This should be a wake up call to those who vote for the Dem's every election year. The same story is playing out in many states with Michigan sitting at the very top next to California.
http://online.wsj.com/article/SB121625150189660215.html?mod=opinion_main_review_ and_outlooks
REVIEW & OUTLOOK
California as No. 1
July 17, 2008;PageA14
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.
The Democratic tax plan will give rich people a further incentive to flee at the very time the real-estate market is in collapse. New housing data reveals that the average California home price fell by 28% from June 2007 to June 2008, almost double the decline of any other state. The politicians in Nevada, the state with the third worst real-estate market, are hoping California raises taxes, because this could be a fast way to revive the Reno and Las Vegas housing markets.
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.
It may be that California Democrats are trying this now as a kind of trial run for Barack Obama next year. The Illinois Senator also believes he can solve the federal government's fiscal imbalance by imposing higher tax rates on small business employers and the wealthiest Americans. If they can get away with it in Sacramento, look for a national reprise next year.
See all of today's editorials and op-eds, plus video commentary, on Opinion Journal.
And add your comments to the Opinion Journal forum.
[/align]
California as #1
