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The California Exodus

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http://online.wsj.com/article/SB1216251501...emEditorialPage

New York City has long been the highest tax jurisdiction in the United States, but California politicians are proposing to steal that brass tiara. California faces a $15 billion budget deficit and Democrats who rule the state Legislature have proposed closing the gap with a $9.7 billion tax hike on business and "the rich." There's a movie that describes this idea: Clueless.

The plan would raise the top marginal income tax rate to 12% from 10.3%; that would be the highest in the nation and twice the national average. This plan would also repeal indexing for inflation, which is a sneaky way for politicians to push middle-income Californians into higher tax brackets every year, especially when prices are rising as they are now. The corporate income tax rate would also rise to 9.3% from 8.4%. So in the face of one of the worst real-estate recessions in the state's history, the politicians want to raise taxes on businesses that are still making money.

This latest tax gambit was unveiled, ironically enough, within days of two very large California employers announcing they are saying, in the famous words of Governor Arnold Schwarzenegger, "hasta la vista, baby" to the state. First, the AAA auto club declared it will close its call centers in California, meaning that 900 jobs will move to other states. "It costs more to do business in California," said a AAA press release, in the understatement of the year.

Then last week Toyota announced it is canceling plans to build its new Prius hybrid at its plant in the San Francisco Bay area because of the high tax and regulatory costs. Adding to the humiliation is that Toyota will now take this investment and about 1,000 jobs to a more progressive and pro-business state: Mississippi.

There is already a reverse gold rush going on in California and the evidence points powerfully toward high tax rates as a culprit. Census Bureau data show that, from 1996-2005, 1.3 million more Americans left than came to California. And the people who are leaving are disproportionately those with higher incomes: the very targets the Democrats want to tax more.

The liberal fairy tale is that the rich "don't pay their fair share." The reality is that there's no state in the country more dependent on six- and seven-figure earners to pay its bills. Those with incomes of more than $100,000 pay 83% of the state's income taxes, and the richest 6,000 of the 38 million Californians pay $9 billion in taxes. Every time a rich person like Tiger Woods departs, the state fiscal problem deepens.

What the politicians in California refuse to address is their own overspending. State outlays were up 44% over the past five years, meaning that California is spending at a faster pace than even Congress. Minority Republicans in the Legislature say the solution is a hard expenditure cap – like 46 other states have. Yet even in the face of the giant deficit, Mr. Schwarzenegger and the Democrats want to pass a new $9 billion water bond, a $14 billion state-run health insurance program, and the most expensive climate-change program in the country.
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Jeez, imagine that! In the face of failure the Democrats want to spend more money they don't have and make the government bigger. Bet nobody saw THAT coming!

Are you sure you don't live in ASSachusetts?

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CA recently made home schooling a criminal offense. Can a state be more misguided ??

IMO- the typical & pervasive CA liberalism is finally biting it's own throat. Good- perhaps... just perhaps some of these whiny libs will scuttle back under their rocks for a decade or so.... but I'd bet against that.

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Jeez, imagine that! In the face of failure the Democrats want to spend more money they don't have and make the government bigger. Bet nobody saw THAT coming!

Just for the record, the governator is a republican.

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Jeez, just when I decide to come, everyone decides to leave. :smilewide:

They probably smelt you coming. :P:lol:

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Arnold is quite liberal on social issues, but for fiscal issues, he uses the Republican playbook - cut revenues but expand government. And now he faces a $15 billion dollar deficit. Arnold has been in love with bonds. There's been billions in new borrowing. He will not have to worry about being accountable because he will be out of office in a couple ofyears.

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'Republican' is not the opposite of 'liberal'.

The whole stupid mess reminds me of a reoccuring practice in gov: This happened this year (I forget where) and I saw the same thing reported in a 1968 NY newspaper I was paging thru last week: local government urges water conservation... gets it... and is forced to raise water rates due to lower revenue. Cut waste somewhere else to take up the slack, because... you know.... it's WASTE ? Nope.

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I don't want to go off on a rant here, but the problem isn't just California, it's the whole country. The vast majority of politicians are willing to do whatever to guarantee their reelection and typically that means giving away the farm. The population behaves like children asking for more and more without ever considering how everything is going to be paid for and the long term ramifications of their greed. These two things put together are a recipe for disaster and it simply can't go on forever. I believe we are seeing the beginnings of the end of the dominance of the US in world affairs. We can't continue to be a world power when we are as far in debt as we are to other countries. I hope I'm wrong, but I don't think I am.

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Just for the record, the governator is a republican.

yeah, but he doesn't make the laws, he can only push a direction, and sign or veto laws.

'Republican' is not the opposite of 'liberal'.

true, but liberal doesn't mean what it used to either.

didn't Cleveland or some other ohio city face bankruptcy recently... a city in cali was/is facing bankruptcy too.

maybe cali will go bankrupt and only the yuppies will live there.... and they'll realize either they know nothing or feel victorious and then leave cali for everyone to move back in. lol

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yeah, but he doesn't make the laws, he can only push a direction, and sign or veto laws.

And that veto power is very important, cause it could, ya know, be used to kill any outrageous spending bill.

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Arnold also has the line-item veto at his disposal.

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They probably smelt you coming. :P:lol:

I thought the air rather reeked of low tide at a Santa Monica pier. :smilewide:

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I didn't read the whole thing, but from what I did read it seemed that the problem was that the mother was acused of mistreating her children and lacked teaching credentials.

Home schooling is fine, but certainly the parents need to have proof that they can actually teach.

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Yes, the high tax bracket may make some rich people leave but... do you really think that all the high paid celebrities are going to leave LA? Not bloody likely... they probably won't notice 1.5% more tax anyways.

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there always comes a point where the cost of doing business is too much but the icing on the cake is probably excess regulation and lawmaking.

hopefully this will stem CA's desire to extend their tentacles to the rest of our great nation with all the crap like bullying others into extreme emmissions regs etc.

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Yes, the high tax bracket may make some rich people leave but... do you really think that all the high paid celebrities are going to leave LA? Not bloody likely... they probably won't notice 1.5% more tax anyways.

It is that kind of short-sighted thinking that causes the dispare between working class and the wealthy. A person making 4.5 Million annually taxed an additional 1.5% would lose the equivalent of 68k annually. These people structure their lives like you and I do with a budget, allbeit larger, a balanced budget nonetheless. An increase in costs will be offset with the loss of 1-2 household employees. Where will they go? Unemployment, welfare???

For real people the problem with the US and state governments is not income it is outgo. Eliminate government spending on programs that could be left to private business. Healthcare, postal service, and charity are a couple to name a few.

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It's always a balancing act. Often popular locations can become victims of their own success. They do run the risk of pricing themselves out of the market. Eventually, some sort of 'push back' in the market can take hold.

For example, if you are a teacher making $50k a year, would you rather live in L.A. where a bungalo will cost you $400k, or in Seattle where it is 1/3 less? I am pulling these numbers out of my ass to make a point. If you are a long time L.A. resident (having bought your home 25 years ago), then it is a wash - other than the traffic. However, if you are looking to set up in L.A., the entry costs are prohibitive.

If a place becomes too popular, then some of the reasons for living there in the first place can diminish with time. The balance of L.A.'s nice weather, versus famous smog being one example.

I suspect a 7.5 on the richter scale might not do L.A. county any favors either.

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Just to let you know, the average cost of a home in Seattle is over $400,000... :)

But your point is still valid. A lot of people will move where they can get more for their money.

Many won't though because of the impact it has on the true "quality of life" that one benefits from their location. There are several cities in Washington and in the country that are far cheaper than Seattle/Bellevue but we wouldn't want to give up what we have here just to buy a more expensive car or live in a home that's unnecessarily 2000 sq ft bigger than we need. We would inadvertently spend the same amount somewhere else anyway, but trade our "quality of life" with an increase of material possessions that neither of us wants or need.

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hopefully this will stem CA's desire to extend their tentacles to the rest of our great nation with all the crap like bullying others into extreme emmissions regs etc.

This doesn't happen. CA only governs itself. If other states adopt things CA adopted first, your issue is with those legislators, not the state of CA.

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CA recently made home schooling a criminal offense. Can a state be more misguided ??

IMO- the typical & pervasive CA liberalism is finally biting it's own throat. Good- perhaps... just perhaps some of these whiny libs will scuttle back under their rocks for a decade or so.... but I'd bet against that.

This is being challenged...

Which is good. My 18 year old daughter just graduated home-school high school.

Chris

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Just to let you know, the average cost of a home in Seattle is over $400,000... :)

But your point is still valid. A lot of people will move where they can get more for their money.

Many won't though because of the impact it has on the true "quality of life" that one benefits from their location. There are several cities in Washington and in the country that are far cheaper than Seattle/Bellevue but we wouldn't want to give up what we have here just to buy a more expensive car or live in a home that's unnecessarily 2000 sq ft bigger than we need. We would inadvertently spend the same amount somewhere else anyway, but trade our "quality of life" with an increase of material possessions that neither of us wants or need.

This is why I like Central Ohio, where I live $275,000 buys a 3000 sq. foot log home that backs to a ravine and sits on about 8 or 10 acres of land.

But I would also love to live in Seattle, I hear it is fantastic.

It is a trip I intend to make again, I was there once when I was in College and thought it was wonderful.

Chris

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