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State Budget
Budget Alert: Sacramento’s Attempt at making California #1 in Taxes –
Recipe for Economic Recession and Reverse Gold Rush
Across this state, thousands of California families are hurting. They are concerned about losing their jobs and homes. As fuel prices and the cost of doing business in this state continues to rise, small businesses are cutting expenses and often times laying off workers driving up the state’s unemployment rate.
California’s current $17 billion deficit has the Governor calling for park closures, cuts to health care and other reductions in social services. The last thing Sacramento needs to do is increase the economic burden. People need a break, and we shouldn’t have politicians trying to make the situation worse. How much more can we ask from our already struggling families, students, small business community, elderly and the poor?
The legislative majority is proposing a $9.7 billion tax hike on businesses and “the rich”. The marginal tax rate would be increased from 10.3% to 12% making it the highest in the nation. The middle class will be pushed into the higher “rich” income tax bracket every year as a consequence of the legislature’s proposal to eliminate the indexing for inflation. Additionally, Sacramento politicians want to raise taxes on businesses (those still making a profit) in the face of one of the worst real estate recession’s in our history. Tack on the corporate income tax rate hike from 8.4% to 9.3% and you have the perfect recipe for economic recession.
The Automobile Club of America (AAA) recently announced that due to the high cost of doing business here, it will close its call centers in California taking 900 jobs from our state to other states. On the heels of their announcement, Toyota Motors canceled its plan to build the Prius hybrid at its San Francisco plant in the Bay area due to high tax and regulatory costs. End result? 1000 jobs will be lost in this state and move to Mississippi, considered a pro business state.
What can we expect as fallout from California’s over-regulation and call for higher taxes? From 1996-2005 1.3 million more Americans left the Golden State than moved in (Census Bureau data). This disturbing trend has been described as “the reverse gold rush” in a recent Wall Street Journal editorial. Who is leaving our state? Those with higher incomes and their departure, collectively, will have a profound impact on the already widening state deficit. The tax plan proposed by the Legislative majority will give that higher income earners further incentive to leave California. Compound that impact with the fact that those whose incomes of more than $100,000 pay 83% of the state’s income taxes, and are the ones exiting the state, our fiscal problems will only deepen.
Interestingly enough, the liberal state politicians refuse to recognize it is their continued overspending that is the root of the deficit. California is spending at a rate faster than Congress – 44% greater over the past 5 years than what the state took in with revenues. The minority fiscal conservatives in the Legislature hold fast that the solution is a hard spending cap. The proposed $9.7 billion tax increase package is a recipe to put our state into an economic recession given California’s weakened economy, skyrocketing gas prices, shrinking job market, and housing crisis. The last thing Californians need is another tax hike to support legislative overspending.
As your elected representative, I will work to find the waste in government spending, look to reduce the size of government, decrease regulations, and increase the efficiency and effectiveness of government services. To the proposed $9.7 billion tax package presented as a solution to the state’s budget deficit, I will just say no.
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paid for by Friends of Gabriella Holt
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