that the state budget is a moral document, setting forth the priorities and values of its people. If what we are seeing today is such a set of priorities, we have clearly lost our moral compass.

Passing out pink slips to our teachers while giving tax-breaks to multi-national corporations sets a sad standard in the annals of decency and short-sightedness. What is more important than our children and their future? Apparently to the right-wing Republicans who have taken a pledge against balancing the budget thoughtfully and fairly and who forced yet another such  boondoggle before agreeing to the February, 2009 budget,it is seeing to it that their big corporate donors (the real special interests in our state) get even more from California while giving nothing in return.

At the same time our governor boasts that he's so cool with what's happening that he is spending his evenings in his jacuzzi with his 8 inch stogie while people in wheel chairs are being arrested outside his office because they're asking  for simply enough to maintain a level of human dignity while they fight to survive each day.  Yet, this apparently doesn't offend enough that the media has barely mentioned the Governor's directive to arrest these folks while he embarasses us all with his cigars and indulgences. It is shameful. Our lack of indignation is shameful, too. Where is our moral compass?

While in Washington D.C. recently, I went to the wonderful FDR Memorial, located within a stone's throw of the Jefferson Memorial. Franklin Delano Roosevelt was a man who set this country on a path of compassion and greatness with his effort to give every American the opportunity to live with dignity. One is reminded of this throughout his Memorial.

During a time not too different from today, he gave us hope and challenged us not to succumb to fear.His was a vision of possibility, dignity and kindness combined with the greatness to see that vision become a reality. His moral compass should have set the tone not just for several generations of Americans,  but for all generations when he said,

                            The test of our progress is not whether we add more to the

                            abundance of those who have much; it is whether we provide

                            enough for those who have too little

 

Today, all we hear about is how we are taxed too much; that we have to do without; that we have to give big corporations more so they create jobs (a totally false premise since so much of their profit goes to greedy executives or to create jobs in other countries); that we should cut education, healthcare, close our parks, reduce services that protect our natural resources and protect our environment and public health, etc. The list goes on and on, but for those who have either forgotten the admonition of Franklin Roosevelt or the role of government to provide for the common good, it's simply and ONLY about the money and shrinking government so it can no longer function.

While there is certainly a good argument that government cannot be all things to all people and that it must respond to the economic circumstances of the times, the Governor and the anti-government right-wing that has far too much influence in California (because of the 2/3 vote requirement for a budget) have taken this too far. To be OK with giving to those who have the most at the expense of those who have the least and even to the middle-class struggling to stay afloat means we have forgotten who we are as a people.

It is time to start talking about investing in our people and our future and regain our moral compass. And it should start with the Governor getting out of his jacuzzi and listening to those in steel chairs who are asking for simple dignity. Or better yet, he should remember the words of the man who governed from a steel-chair and did so with great compassion and success. That's real leadership.


Comments (9)
Today's San Jose Mercury News has a front-page story, California leaders in no hurry to break budget impasse. From the story,

"Despite plunging tax revenues, Wall Street's unwillingness to loan the state money and billions of dollars worth of IOUs hitting mailboxes, California's leaders are displaying a seeming lack of urgency to close the state's $26.3 billion deficit.

Gov. Arnold Schwarzenegger and legislative leaders blew past a supposedly ironclad June 30 deadline to pass a new budget..."
Blew past?  The legislature did pass a budget fix last week, but the Governor vetoed it!  This choice by the Governor led to the state needing to issue IOUs.

But readers who depend on this newspaper for information about the state budget process have no way to know this.  In fact, I have had difficulty locating any news source in the state that informed citizens that a budget fix passed and was vetoed.  (The papers did write that the Governor had threatened a veto, but -- and I may be wrong - I can not find a single story explaining that he did it.)

To their credit (I guess) the San Jose paper hinted at the veto in an editorial a week ago, Governor didn't need to push state over the edge, writing,
 
"In rejecting a stopgap fix for the budget on Tuesday, the governor and GOP leaders have accelerated a budget meltdown that pushes the state deeper into debt."
Talking to people involved, I pick up a sense that passing a budget fix after the Governor said he would veto it was pointless, so not worth mentioning.  But isn't that for the voters to decide?  Many would say that passing the fix, especially at the last minute after all negotiations had failed and the state was going over the cliff was the responsible thing to do, also known as governing.  This put a budget fix on the table and available for use to avoid the calamity and cost of IOUs, rating downgrades, etc.  The Governor had a clear choice at that point, and chose to take the state over the cliff.  The voters should have been told, not kept in the dark that the Governor made that choice.  

Meanwhile, the other side still refuses to offer up any plan of their own, still insisting that the Democrats fix the budget entirely with cuts to services that the public needs and take the blame for that.  They refuse to allow any plan that asks oil or tobacco companies to pitch in.  They claim the wealthy will "leave the state" if asked to pitch in an additional $40 a week.  They make up stories about companies leaving the state (but can't name any).  But it is not reported that the Republicans refuse to offer a plan or engage in serious negotiations.  It is as if the Republicans are expected to not be serious, so it's not worth reporting that they aren't serious.  The voters should have been told.  

The system of democracy depends on the voters being informed so they can apply pressure as needed and remove officeholders who are not doing what the voters want them to do.  But none of this works if the citizens have no way of learning simple facts, like that the legislature did govern responsibly and pass a budget fix, which the Governor vetoed.  The voters should have been told.


Comments (4)
The resignation of Alaska Governor Sarah Palin provides an opportunity to understand what is happening to us in California.  There are people who have so little respect for government and governing that they think Palin's resignation is a good thing.  In California there are also people who have so little respect for government and governing that they think it is a good idea to let the state fall off of a financial cliff.

Sarah Palin is said to be resigning so she can climb the ladder of Republican politics -- possibly even to run for the Republican nomination for President in 2012.  One would think that abandoning office in the middle of her term would disqualify her from having a future in seeking elected office.  But this is not the case -- just the opposite.  In fact this is so much not the case that the resignation is seen as a "brilliant" strategic move to increase her chances of obtaining that Presidential nomination prize.

The lesson to take away from Palin's resignation is that actually governing once elected to office is not the point.  Modern-day Republican Party politics is not about governing, not even a little bit. It is about being against governing.

This is how they can get away with being against government:  Good government was put in place in this country in the 1930s, 40s, 50s and 60s (with 90% tax rates at the top, by the way) and has been taken for granted since.  The infrastructure of roads, laws, trash collection, etc. has been in place and functioning for so long that it is taken for granted.  And so it all provides a safe platform for anti-government ideologues to pretend that government is not needed.

This brings us to California.  We have a minority of elected officials who also do not care about governing.  So far they have been able to get away with it, because of the work that We, the People did for several decades to build this state and make it governable. 

California enjoyed massive government infrastructure investment from the 1930s through the 1960s.  We built the best roads, water systems, schools, courts, etc.  As a result we had the most prosperous industries, most well-educated people and best-functioning government. 

And so the anti-government tax-cutting ideologues were able to defer maintenance of that wonderful system, handing the maintenance money out as tax cuts, and no one saw the foundations of that prosperity slowly begin to erode.  They were able to complain about government and ignore governing because government was there for them and all of us anyway.

Well now we have coasted along on the infrastructure built decades ago, but it has eroded, and we are coming to the end of the time when the ideologues can enjoy the luxury of deferring maintenance.  But our Republican leadership is firmly entrenched in their anti-governing ideology.  They are willing to let the state fall off a cliff rather than actually pay to maintain the governing structure they depend on -- because they believe it will just operate as it seemingly always has, for free.

But governing is about about the people of the state and their needs.  It takes skill, wisdom, an understanding of government and governing to be an elected leader.  Sarah Palin obviously has none of these qualities, nor does Ahnold, for that matter.  While our most vulnerable people are begging for their services and programs not to be dismantled so that they can actually have food and help in their most basic needs, our Governator boasts about sitting in his jacuzzi smoking a stogie.Would FDR ever suggest that? Would Dwight Eisenhower?   What kind of leadership, compassion, understanding is reflected in these kind of "leaders."  The answer is obvious and dramatic: NONE.

Comments (3)
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