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Businesses Exit Taxifornia in Droves ^ | March 16, 2012 | Mike Shedlock

Posted on 03/16/2012 8:41:56 AM PDT by Kaslin

California Tax Revenue Plunges

Inquiring minds have noticed a huge plunge in California Tax Revenue for the month of February compared to February 2011.

The numbers below represent a 22.55% plunge in spite of the fact that this February was a leap year adding a day to the calendar.

Madeline Schnapp, at TrimTabs Investment Research sent me a quick note regarding that plunge a few days ago.


Madeline writes...

Hello Mish

I came across this little tidbit from the February report from the Comptroller's office of the State of CA.

In Feb 2012 income tax receipts are down $328 million y-o-y, or 16.5%. Ouch!

What about retail sales taxes? CA had a "temporary" sales tax hike of one cent that expired last July. Adjust the data to reflect that change, it looks like sales taxes in February are $400 million y-o-y +/-, a decline of about 12.4%. Double ouch!

That doesn't sound like robust growth to me.

Something About the Economy Doesn't Add Up

Piecing Together the Jobs-Picture Puzzle, Jon Hilsenrath at The Wall Street Journal wonders "How can an economy that is growing so slowly produce such big declines in unemployment?"

Something about the U.S. economy isn't adding up.

At 8.3%, the unemployment rate has fallen 0.7 percentage point from a year earlier and is down 1.7 percentage points from a peak of 10% in October 2009. Many other measures of the job market are improving. Companies have expanded payrolls by more than 200,000 a month for the past three months, according to Labor Department data. And the number of people filing claims for government unemployment benefits has fallen.

Yet the economy is barely growing. Many economists in the past few weeks have again reduced their estimates of growth. The economy by many estimates is on track to grow at an annual rate of less than 2% in the first three months of 2012. The economy expanded just 1.7% last year. And since the final months of 2009, when unemployment peaked, the economy has expanded at a pretty paltry 2.5% annual rate.

How can an economy that is growing so slowly produce such big declines in unemployment?

Trimtabs thinks the problem lies in the heavily massaged BLS employment data and the highly suspect BEA personal income data.

That said, withholding tax data is also messy and not a perfect measure either, but no matter what I do with the data, I can't get to 200,000+ jobs unless a huge percentage of the workforce is suddenly working for McDonalds


Madeline Schnapp
Director, Macroeconomic Research
TrimTabs Investment Research
Many Explanations for the Unemployment Puzzle

There are many explanations for the "miracle drop" in unemployment.

  1. Disability Fraud: Disability Fraud Holds Down Unemployment Rate; Jobless Disability Claims Hit Record $200B in January
  2. Exploding growth in student loans and middle-aged job hopefuls returning to school: Consumer Credit "Demolishes Expectations" Really? No Not Really! The "Non-Bounce" in Non-Revolving Credit

  3. Involuntary Retirement: Boomers of retirement age that still want and need a job have involuntarily retired to collect social security because unemployment benefts rans out and they have no other source of income.

Divergence with Gallup

Those there things piece together the "unemployment puzzle" nicely except for one thing. Gallup polls do not agree as noted in Gallup Reports Large Jump in Unemployment to 9.1%, Underemployment to 19.1%.

U.S. unemployment, as measured by Gallup without seasonal adjustment, increased to 9.1% in February from 8.6% in January and 8.5% in December.

The 0.5-percentage-point increase in February compared with January is the largest such month-to-month change Gallup has recorded in its not-seasonally adjusted measure since December 2010, when the rate rose 0.8 points to 9.6% from 8.8% in November. So, is the BLS carefully massaging the data, or are their seasonal adjustments simply that far out of line with reality, tax collections, and common sense?

Businesses Exit California in Droves

Madeline and I are not the only ones who noticed the plunge in California. Chriss W. Street on Beitbart discusses the California Exodus behind the drop. Street has the reason: Businesses fed up with high taxes have fled the state.

California politicians seem delusional in their continued delusion that high taxes have not savaged the State’s economy. Each month’s disappointment is written off as due to some one-time event.

The more likely reason tax collections continue falling is that businesses and successful people are leaving California for the better tax rates available in more pro-business states.

Derisively referred to as “Taxifornia” by the independent Pacific Research Institute, California wins the booby prize for the highest personal income taxes in the nation and higher sales tax rates than all but four other states. Though Californians benefit from Proposition 13 restrictions on how much their property tax can increase in one year, the state still has the worst state tax burden in the U.S.

Spectrum Locations Consultants recorded 254 California companies moved some or all of their work and jobs out of state in 2011, 26% more than in 2010 and five times as many as in 2009. According SLC President, Joe Vranich: the “top ten reasons companies are leaving California: 1) Poor rankings in surveys 2) More adversarial toward business 3) Uncontrollable public spending 4) Unfriendly business climate 5) Provable savings elsewhere 6) Most expensive business locations 7) Unfriendly legal environment for business 8) Worst regulatory burden 9) Severe tax treatment 10) Unprecedented energy costs.

Vranich considers California the worst state in the nation to locate a business and Los Angeles is considered the worst city to start a business. Leaving Los Angeles for another surrounding county can save businesses 20% of costs. Leaving the state for Texas can save up to 40% of costs. This probably explains why California lost 120,000 jobs last year and Texas gained 130,000 jobs.

California Governor Jerry Brown’s answer to the State’s failing economy and crumbling tax revenue is to place a $6 billion tax increase initiative on the ballot to support K-12 public schools. He promises to only “temporarily” raise personal income rates by 25% on any of the rich folk who haven’t already left.
Taxed to Death

If Brown continues to suck up to the public unions responsible for the mess California is in, expect still more businesses to leave, expect the unemployment rate to rise, and expect a continued plunge in revenue.

TOPICS: Business/Economy; Editorial; Extended News; US: California
KEYWORDS: democrats; liberal; liberalfascism; liberals; liberalutopia; progressives; taxes
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1 posted on 03/16/2012 8:42:00 AM PDT by Kaslin
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To: Kaslin

The problem with killing the rich and taking their stuff is you can only do it once.

2 posted on 03/16/2012 8:44:28 AM PDT by Joe the Pimpernel (Islam is a religion of peace, and Moslems reserve the right to behead anyone who says otherwise.)
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To: Kaslin

And Jerry Brown’s solution to this is to raise taxes on business and high earners. You can shear a sheep many times but you can only skin it once.

3 posted on 03/16/2012 8:49:33 AM PDT by circlecity
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To: Joe the Pimpernel

That’s OK there Calipornia the Kardashians will take care of all of you!

4 posted on 03/16/2012 8:50:44 AM PDT by US Navy Vet (Go Packers! Go Rockies! Go Boston Bruins! See, I'm "Diverse"!)
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To: Kaslin

Texas = West Germany.

5 posted on 03/16/2012 8:51:09 AM PDT by Charles Martel (Endeavor to persevere...)
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To: Charles Martel

I got a new really, really good employee out of CA yesterday.

Keep ‘em coming CA.

6 posted on 03/16/2012 8:53:51 AM PDT by txhurl (Thank you, Andrew Breitbart. In your untimely passing, you have exposed these people one last time.)
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To: Kaslin

and all they seem to be focused on locally is eliminating one time use plastic bags from businesses. Go figure. Delusional isn’t even the word anymore. Not strong enough for the mental illness of these California politicians and those that continue to vote them in.

7 posted on 03/16/2012 8:55:06 AM PDT by GOP Poet
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To: Charles Martel

“Texas = West Germany.”

California=East Germany

8 posted on 03/16/2012 8:55:44 AM PDT by chuckee
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To: US Navy Vet

Um, the kardashians have quietly moved to Dallas. Happened when Odom became a Mav...

9 posted on 03/16/2012 8:56:11 AM PDT by piytar (Rebellion is here! Free Republic is on the front line! NEVER SURRENDER!)
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To: Kaslin

Put a fence around it,barricade the rest of the country away from them.Then put some dynamite charges in the San Andreas Fault and set em off....

10 posted on 03/16/2012 8:57:09 AM PDT by gimme1ibertee (If you want to kick a tiger in the ass, you better have a plan for dealing with his teeth.)
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To: piytar
Um, the kardashians have quietly moved to Dallas. Happened when Odom became a Mav...

And we can't wait until they leave.

11 posted on 03/16/2012 8:57:40 AM PDT by dfwgator (Don't wake up in a roadside ditch. Get rid of Romney.)
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To: Charles Martel

‘Bout right, most of them seem to be showing up here in Texas.

12 posted on 03/16/2012 9:00:34 AM PDT by Sequoyah101 (Half the people are below average.)
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To: Kaslin

Alcohol and cigarettes are up. Death is way up. So is insurance, but that’s probably from people who want to torch their businesses.

13 posted on 03/16/2012 9:01:04 AM PDT by Moonman62 (The US has become a government with a country, rather than a country with a government.)
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To: Kaslin

Penalizing the productive, and rewarding the non-productive, is a central tenet and practice of Socialism.

Even when the disastrous effects of this practice are right in front of their eyes, liberals refuse to accept the truth of that destruction, and insist upon solving those ill effects by penalizing the productive even more.

And as long as there’s water in the taps, and the street lights keep working, they’ll continue to double down on their suicidal solutions. It’s going to take a complete breakdown of the entire system before the people throw that cult out of power.

14 posted on 03/16/2012 9:04:00 AM PDT by Windflier (To anger a conservative, tell him a lie. To anger a liberal, tell him the truth.)
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To: Kaslin

The absolutely striking thing in the table is the “Vehicle License Fees”......the most telling of one moving there, everybody and his brother (who isn’t illegal or DEM) leaving.....marvelous!

15 posted on 03/16/2012 9:04:31 AM PDT by Gaffer
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To: Kaslin

Californian’s are counting on a bail-out. I don’t think the rest of the country is down for it.

But I can imagine the media onslaught. I’m going to have to turn off the telly.

16 posted on 03/16/2012 9:04:41 AM PDT by St_Thomas_Aquinas (Viva Christo Rey!)
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To: Kaslin
They need to raise taxes to fill the gap.

That will drive more businesses out.

Then they'll need to raise taxes to fill that gap.

That will drive yet more businesses out.

Then they'll need...

17 posted on 03/16/2012 9:08:36 AM PDT by Lexinom (Mitt < 1,144)
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To: circlecity

As the productive taxpayers leave in droves the state of Kalipornia is replacing them with illegal aliens on welfare.

I am sure that will work out.

18 posted on 03/16/2012 9:11:40 AM PDT by GeronL (The Right to Life came before the Right to Pursue Happiness)
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To: Kaslin

California will be our Greece. If the DNC controls the White House the taxpayers will eat it. If the GOP controls the White House the proposed bailout will be one of the most heated battles we have witnessed. If the current GOP leadership is still in place the taxpayers will eat it again. Their congressional delegation is that powerful.

Entitlements, state salaries, and public pensions will eventually crush the state economy. The rats in California will continue to strangle producers with high taxes and Texas, Nevada, and Arizona will gain productive companies and people and state revenues will continue to decrease as budgets increase.

The danger to the rest of the nation is the massive size of California’s budget.

That is my .02

19 posted on 03/16/2012 9:12:44 AM PDT by volunbeer (Keep the dope, we'll make the change in 2012!)
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To: Kaslin

Businesses are leaving in greater numbers than companies that no longer advertise on Rush.

20 posted on 03/16/2012 9:14:30 AM PDT by bmwcyle (I am ready to serve Jesus on Earth because the GOP failed again)
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